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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">As filed with the Securities and Exchange
Commission on April 26, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">Registration No. 333-</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">UNITED STATES SECURITIES AND EXCHANGE COMMISSION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">WASHINGTON D.C. 20549</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">____________________________</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">FORM S-1</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">REGISTRATION STATEMENT</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">UNDER</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">THE SECURITIES ACT OF 1933</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">_____________________________</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Name of registrant in its charter)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 32%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nevada</TD>
    <TD STYLE="width: 2%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 32%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">1000</TD>
    <TD STYLE="width: 2%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 32%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">26-1434750</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">(State or other Jurisdiction</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">(Primary Standard Industrial</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">of Incorporation or</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Classification Code</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">(I.R.S. Employer</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">Organization)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Number)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Identification No.)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>509 Madison Avenue, Suite 306</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>New York, New York</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(212) 980-9155</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Address and telephone number of principal
executive offices and principal place of business)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Seth Lederman, Chief Executive Officer</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Tonix Pharmaceuticals Holding Corp.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>509 Madison Avenue, Suite 306</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>New York, New York</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(212) 980-9155</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;(Name, address and telephone number
of agent for service)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Copies to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Marc A. Ross, Esq.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>James M. Turner, Esq.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Sichenzia Ross Friedman Ference LLP</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>61 Broadway, 32nd Flr.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>New York, New York 10006</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(212) 930-9700</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(212) 930-9725 (fax)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>APPROXIMATE DATE OF PROPOSED SALE TO
THE PUBLIC:</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">From time to time after this Registration
Statement becomes effective.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If any securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment plans, check the following box: <FONT STYLE="font-family: Wingdings; color: black">x</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering. ________</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. _________</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. _________</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.&nbsp;&nbsp;See definitions
of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated filed,&rdquo; and &ldquo;smaller reporting company&rdquo; in Rule
12b-2 of the Exchange Act. (Check one):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 50%">Large accelerated filer <FONT STYLE="font-family: Wingdings">&uml;</FONT></TD>
    <TD STYLE="width: 50%">Accelerated filer <FONT STYLE="font-family: Wingdings">&uml;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Non-accelerated filer <FONT STYLE="font-family: Wingdings">&uml;</FONT></TD>
    <TD>Smaller reporting company <FONT STYLE="font-family: Wingdings">x</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2">(Do not check if a smaller reporting company)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CALCULATION OF REGISTRATION FEE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Title&nbsp;of&nbsp;Each&nbsp;Class&nbsp;Of<BR> Securities&nbsp;To&nbsp;Be&nbsp;Registered</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount&nbsp;To<BR>
Be<BR> Registered&nbsp;(1)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Proposed<BR> Maximum<BR> Offering&nbsp;Price<BR> Per&nbsp;Security&nbsp;(2)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Proposed<BR> Maximum<BR> Aggregate<BR> Offering&nbsp;Price</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount&nbsp;Of<BR> Registration<BR> Fee</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%">Common Stock, $.001 par value</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">7,178,515</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1.20</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">8,614,218.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">987.19</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Common Stock, $.001 par value issuable upon exercise of warrants exercisable at $1.00 per share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">305,750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">366,900.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">42.05</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Common Stock, $.001 par value issuable upon exercise of warrants exercisable at $1.25 per share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,059,542</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">8,824,427.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,011.28</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Total</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,543,807</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">17,805,545.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,040.52</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%">(1)</TD>
    <TD STYLE="width: 91%; text-align: justify">Includes shares of our common stock, par value $0.001 per share, which may be offered pursuant to this registration statement, which shares are issuable upon exercise of warrants held by the selling stockholders. In addition to the shares set forth in the table, the amount to be registered includes an indeterminate number of shares issuable upon exercise of the warrants, as such number may be adjusted as a result of stock splits, stock dividends and similar transactions in accordance with Rule 416. The number of shares of common stock registered hereunder represents a good faith estimate by us of the number of shares of common stock issuable upon exercise of the warrants. For purposes of estimating the number of shares of common stock to be included in this registration statement, we calculated a good faith estimate of the number of shares of our common stock that we believe will be issuable upon exercise of the warrants to account for market fluctuations, and antidilution and price protection adjustments, respectively. Should the conversion ratio result in our having insufficient shares, we will not rely upon Rule 416, but will file a new registration statement to cover the resale of such additional shares should that become necessary.&nbsp; In addition, should a decrease in the exercise price as a result of an issuance or sale of shares below the then current market price, result in our having insufficient shares, we will not rely upon Rule 416, but will file a new registration statement to cover the resale of such additional shares should that become necessary.</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(2)</TD>
    <TD STYLE="text-align: justify">Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(c) and Rule 457(g) under the Securities Act of 1933, using the average of the high and low price as reported on the Over-the-Counter Bulletin Board on April 24, 2012, which was $1.20 per share.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #DE1A1E"><B>The information in this
prospectus is not complete and may be changed.&nbsp;The selling stockholders may not sell these securities under this prospectus
until the registration statement of which it is a part and filed with the Securities and Exchange Commission is effective.&nbsp;This
prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; color: #DE1A1E"><B>SUBJECT TO COMPLETION,
DATED APRIL 26, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><img src="logo.jpg"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; color: blue">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Up to 14,543,807 Shares of Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 23pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus relates
to the offering by the selling stockholders of Tonix Pharmaceuticals Holding Corp. of up to 14,543,807 shares of common stock,
par value $0.001 per share.&nbsp;All of the shares of common stock offered by this prospectus are being sold by the selling stockholders.
These shares consist of (i) 585,750 shares and warrants to purchase 275,000 shares issued to investors in our 2011 Financing, (ii)
warrants to purchase 30,750 shares issued to placement agents in connection with the 2011 Financing, (iii) 6,592,765 shares and
warrants to purchase 6,592,765 shares were issued to investors in our 2012 Financing, (ii) warrants to purchase 466,777 shares
issued to a placement agent in connection with the 2012 Financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The selling stockholders
have advised us that they will sell the shares of common stock from time to time in the open market, on the OTC Bulletin Board,
in privately negotiated transactions or a combination of these methods, at market prices prevailing at the time of sale or at prices
related to the prevailing market prices or at negotiated prices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 23pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The selling stockholders
may sell the common shares to or through underwriters, brokers or dealers or directly to purchasers. Underwriters, brokers or dealers
may receive discounts, commissions or concessions from the selling stockholders, purchasers in connection with sales of the common
shares, or both. Additional information relating to the distribution of the common shares by the selling stockholders can be found
in this prospectus under the heading &ldquo;Plan of Distribution.&rdquo; If underwriters or dealers are involved in the sale of
any securities offered by this prospectus, their names, and any applicable purchase price, fee, commission or discount arrangement
between or among them, will be set forth, or will be calculable from the information set forth, in a supplement to this prospectus.
We will pay the expenses of registering these shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 23pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We will not receive
any proceeds from the sale of common stock by the selling stockholders. We will receive proceeds from the selling stockholders
from any exercise of their warrants on a cash basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 23pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in">We are a reporting
company pursuant to Section 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, and our common stock is traded on
the OTC Bulletin Board under the symbol &ldquo;TNXP&rdquo;.&nbsp;On April 25, 2012, the closing price of our common stock was $1.20
per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><B>Investing in our
common stock involves a high degree of risk.&nbsp;Before making any investment in our common stock, you should read and carefully
consider the risks described in this prospectus under &ldquo;<FONT STYLE="color: windowtext">Risk Factors</FONT> &rdquo; beginning
on page&nbsp;8 of this prospectus.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 23pt"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><B>You should rely
only on the information contained in this prospectus or any prospectus supplement or amendment thereto.&nbsp;We have not authorized
anyone to provide you with different information.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 23pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><B>Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete.&nbsp;Any representation to the contrary is a criminal offense.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>This prospectus is dated &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>&nbsp;&nbsp;&nbsp;&nbsp;</U> &nbsp;, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>TABLE OF CONTENTS</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 94%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 5%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Page</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-weight: normal">Special Note Regarding Forward-Looking Statements</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>About this Prospectus</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Prospectus Summary</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Risk Factors</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">8</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Use of Proceeds</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">27</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Market For Common Stock and Related Stockholder Matters</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">28</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">29</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Business</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">37</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Description of Property</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">59</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Legal Proceedings</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">59</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Management</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">60</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Executive Compensation</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">64</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Certain Relationships and Related Transactions</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">66</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Security Ownership of Certain Beneficial Owners and Management</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">67</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Description of Securities</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">69</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Indemnification for Securities Act Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">70</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Plan of Distribution</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">71</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Selling Stockholders</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">73</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Legal Matters</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">80</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Experts</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">80</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Additional Information</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">80</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Index to Financial Statements</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">81</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>You should rely
only on the information contained in this prospectus. We have not, and the underwriter has not, authorized anyone to provide you
with information that is different. If anyone provides you with different or inconsistent information, you should not rely on it.
We are offering to sell, and are seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time
of delivery of this prospectus or of any sale of the common stock. Our business, financial conditions, results of operations and
prospects may have changed since that date. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus contains
&ldquo;forward-looking statements&rdquo; within the meaning of Section&nbsp;27A of the Securities Act of 1933, as amended, or Securities
Act, and Section&nbsp;21E of the Securities Exchange Act of 1934, or Exchange Act. Forward-looking statements reflect the current
view about future events. When used in this prospectus, the words &ldquo;anticipate,&rdquo; &ldquo;believe,&rdquo; &ldquo;estimate,&rdquo;
&ldquo;expect,&rdquo; &ldquo;future,&rdquo; &ldquo;intend,&rdquo; &ldquo;plan,&rdquo; or the negative of these terms and similar
expressions, as they relate to us or our management, identify forward-looking statements. Such statements, include, but are not
limited to, statements contained in this prospectus relating to our business strategy, our future operating results and liquidity
and capital resources outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business,
the economy and other future conditions. Because forward&ndash;looking statements relate to the future, they are subject to inherent
uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from
those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assurance
of future performance. We caution you therefore against relying on any of these forward-looking statements. Important factors that
could cause actual results to differ materially from those in the forward-looking statements include, without limitation, a continued
decline in general economic conditions nationally and internationally; decreased demand for our products and services; market acceptance
of our products and services; our ability to protect our intellectual property rights; the impact of any infringement actions or
other litigation brought against us; competition from other providers and products; our ability to develop and commercialize new
and improved products and services; our ability to raise capital to fund continuing operations; changes in government regulation;
our ability to complete customer transactions and capital raising transactions; and other factors (including the risks contained
in the section of this prospectus entitled &ldquo;Risk Factors&rdquo;) relating to our industry, our operations and results of
operations and any businesses that may be acquired by us. Should one or more of these risks or uncertainties materialize, or should
the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated,
expected, intended or planned.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Factors or events that
could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We
cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including
the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements
to actual results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ABOUT THIS PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You should rely only
on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell and seeking offers to buy shares of our common stock,
including shares they acquire upon exercise of their warrants, only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery
of this prospectus or of any sale of our common stock. The prospectus will be updated and updated prospectuses made available for
delivery to the extent required by the federal securities laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No person is authorized
in connection with this prospectus to give any information or to make any representations about us, the selling stockholders, the
securities or any matter discussed in this prospectus, other than the information and representations contained in this prospectus.
If any other information or representation is given or made, such information or representation may not be relied upon as having
been authorized by us or any selling stockholder. This prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy the securities in any circumstances under which the offer or solicitation is unlawful. Neither the delivery of this
prospectus nor any distribution of securities in accordance with this prospectus shall, under any circumstances, imply that there
has been no change in our affairs since the date of this prospectus. The prospectus will be updated and updated prospectuses made
available for delivery to the extent required by the federal securities laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PROSPECTUS SUMMARY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>This summary highlights information
contained throughout this prospectus and is qualified in its entirety to the more detailed information and financial statements
included elsewhere in this prospectus. This summary does not contain all of the information that should be considered before investing
in our common stock.&nbsp;Investors should read the entire prospectus carefully, including the more detailed information regarding
our business, the risks of purchasing our common stock discussed in this prospectus under &ldquo;Risk Factors&rdquo; beginning
on page 4 of this prospectus and our financial statements and the accompanying notes beginning on page F-1 of this prospectus.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Unless otherwise indicated or unless the
context requires otherwise, this prospectus includes the accounts of Tonix Pharmaceuticals Holding Corp. (&ldquo;Tonix&rdquo;)
and its wholly-owned subsidiaries, as follows, collectively referred to as &ldquo;we&rdquo;, &ldquo;us&rdquo; or the &ldquo;Company&rdquo;:
Tonix Pharmaceuticals, Inc., a Delaware corporation (&ldquo;Tonix Sub&rdquo;) and Krele LLC, a Delaware limited liability company
(&ldquo;Krele&rdquo;). Tonix Sub is a wholly-owned subsidiary of Tonix and Krele is a wholly-owned subsidiary of Tonix Sub.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 22.3pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Our Company</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Corporate Structure</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We were incorporated
on November 16, 2007 under the laws of the State of Nevada as Tamandare Explorations Inc. From inception through October 2011,
we were involved in the acquisition, exploration and development of natural resource properties in the State of Nevada. On October
7, 2011 (&ldquo;Closing Date&rdquo; and the closing of the share exchange transaction, the &ldquo;Closing&rdquo;), we executed
and consummated a share exchange agreement by and among Tonix Sub and the stockholders of 100% of the equity securities of Tonix
Sub, including, the holders of 5,207,500 shares of common stock, 1,500,000 shares of Series A Preferred Stock and 2,275,527 shares
of Series B Preferred Stock (the &ldquo;Tonix Shareholders&rdquo;), on the one hand, and us and David Moss (&ldquo;Moss&rdquo;),
our then sole officer and director and majority shareholder, on the other hand (the &ldquo;Share Exchange Agreement&rdquo; and
the transaction, the &ldquo;Share Exchange&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the Share Exchange,
the Tonix Shareholders exchanged their shares of Tonix Sub for newly issued shares of our common stock (&ldquo;Common Stock&rdquo;).
As a result, upon completion of the Share Exchange, Tonix Sub became our wholly-owned subsidiary.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon completion of
the Share Exchange, the Tonix Shareholders received an aggregate of 22,666,667 shares of our Common Stock. Moss returned 1,500,000
shares of Common Stock to us, which were retired, and our existing stockholders retained 4,000,000 shares of Common Stock. The
22,666,667 shares issued to the Tonix Shareholders constituted approximately 85% of our 26,666,667 issued and outstanding shares
of Common Stock post-Closing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of the
Share Exchange, we acquired 100% of the capital stock of Tonix Sub and consequently, control of the business and operations of
Tonix Sub and Krele. From and after the Closing Date of the Share Exchange, our primary operations consist of the business and
operations of Tonix Sub and Krele.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 11, 2011,
we changed our name to Tonix Pharmaceuticals Holding Corp. to reflect our new business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Corporate Background</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 1996, Seth Lederman,
MD, and Donald Landry, MD, PhD, formed L&amp;L Technologies, LLC, (&ldquo;L&amp;L&rdquo;), to develop medications for central nervous
system (&ldquo;CNS&rdquo;) conditions. Dr. Lederman is our Chairman and Chief Executive Officer and Dr. Landry is a Director. L&amp;L
was a founder of Janus Pharmaceuticals, Inc., later renamed Vela Pharmaceuticals, Inc., (&ldquo;Vela&rdquo;), which developed various
therapeutics, including a very low dose, or VLD, version of cyclobenzaprine, under an agreement with L&amp;L. Vela decided to focus
its resources on other programs and transferred the rights in VLD cyclobenzaprine and certain other technologies to L&amp;L in
March 2006.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Tonix Sub formed in
June 2007 as Krele Pharmaceuticals, Inc. by L&amp;L and Krele Pharmaceuticals, LLC (now known as Plumbline LLC) (&ldquo;Plumbline&rdquo;).
Dr. Lederman is managing partner of Plumbline. Plumbline possessed rights to certain technology for the treatment of alcohol dependence
and abuse. In connection with founding Tonix Sub, L&amp;L and Plumbline entered into an intellectual property transfer and assignment
agreement with Tonix Sub for the purpose of assigning patents and transferring intellectual property and know-how in exchange for
shares of common stock of Tonix Sub. As a result of economic conditions related to the financial crisis of 2007 and 2008, Tonix
Sub was not successful in raising money to fund its programs until 2009. As a result, Tonix Sub was unable to advance the development
programs and had little activity except for prosecuting and maintaining patents and maintaining contracts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 2009, Tonix Sub
contracted with the Toronto Psychiatric Research Foundation to analyze the sleep data from the 2001 Phase 2a study of 36 patients
with fibromyalgia syndrome, or FM (the &ldquo;Moldofsky Study&rdquo;), who were treated with bedtime VLD cyclobenzaprine or placebo.
The Moldofsky Study was conducted in Canada by the Toronto Psychiatric Research Foundation, and Tonix Sub obtained the data from
this study from L&amp;L. In addition, in 2009, Tonix Sub contracted with Caliper Life Sciences (formerly, NovaScreen Bioscience
Corp.) (&ldquo;Caliper&rdquo;) to analyze the interactions of cyclobenzaprine with certain receptors. In June 2010, Tonix Sub entered
into consulting agreements with L&amp;L and Lederman &amp; Co, LLC (&ldquo;Lederman &amp; Co&rdquo;) and also acquired certain
rights to develop isometheptene mucate as a treatment for certain types of headaches from Lederman &amp; Co., which we are developing
as TNX-201. Dr. Lederman is managing partner of Lederman &amp; Co. Between June 2010 and October 2011, Tonix Sub was active in
recruiting new officers and directors and started dosing normal healthy volunteers for the pharmacokinetic trial for TNX-102.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Lederman &amp; Co predominantly
provides us with clinical development expertise. L&amp;L predominantly provides us with scientific development expertise. Relative
to traditional pharmaceutical development companies, we can be considered a virtual company, since we contract with third-party
vendors to provide many functions that are core to traditional pharmaceutical companies. For example, we have contracted with PharmaNet
Canada, Inc., or PharmaNet Canada, to develop methods for analyzing cyclobenzaprine in the blood and to conduct a human clinical
study to evaluate the performance of our formulation technology. Lederman &amp; Co is responsible for overseeing the scientific
and technical aspects of PharmaNet&rsquo;s contract work product.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In July 2010, Tonix
Sub changed its name to Tonix Pharmaceuticals, Inc. In August 2010, Tonix Sub formed Krele.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Business Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a specialty
pharmaceutical company focused on developing new pharmaceutical products for CNS conditions that may be safer and more effective
than currently available treatments. We use ongoing advances in science and medicine to search for potential therapeutic solutions
among already existing prescription pharmaceutical agents that have been successfully used in patients for other conditions. We
create new dose formulations for these agents with the intent to developing products that are optimized for the new therapeutic
uses or indications that we target. Our projects are in the development phase, and we currently do not market any products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The process of taking
a new drug formulation from concept through testing to approval for a new indication by the U.S. Food and Drug Administration (&ldquo;FDA&rdquo;)
is a time-consuming, costly and high-risk process. Once a drug formulation has been tested in laboratories, we need to conduct
clinical trials of the product candidate to test its uptake into the blood stream, elimination, effectiveness and safety. Neither
laboratory nor animal studies predict the properties of drugs in humans, so designing new formulations can result in a large number
of unpredictable outcomes. The first set of clinical trials, which are sometimes referred to as Phase 1 studies, are performed
by administering new drug formulations to a limited number of healthy human volunteers and are designed to test the initial concept
of the drug formulation and to determine the correct dosage to be tested subsequently on patients affected with the target disorder.
The initial Phase 1 studies can take up to a year to complete, however, since we reformulate versions of approved drugs for new
uses, we may need to devote less time to Phase I studies since our testing is informed by significant prior human research that
we believe allows us to reduce the possible outcomes. The next step in the process is to conduct a larger study in which the new
drug formulation is administered to human patients affected with the targeted disorder, which can be referred to as a first pivotal
study, a Phase 2b study or a Phase 3 study. The first pivotal study for a condition like FM typically takes a year to complete
and then several more months to interpret the data. If the first pivotal study proves the drug is effective and safe, then a second
pivotal study is conducted, which can also be referred to as a Phase 3 study. The second pivotal study for a condition like FM
would typically take 18 months to complete. After the second pivotal study is completed, and if the results are deemed a success,
we would then submit an application to the FDA seeking approval of the new drug product. This application is called a New Drug
Application, or NDA. We believe it would take approximately three months to file the FDA application and another 14 months for
FDA approval. The drug could be marketed shortly after FDA approval. Therefore, it typically takes more than five years to bring
a new formulation of a drug to market for a new indication, and any delays in the process, such as lack of capital necessary to
run clinical trials, unexpected results, adverse effects, or difficulty in recruiting willing subjects for trials, would result
in additional time before a drug could be available for sale.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our lead product candidate,
TNX-102, is a new optimized dosage form of cyclobenzaprine. TNX-102 is being developed for the management of FM. FM is a CNS condition
that is characterized by diffuse musculoskeletal pain, increased pain sensitivity, fatigue and disturbed sleep. Cyclobenzaprine
is the active pharmaceutical ingredient of two FDA approved and widely prescribed muscle relaxant products: Flexeril&reg;, an immediate-release
form, marketed by the McNeil Specialty Pharmaceuticals division of Johnson &amp; Johnson, and Amrix&reg;, a controlled release
form marketed by Cephalon. Generic copies of Flexeril (cyclobenzaprine in the immediate-release form) are available and many patients
receive a generic when their physician prescribes Flexeril. Likewise, generic copies of Amrix are also available. According to
a study conducted by Frost &amp; Sullivan on our behalf relating to the FM market in the United States (&ldquo;Frost and Sullivan&rdquo;),
the immediate-release dose form of cyclobenzaprine is widely used off-label to treat FM. We are working to optimize the dose and
formulation of TNX-102 to treat FM safely and effectively. We plan to subject TNX-102 to the strict testing required for FDA approval,
which we believe will take at least four years and significant clinical studies. We have conducted an initial study of TNX-102
and a comparative pharmacokinetic and bioavailability study. If TNX-102 is ultimately approved by the FDA for the management of
FM, we believe it will be adopted by physicians and reimbursed by managed care companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our other leading product
candidate, TNX-105, which we are also developing, is a new dose form of cyclobenzaprine to treat symptoms of post-traumatic stress
disorder, or PTSD. PTSD is a psychiatric disorder that begins in the aftermath of traumatic experiences. Sleep disturbances, including
nightmares and insomnia, are core features of PTSD and are included in two of the three main symptom clusters. Patients with PTSD
may have any single or combination of symptoms that include re-experiencing, emotional numbing and avoidance, and hyperarousal
reactions that persist for more than one month after the traumatic event. PTSD shares several features with FM, and some patients
are believed to suffer from both PTSD and FM.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cyclobenzaprine is
the active pharmaceutical ingredient in each of our lead product candidates. We are utilizing drug delivery technology to produce
new formulations. In addition to cyclobenzaprine, each formulation of TNX-102 and TNX-105 will contain inactive ingredients, called
excipients that are well-characterized and have been FDA approved previously in other products. As a result, we anticipate seeking
FDA marketing approval of our lead product candidates, TNX-102 and TNX-105, through the NDA process under Section 505(b)(2) of
the U.S. Federal Food, Drug and Cosmetic Act, or the FFDCA, which we also refer to as Section 505(b)(2). This process permits the
FDA to make some safety and effectiveness determinations through review of materials in the public domain or in already approved
NDAs of products containing cyclobenzaprine. This approach would spare us some of the burden of generating all of this data for
ourselves and may allow our lead product candidates to progress through a shorter development pathway than is typical for pharmaceutical
products based on novel active ingredients. We have not filed an NDA for either of our lead product candidates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We also have a pipeline
of several other product candidates that we are constantly evaluating. For example, we are developing TNX-201, which is a treatment
for certain types of headaches and TNX-301, which is a potential treatment for alcohol dependence and addiction. For commercial
reasons, we normally do not disclose the identities of the active ingredients or targeted indications of products in our pipeline
until a U.S. patent has been allowed. Consistent with our mission, these product candidates are, or likely will be, reformulations
of active ingredients that have been used by patients in other FDA-approved products. We anticipate that some of our other pipeline
products will be submitted to the FDA for approval under Section 505(b)(2). In other cases, we expect that the products will be
formulated to match earlier predicate products closely enough to rely, in part, on their regulatory review and status. There may
be instances where the predicate product is a medicine that was reviewed for safety and effectiveness by the National Academy of
Sciences under the Drug Evaluation and Safety Initiative, or DESI, and would be considered by the FDA to be an &ldquo;unapproved
product.&rdquo; For DESI products, it is our intent also to develop NDA versions by modernizing the chemistry, manufacturing and
controls and to perform new clinical studies to support an NDA filing under Section 505(b)(2).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because of our size
and being in the development stage, we do not currently devote a significant amount of time or resources towards our other pipeline
candidates. We anticipate that sometime in 2012 we will begin developing formulations for TNX-201 and possibly TNX-301, but do
not expect to start clinical trials until 2013 at the earliest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Krele&rsquo;s mission
is to commercialize products that are generic versions of predicate NDA products or existing marketed products that it may acquire
from other pharmaceutical companies. We expect that Tonix Sub&rsquo;s relationship to Krele will be similar to that of several
other pharmaceutical companies and their subsidiaries that market generic versions of the parent&rsquo;s branded products at different
periods in their product life-cycle. We anticipate that when one of our branded products loses patent protection, Krele may market
generic versions of it. In such instances, Krele&rsquo;s product would be an &ldquo;authorized generic&rdquo; and would rely on
our NDA. Krele may also develop or acquire generic products approved under Abbreviated New Drug Applications (&ldquo;ANDAs&rdquo;).
For ANDAs, the predicate product is a medicine approved by the U.S. Food and Drug Administration (the &ldquo;FDA&rdquo;) under
an NDA. Tonix Sub may market branded versions of such products that rely on Krele&rsquo;s ANDAs which would be referred to as branded
generics. We do not currently market any products and have only begun the process of obtaining state licenses, which are legally
required before a company can manufacture, distribute and market prescription medications. Krele has been issued a state license
in New York.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>The Offering</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 25%">Common stock offered by the selling stockholders</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 73%">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Up to 14,534,807&nbsp;shares of common stock, including the
        following:</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">-&#9;&nbsp;&nbsp;&nbsp;
        &nbsp;7,178,575         shares of common stock,</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">-&#9;&nbsp;&nbsp;
        &nbsp;up         to 305,750 shares of common stock issuable upon the exercise of common stock purchase warrants at an exercise
        price of $1.00 per         share (includes a good faith estimate of the shares underlying warrants to account for
        antidilution protection adjustments); and</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">-&#9;&nbsp;&nbsp;&nbsp;
        up         to 7,059,542 shares of common stock issuable upon the exercise of common stock purchase warrants at an exercise
        price of $1.25         per share (includes a good faith estimate of the shares underlying warrants to account for
        antidilution protection adjustments).</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Common stock to be outstanding after the offering</TD>
    <TD>&nbsp;</TD>
    <TD>Up to&nbsp;41,643,724 shares.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Use of proceeds</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">We will not receive any proceeds from the sale of the common stock. However, we will receive the exercise price of any common stock we sell to the selling stockholder upon exercise of the warrants. All but 30,750 of the warrants entitle the holder to exercise their warrants on a cashless basis under certain conditions. In the event that any selling stockholder exercises their warrants on a cashless basis, then we will not receive any proceeds from the exercise of those warrants. We expect to use the proceeds received from the exercise of the warrants, if any, for general working capital purposes.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>OTCBB symbol</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">TNXP</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The above information
regarding common stock to be outstanding after the offering is based on <FONT STYLE="color: black">34,278,432 </FONT>shares of
common stock outstanding as of April 25, 2012 and includes the 7,365,292 shares of common stock issuable upon the exercise of all
warrants outstanding as of April 25, 2012 registered pursuant to the registration statement that this prospectus is part of.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following is a
summary of the transactions relating to the securities being registered hereunder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>2011 Private Placement</I> &nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Between October and
November, 2011 we consummated a private placement financing (the &ldquo;2011 Financing&rdquo;) pursuant to which we sold $2,075,000
principal amount of Debentures for aggregate cash proceeds of $1,575,000 and the exchange of $500,000 in previously issued Notes
of Tonix Sub that were converted into Debentures in the principal face amount of $500,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Debentures matured
on the earlier of (i) the one year anniversary of the date of issuance or (ii) the date of closing of a private placement of equity,
equity equivalent, convertible debt or debt financing in which we receive gross proceeds, in one or more transactions, of at least
$3,875,000 (a &ldquo;Subsequent Financing&rdquo;). The Debentures bore interest at 8% per annum and were convertible at the holder&rsquo;s
option into a Subsequent Financing. In the event that a Subsequent Financing did not occur within 12 months from the date of issuance
of the Debenture, the holder had the option to convert the Debenture into the Conversion Shares. In addition, upon conversion or
repayment of the Debenture, the holders were entitled to receive, at the holder&rsquo;s option, either (i) a warrant (the &ldquo;Conversion
Warrant&rdquo;) to purchase such number of shares of common stock equal to the principal amount of the Debenture divided by the
offering price in a Subsequent Financing (the &ldquo;Warrant Shares&rdquo;) or (ii) shares of our common stock equal to 33% of
the principal amount of the Debenture divided by the offering price in a Subsequent Financing (the &ldquo;Incentive Shares&rdquo;).
The private placement that closed in January 2012 met the requirements of a Subsequent Financing, therefore, the holders of the
Debentures elected to receive 275,000 Conversion Warrants and 594,000 Incentive Shares. The Conversion Warrants have three year
term and $1.00 exercise price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with
the 2011 Financing, we made cash payments to WFG Investments and Seagate of $40,000 and $14,000, respectively, as commissions and
attorney fees of $20,000. In addition, WFG Investments and Seagate earned an aggregate of 30,750 placement agent warrants (the
&ldquo;2011 Agent Warrants&rdquo;), which have terms similar to the Conversion Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Incentive Shares
and shares underlying the Conversion Warrants and 2011 Agent Warrants are registered pursuant to this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>2012 Private Placement</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Between January and
March, 2012, we consummated a private placement financing transaction (the &ldquo;2012 Financing&rdquo;) pursuant to which we issued
an aggregate of 264.7106 units (&ldquo;Units&rdquo;) to certain investors for aggregate cash proceeds of $4,692,765 and the exchange
of $1,925,000 in previously issued Debentures that were converted into Units. The 2012 Financing satisfied the requirements for
the Subsequent Financing discussed above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each Unit had a purchase
price of $25,000 per Unit and consisted of twenty five thousand (25,000) shares of our Common Stock, a Class A Warrant to purchase
twenty five thousand (25,000) shares of common stock (the &ldquo;Class A Warrants&rdquo;), and a Class B Warrant to purchase up
to twenty five thousand (25,000) shares of common stock (the &ldquo;Class B Warrants&rdquo; and together with the Class A Warrants,
the &ldquo;Warrants&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Class A Warrants
have an exercise price of $1.25 per share of Common Stock and will be exercisable for a period of five years from the date of issuance.
The Class B Warrants expired unexercised effective April 24, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with
the Financing, we paid Dawson James Securities, Inc., a FINRA registered broker-dealer (&ldquo;Dawson James&rdquo;) a cash payment
of $466,777, which represented an 8% commission and a 2% non-accountable expense allowance of the gross proceeds delivered by investors
in the 2012 Financing. In addition, Dawson James earned warrants to purchase 466,777 shares of Common Stock (the &ldquo;2012 Agent
Warrants&rdquo;), which have an exercise price of $1.25 per share of common stock, will be exercisable for a period of seven years,
contain customary anti-dilution protection and are entitled to piggy-back registration rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The shares included
in the Units and shares underlying the Class A Warrants and 2012 Agent Warrants are registered pursuant to this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Plan of Distribution</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This offering is not
being underwritten.&nbsp;The selling stockholders will sell their shares of our common stock at prevailing market prices or privately
negotiated prices.&nbsp;The selling stockholders themselves directly, or through their agents, or through their brokers or dealers,
may sell their shares from time to time, in (i)&nbsp;privately negotiated transactions, (ii)&nbsp;in one or more transactions,
including block transactions in accordance with the applicable rules of the OTC Bulletin Board or (iii)&nbsp;otherwise in accordance
with the section of this prospectus entitled &ldquo;Plan of Distribution.&rdquo;&nbsp;To the extent required, the specific shares
to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any
agent, broker or dealer and any applicable commission or discounts with respect to a particular offer will be described in an accompanying
prospectus supplement.&nbsp;In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144
may be sold under Rule 144 rather than pursuant to this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For additional information
on the methods of sale, you should refer to the section of this prospectus entitled &ldquo;Plan of Distribution,&rdquo; beginning
on page 71.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>RISK FACTORS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This investment has
a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below and the other
information in this prospectus. If any of the following risks actually occur, our business, operating results and financial condition
could be harmed and the value of our stock could go down. This means you could lose all or a part of your investment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>RISKS RELATED TO OUR BUSINESS </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We have a history of operating losses
and expect to incur losses for the foreseeable future. We may never generate revenues or, if we are able to generate revenues,
achieve profitability. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are focused on product
development, and we have not generated any revenues to date. We have incurred losses in each year of our operations, and we expect
to continue to incur operating losses for the foreseeable future. These operating losses have adversely affected and are likely
to continue to adversely affect our working capital, total assets and shareholders&rsquo; equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company and its
prospects should be examined in light of the risks and difficulties frequently encountered by new and early stage companies in
new and rapidly evolving markets. These risks include, among other things, the speed at which we can scale up operations, our complete
dependence upon development of products that currently have no market acceptance, our ability to establish and expand our brand
name, our ability to expand our operations to meet the commercial demand of our clients, our development of and reliance on strategic
and customer relationships and our ability to minimize fraud and other security risks.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The process of developing
our products requires significant clinical, development and laboratory testing and clinical trials. In addition, commercialization
of our product candidates will require that we obtain necessary regulatory approvals and establish sales, marketing and manufacturing
capabilities, either through internal hiring or through contractual relationships with others. We expect to incur substantial losses
for the foreseeable future as a result of anticipated increases in our research and development costs, including costs associated
with conducting preclinical testing and clinical trials, and regulatory compliance activities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ability to generate
revenues and achieve profitability will depend on numerous factors, including success in:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 11%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 86%; text-align: justify">developing and testing product candidates;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">receiving regulatory approvals;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">commercializing our products; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">establishing a favorable competitive position.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Many of these factors
will depend on circumstances beyond our control. We cannot assure you that we will ever have a product approved by the FDA, that
we will bring any product to market or, if we are successful in doing so, that we will ever become profitable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect to incur
substantial additional operating expenses over the next several years as our research, development, pre-clinical testing, and clinical
trial activities increase. The amount of future losses and when, if ever, we will achieve profitability are uncertain. We have
no products that have generated any commercial revenue, do not expect to generate revenues from the commercial sale of products
in the near future, and might never generate revenues from the sale of products. Our ability to generate revenue and achieve profitability
will depend on, among other things, successful completion of the development of our product candidates; obtaining necessary regulatory
approvals from the FDA; establishing manufacturing, sales, and marketing arrangements with third parties; and raising sufficient
funds to finance our activities. We might not succeed at any of these undertakings. If we are unsuccessful at some or all of these
undertakings, our business, prospects, and results of operations may be materially adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We received a report from our independent
registered public accounting firm with an explanatory paragraph for the year ended December 31, 2011 with respect to our ability
to continue as a going concern.&nbsp;&nbsp;The existence of such a report may adversely affect our stock price and our ability
to raise capital.&nbsp;&nbsp;There is no assurance that we will not receive a similar report for our year ended December 31, 2012.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In their report dated
March 30, 2012, our independent registered public accounting firm expressed substantial doubt about our ability to continue as
a going concern as we have incurred losses since inception of development stage, have a negative cash flow from operations and
have working capital and stockholders&rsquo; deficiencies and require additional financing to fund future operations. Our ability
to continue as a going concern is subject to our ability to obtain necessary funding from outside sources, including obtaining
additional funding from the sale of our securities, obtaining loans and grants from various financial institutions where possible.
Our continued net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods
will prove successful.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We have no approved products on the
market and therefore do not expect to generate any revenues from product sales in the foreseeable future, if at all. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To date, we have no
approved product on the market and have generated no product revenues. We have funded our operations primarily from sales of our
securities. We have not received, and do not expect to receive for at least the next several years, if at all, any revenues from
the commercialization of our product candidates. To obtain revenues from sales of our product candidates, we must succeed, either
alone or with third parties, in developing, obtaining regulatory approval for, manufacturing and marketing drugs with commercial
potential. We may never succeed in these activities, and we may not generate sufficient revenues to continue our business operations
or achieve profitability.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We are largely dependent on the success
of our lead product candidate, TNX-102, and we cannot be certain that this product candidate will receive regulatory approval or
be successfully commercialized.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently have no
products for sale, and we cannot guarantee that we will ever have any drug products approved for sale. We and our product candidates
are subject to extensive regulation by the FDA and comparable regulatory authorities in other countries governing, among other
things, research, testing, clinical trials, manufacturing, labeling, promotion, selling, adverse event reporting and recordkeeping.
We are not permitted to market any of our product candidates in the United States until we receive approval of an NDA for a product
candidate from the FDA or the equivalent approval from a foreign regulatory authority. Obtaining FDA approval is a lengthy, expensive
and uncertain process. We currently have one lead product candidate, TNX-102 for the treatment of FM, and the success of our business
currently depends on its successful development, approval and commercialization. Any projected sales or future revenue predictions
are predicated upon FDA approval and market acceptance of TNX-102. If projected sales do not materialize for any reason, it would
have a material adverse effect on our business and our ability to continue operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">TNX-102 has not completed
the clinical development process; therefore, we have not yet submitted an NDA or foreign equivalent or received marketing approval
for this product candidate anywhere in the world. The clinical development program for TNX-102 may not lead to commercial products
for a number of reasons, including if we fail to obtain necessary approvals from the FDA or foreign regulatory authorities because
our clinical trials fail to demonstrate to their satisfaction that this product candidate is safe and effective. We may also fail
to obtain the necessary approvals if we have inadequate financial or other resources to advance our product candidates through
the clinical trial process. Any failure or delay in completing clinical trials or obtaining regulatory approval for TNX-102 in
a timely manner would have a material adverse impact on our business and our stock price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We need additional capital. If additional
capital is not available or is available at unattractive terms, we may be forced to delay, reduce the scope of or eliminate our
research and development programs, reduce our commercialization efforts or curtail our operations. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to develop
and bring our product candidates to market, we must commit substantial resources to costly and time-consuming research, preclinical
and clinical trials and marketing activities. We anticipate that our existing cash and cash equivalents will enable us to maintain
our current operations for at least the next nine months. We anticipate that we will need an additional $1 million to continue
our operations for the next 12 months. We anticipate using our cash and cash equivalents to fund further research and development
with respect to our lead product candidates. We may, however, need to raise additional funding sooner if our business or operations
change in a manner that consumes available resources more rapidly than we anticipate. Our requirements for additional capital will
depend on many factors, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 90%; text-align: justify">successful commercialization of our product candidates;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">the time and costs involved in obtaining regulatory approval for our product candidates;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">costs associated with protecting our intellectual property rights;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">development of marketing and sales capabilities;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">payments received under future collaborative agreements, if any; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">market acceptance of our products.</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To the extent we raise
additional capital through the sale of equity securities, the issuance of those securities could result in dilution to our shareholders.
In addition, if we obtain debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of principal
and interest on such indebtedness, thus limiting funds available for our business activities. If adequate funds are not available,
we may be required to delay, reduce the scope of or eliminate our research and development programs, reduce our commercialization
efforts or curtail our operations. In addition, we may be required to obtain funds through arrangements with collaborative partners
or others that may require us to relinquish rights to technologies, product candidates or products that we would otherwise seek
to develop or commercialize ourselves or license rights to technologies, product candidates or products on terms that are less
favorable to us than might otherwise be available.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We will require substantial
additional funds to support our research and development activities, and the anticipated costs of preclinical studies and clinical
trials, regulatory approvals and eventual commercialization. Such additional sources of financing may not be available on favorable
terms, if at all. If we do not succeed in raising additional funds on acceptable terms, we may be unable to initiate clinical trials
or obtain approval of any product candidates from the FDA and other regulatory authorities. In addition, we could be forced to
discontinue product development, forego sales and marketing efforts and forego attractive business opportunities. Any additional
sources of financing will likely involve the issuance of our equity securities, which will have a dilutive effect on our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is no assurance
that we will be successful in raising the additional funds needed to fund our business plan. If we are not able to raise sufficient
capital in the near future, our continued operations will be in jeopardy and we may be forced to cease operations and sell or otherwise
transfer all or substantially all of our remaining assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We face intense competition in the
markets targeted by our lead product candidates. Many of our competitors have substantially greater resources than we do, and we
expect that all of our product candidates under development will face intense competition from existing or future drugs. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect that all
of our product candidates under development, if approved, will face intense competition from existing and future drugs marketed
by large companies. These competitors may successfully market products that compete with our products, successfully identify drug
candidates or develop products earlier than we do, or develop products that are more effective, have fewer side effects or cost
less than our products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, if a
competitor receives FDA approval before we do for a drug that is similar to one of our product candidates, FDA approval for our
product candidate may be precluded or delayed due to periods of non-patent exclusivity and/or the listing with the FDA by the competitor
of patents covering its newly-approved drug product. Periods of non-patent exclusivity for new versions of existing drugs such
as our current product candidates can extend up to three and one-half years. See &ldquo;Business&mdash;Government Regulation.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">These competitive factors
could require us to conduct substantial new research and development activities to establish new product targets, which would be
costly and time consuming. These activities would adversely affect our ability to commercialize products and achieve revenue and
profits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Competition and technological change
may make our product candidates and technologies less attractive or obsolete.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We compete with established
pharmaceutical and biotechnology companies that are pursuing other forms of treatment for the same indications we are pursuing
and that have greater financial and other resources. Other companies may succeed in developing products earlier than us, obtaining
FDA approval for products more rapidly, or developing products that are more effective than our product candidates. Research and
development by others may render our technology or product candidates obsolete or noncompetitive, or result in treatments or cures
superior to any therapy we develop. We face competition from companies that internally develop competing technology or acquire
competing technology from universities and other research institutions. As these companies develop their technologies, they may
develop competitive positions that may prevent, make futile, or limit our product commercialization efforts, which would result
in a decrease in the revenue we would be able to derive from the sale of any products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There can be no assurance
that any of our product candidates will be accepted by the marketplace as readily as these or other competing treatments. Furthermore,
if our competitors' products are approved before ours, it could be more difficult for us to obtain approval from the FDA. Even
if our products are successfully developed and approved for use by all governing regulatory bodies, there can be no assurance that
physicians and patients will accept our product(s) as a treatment of choice.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, the pharmaceutical
research industry is diverse, complex, and rapidly changing. By its nature, the business risks associated therewith are numerous
and significant. The effects of competition, intellectual property disputes, market acceptance, and FDA regulations preclude us
from forecasting revenues or income with certainty or even confidence.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If we fail to protect our intellectual
property rights, our ability to pursue the development of our technologies and products would be negatively affected. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our success will depend
in part on our ability to obtain patents and maintain adequate protection of our technologies and products. If we do not adequately
protect our intellectual property, competitors may be able to use our technologies to produce and market drugs in direct competition
with us and erode our competitive advantage. Some foreign countries lack rules and methods for defending intellectual property
rights and do not protect proprietary rights to the same extent as the United States. Many companies have had difficulty protecting
their proprietary rights in these foreign countries. We may not be able to prevent misappropriation of our proprietary rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have received, and
are currently seeking, patent protection for numerous compounds and methods of treating diseases. However, the patent process is
subject to numerous risks and uncertainties, and there can be no assurance that we will be successful in protecting our products
by obtaining and defending patents. These risks and uncertainties include the following: patents that may be issued or licensed
may be challenged, invalidated, or circumvented, or otherwise may not provide any competitive advantage; our competitors, many
of which have substantially greater resources than us and many of which have made significant investments in competing technologies,
may seek, or may already have obtained, patents that will limit, interfere with, or eliminate our ability to make, use, and sell
our potential products either in the United States or in international markets; there may be significant pressure on the United
States government and other international governmental bodies to limit the scope of patent protection both inside and outside the
United States for treatments that prove successful as a matter of public policy regarding worldwide health concerns; countries
other than the United States may have less restrictive patent laws than those upheld by United States courts, allowing foreign
competitors the ability to exploit these laws to create, develop, and market competing products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Moreover, any patents
issued to us may not provide us with meaningful protection, or others may challenge, circumvent or narrow our patents. Third parties
may also independently develop products similar to our products, duplicate our unpatented products or design around any patents
on products we develop. Additionally, extensive time is required for development, testing and regulatory review of a potential
product. While extensions of patent term due to regulatory delays may be available, it is possible that, before any of our product
candidates can be commercialized, any related patent, even with an extension, may expire or remain in force for only a short period
following commercialization, thereby reducing any advantages of the patent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the United
States Patent and Trademark Office (the &ldquo;PTO&rdquo;) and patent offices in other jurisdictions have often required that patent
applications concerning pharmaceutical and/or biotechnology-related inventions be limited or narrowed substantially to cover only
the specific innovations exemplified in the patent application, thereby limiting the scope of protection against competitive challenges.
Thus, even if we or our licensors are able to obtain patents, the patents may be substantially narrower than anticipated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our success depends
on our patents, patent applications that may be licensed exclusively to us and other patents to which we may obtain assignment
or licenses. We may not be aware, however, of all patents, published applications or published literature that may affect our business
either by blocking our ability to commercialize our product candidates, by preventing the patentability of our product candidates
to us or our licensors, or by covering the same or similar technologies that may invalidate our patents, limit the scope of our
future patent claims or adversely affect our ability to market our product candidates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to patents,
we rely on a combination of trade secrets, confidentiality, nondisclosure and other contractual provisions, and security measures
to protect our confidential and proprietary information. These measures may not adequately protect our trade secrets or other proprietary
information. If they do not adequately protect our rights, third parties could use our technology, and we could lose any competitive
advantage we may have. In addition, others may independently develop similar proprietary information or techniques or otherwise
gain access to our trade secrets, which could impair any competitive advantage we may have.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Patent protection and
other intellectual property protection is crucial to the success of our business and prospects, and there is a substantial risk
that such protections will prove inadequate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may be involved in lawsuits to
protect or enforce our patents, which could be expensive and time consuming. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The pharmaceutical
industry has been characterized by extensive litigation regarding patents and other intellectual property rights, and companies
have employed intellectual property litigation to gain a competitive advantage. We may become subject to infringement claims or
litigation arising out of patents and pending applications of our competitors, or additional interference proceedings declared
by the PTO to determine the priority of inventions. The defense and prosecution of intellectual property suits, PTO proceedings,
and related legal and administrative proceedings are costly and time-consuming to pursue, and their outcome is uncertain. Litigation
may be necessary to enforce our issued patents, to protect our trade secrets and know-how, or to determine the enforceability,
scope, and validity of the proprietary rights of others. An adverse determination in litigation or interference proceedings to
which we may become a party could subject us to significant liabilities, require us to obtain licenses from third parties, or restrict
or prevent us from selling our products in certain markets. Although patent and intellectual property disputes might be settled
through licensing or similar arrangements, the costs associated with such arrangements may be substantial and could include our
paying large fixed payments and ongoing royalties. Furthermore, the necessary licenses may not be available on satisfactory terms
or at all.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Competitors may infringe
our patents, and we may file infringement claims to counter infringement or unauthorized use. This can be expensive, particularly
for a company of our size, and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of
ours is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds
that our patents do not cover its technology. An adverse determination of any litigation or defense proceedings could put one or
more of our patents at risk of being invalidated or interpreted narrowly.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Also, a third party
may assert that our patents are invalid and/or unenforceable. There are no unresolved communications, allegations, complaints or
threats of litigation related to the possibility that our patents are invalid or unenforceable. Any litigation or claims against
us, whether or not merited, may result in substantial costs, place a significant strain on our financial resources, divert the
attention of management and harm our reputation. An adverse decision in litigation could result in inadequate protection for our
product candidates and/or reduce the value of any license agreements we have with third parties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Interference proceedings
brought before the U.S. Patent and Trademark Office may be necessary to determine priority of invention with respect to our patents
or patent applications. During an interference proceeding, it may be determined that we do not have priority of invention for one
or more aspects in our patents or patent applications and could result in the invalidation in part or whole of a patent or could
put a patent application at risk of not issuing. Even if successful, an interference proceeding may result in substantial costs
and distraction to our management.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, because
of the substantial amount of discovery required in connection with intellectual property litigation or interference proceedings,
there is a risk that some of our confidential information could be compromised by disclosure. In addition, there could be public
announcements of the results of hearings, motions or other interim proceedings or developments. If investors perceive these results
to be negative, the price of our common stock could be adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If we infringe the rights of third
parties we could be prevented from selling products, forced to pay damages, and defend against litigation.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If our products, methods,
processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and we may
have to: obtain licenses, which may not be available on commercially reasonable terms, if at all; abandon an infringing product
candidate; redesign our products or processes to avoid infringement; stop using the subject matter claimed in the patents held
by others; pay damages; and/or defend litigation or administrative proceedings which may be costly whether we win or lose, and
which could result in a substantial diversion of our financial and management resources.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If preclinical testing or clinical
trials for our product candidates are unsuccessful or delayed, we will be unable to meet our anticipated development and commercialization
timelines. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We rely and expect
to continue to rely on third parties, including clinical research organizations and outside consultants, to conduct, supervise
or monitor some or all aspects of preclinical testing or clinical trials involving our product candidates. We have less control
over the timing and other aspects of these preclinical testing or clinical trials than if we performed the monitoring and supervision
entirely on our own. Third parties may not perform their responsibilities for our preclinical testing or clinical trials on our
anticipated schedule or, for clinical trials, consistent with a clinical trial protocol. Delays in preclinical and clinical testing
could significantly increase our product development costs and delay product commercialization. In addition, many of the factors
that may cause, or lead to, a delay in the clinical trials may also ultimately lead to denial of regulatory approval of a product
candidate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The commencement of
clinical trials can be delayed for a variety of reasons, including delays in:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 11%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 86%; text-align: justify">demonstrating sufficient safety and efficacy to obtain regulatory approval to commence a clinical trial;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">reaching agreement on acceptable terms with prospective contract research organizations and trial sites;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">manufacturing sufficient quantities of a product candidate; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">obtaining institutional review board approval to conduct a clinical trial at a prospective site.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Once a clinical trial
has begun, it may be delayed, suspended or terminated by us or the FDA or other regulatory authorities due to a number of factors,
including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 11%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 86%; text-align: justify">ongoing discussions with the FDA or other regulatory authorities regarding the scope or design of our clinical trials;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">failure to conduct clinical trials in accordance with regulatory requirements;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">lower than anticipated recruitment or retention rate of patients in clinical trials;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">lack of adequate funding to continue clinical trials;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">negative results of clinical trials; or</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">side-effects of cyclobenzaprine.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If clinical trials
are unsuccessful, and we are not able to obtain regulatory approvals for our product candidates under development, we will not
be able to commercialize these products, and therefore may not be able to generate sufficient revenues to support our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If we are unable to file for approval
under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act or if we are required to generate additional data related to
safety and efficacy in order to obtain approval under Section 505(b)(2), we may be unable to meet our anticipated development and
commercialization timelines. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current plans for
filing NDAs for our product candidates include efforts to minimize the data we will be required to generate in order to obtain
marketing approval for our product candidates and therefore possibly obtain a shortened review period for the applications. While
we met with the FDA in August 2011 to discuss initial plans for the future development of TNX-102, we have not yet come to full
agreement with the FDA as to the nature or extent of any studies we may be required to conduct in order to achieve approval for
any of our product candidates. The timeline for filing and review of our NDAs is based on our plan to submit those NDAs under Section
505(b)(2) of the Federal Food, Drug and Cosmetic Act, wherein we will rely in part on data in the public domain or elsewhere. We
have not yet filed an NDA under Section 505(b)(2) for any of our lead product candidates. Depending on the data that may be required
by the FDA for approval, some of the data may be related to products already approved by the FDA. If the data relied upon is related
to products already approved by the FDA and covered by third-party patents we would be required to certify that we do not infringe
the listed patents or that such patents are invalid or unenforceable. As a result of the certification, the third-party would have
45 days from notification of our certification to initiate an action against us. In the event that an action is brought in response
to such a certification, the approval of our NDA could be subject to a stay of up to 30 months or more while we defend against
such a suit. Approval of our product candidates under Section 505(b)(2) may therefore be delayed until patent exclusivity expires
or until we successfully challenge the applicability of those patents to our product candidates. Alternatively, we may elect to
generate sufficient additional clinical data so that we no longer rely on data which triggers a potential stay of the approval
of our product candidates. Even if no exclusivity periods apply to our applications under Section 505(b)(2), the FDA has broad
discretion to require us to generate additional data on the safety and efficacy of our product candidates to supplement third-party
data on which we may be permitted to rely. In either event, we could be required, before obtaining marketing approval for any of
our product candidates, to conduct substantial new research and development activities beyond those we currently plan to engage
in order to obtain approval of our product candidates. Such additional new research and development activities would be costly
and time consuming.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may not be able
to obtain shortened review of our applications, and the FDA may not agree that our products qualify for marketing approval. If
we are required to generate additional data to support approval, we may be unable to meet our anticipated development and commercialization
timelines, may be unable to generate the additional data at a reasonable cost, or at all, and may be unable to obtain marketing
approval of our product candidates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our executive officers and other
key personnel are critical to our business, and our future success depends on our ability to retain them. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our success depends
to a significant extent upon the continued services of Dr. Seth Lederman, our President and Chief Executive Officer. Dr. Lederman
has overseen Tonix Sub since inception and provides leadership for our growth and operations strategy as well as being an inventor
on many of our patents. Loss of the services of Dr. Lederman would have a material adverse effect on our growth, revenues, and
prospective business. We have key-man insurance on the life of Dr. Lederman.&nbsp;We are also highly dependent on the other principal
members of our management and scientific team. We are not aware of any present intention of any of our key personnel to leave our
company or to retire. However, we have no employment agreement with Dr. Lederman and while we have employment agreements with certain
of our employees, all of our employees may terminate their employment at any time. The loss of any of our key personnel, or the
inability to attract and retain qualified personnel, may significantly delay or prevent the achievement of our research, development
or business objectives and could materially adversely affect our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any employment agreement
we enter into will not ensure the retention of the employee who is a party to the agreement. In addition, we have only limited
ability to prevent former employees from competing with us. Furthermore, our future success will also depend in part on the continued
service of our key scientific and management personnel and our ability to identify, hire, and retain additional personnel. We experience
intense competition for qualified personnel and may be unable to attract and retain the personnel necessary for the development
of our business. Moreover, our work force is located in the &ldquo;Pharmaceutical Corridor&rdquo; that spans New York, New Jersey
and Pennsylvania, where competition for personnel with the scientific and technical skills that we seek is extremely high and is
likely to remain high. Because of this competition, our compensation costs may increase significantly.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If we are unable to hire additional
qualified personnel, our ability to grow our business may be harmed.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Over time we will need
to hire additional qualified personnel with expertise in clinical testing, clinical research and testing, government regulation,
formulation and manufacturing, financial matters and sales and marketing. We compete for qualified individuals with numerous biopharmaceutical
companies, universities and other research institutions. Competition for such individuals is intense, and we cannot be certain
that our search for such personnel will be successful. Attracting and retaining qualified personnel will be critical to our success.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We rely on third parties to manufacture
the compounds used in our trials, and we intend to rely on them for the manufacture of any approved products for commercial sale.
If these third parties do not manufacture our product candidates in sufficient quantities and at an acceptable cost, clinical development
and commercialization of our product candidates could be delayed, prevented or impaired. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have no manufacturing
facilities, and we have no experience in the clinical or commercial-scale manufacture of drugs or in designing drug manufacturing
processes. We intend to rely on third parties to manufacture some or all of our product candidates in clinical trials and our products
that reach commercialization. Completion of our clinical trials and commercialization of our product candidates requires manufacturing
of a sufficient supply of our product candidates. We are currently in discussions with outside sources to manufacture our development
compounds. If, for any reason, we become unable to rely on our current sources for the manufacture of our product candidates, either
for clinical trials or, at some future date, for commercial quantities, then we would need to identify and contract with additional
or replacement third-party manufacturers to manufacture compounds for pre-clinical, clinical, and commercial purposes. We may not
be successful in identifying such additional or replacement third-party manufacturers, or in negotiating acceptable terms with
any that we do identify.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that there
are a variety of manufacturers that we may be able to retain to produce these products. However, once we retain a manufacturing
source, if our manufacturers do not perform in a satisfactory manner, we may not be able to develop or commercialize potential
products as planned. Certain specialized manufacturers are expected to provide us with modified and unmodified pharmaceutical compounds,
including finished products, for use in our preclinical and clinical studies. Some of these materials are available from only one
supplier or vendor. Any interruption in or termination of service by such sole source suppliers could result in a delay or interruption
in manufacturing until we locate an alternative source of supply. Any delay or interruption in manufacturing operations (or failure
to locate a suitable replacement for such suppliers) could materially adversely affect our business, prospects, or results of operations.
We do not have any short-term or long-term manufacturing agreements with any of these manufacturers. If we fail to contract for
manufacturing on acceptable terms or if third-party manufacturers do not perform as we expect, our development programs could be
materially adversely affected. This may result in delays in filing for and receiving FDA approval for one or more of our products.
Any such delays could cause our prospects to suffer significantly.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Failure by our third-party manufacturers
to comply with the regulatory guidelines set forth by the FDA with respect to our product candidates could delay or prevent the
completion of clinical trials, the approval of any product candidates or the commercialization of our products. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Such third-party manufacturers
must be inspected by FDA for cGMP compliance before they can produce commercial product. We may be in competition with other companies
for access to these manufacturers' facilities and may be subject to delays in manufacture if the manufacturers give other clients
higher priority than they give to us. If we are unable to secure and maintain third-party manufacturing capacity, the development
and sales of our products and our financial performance may be materially affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Manufacturers are obligated
to operate in accordance with FDA-mandated requirements. A failure of any of our third-party manufacturers to establish and follow
cGMP requirements and to document their adherence to such practices may lead to significant delays in the availability of material
for clinical trials, may delay or prevent filing or approval of marketing applications for our products, and may cause delays or
interruptions in the availability of our products for commercial distribution following FDA approval. This could result in higher
costs to us or deprive us of potential product revenues.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Complying with cGMP
and non-U.S. regulatory requirements will require that we expend time, money, and effort in production, recordkeeping, and quality
control to assure that the product meets applicable specifications and other requirements. We, or our contracted manufacturing
facility, must also pass a pre-approval inspection prior to FDA approval. Failure to pass a pre-approval inspection may significantly
delay FDA approval of our products. If we fail to comply with these requirements, we would be subject to possible regulatory action
and may be limited in the jurisdictions in which we are permitted to sell our products. As a result, our business, financial condition,
and results of operations may be materially harmed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Drug manufacturers
are subject to ongoing periodic unannounced inspections by the FDA, the DEA and corresponding state and foreign agencies to ensure
strict compliance with cGMP requirements and other requirements under Federal drug laws, other government regulations and corresponding
foreign standards. If we or our third-party manufacturers fail to comply with applicable regulations, sanctions could be imposed
on us, including fines, injunctions, civil penalties, failure by the government to grant marketing approval of drugs, delays, suspension
or withdrawal of approvals, seizures or recalls of product, operating restrictions and criminal prosecutions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Corporate and academic collaborators
may take actions to delay, prevent, or undermine the success of our products.</I></B><I> </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our operating and financial
strategy for the development, clinical testing, manufacture, and commercialization of drug candidates is heavily dependent on our
entering into collaborations with corporations, academic institutions, licensors, licensees, and other parties. Our current strategy
assumes that we will successfully establish these collaborations, or similar relationships; however, there can be no assurance
that we will be successful establishing such collaborations. Some of our existing collaborations are, and future collaborations
may be, terminable at the sole discretion of the collaborator. Replacement collaborators might not be available on attractive terms,
or at all. The activities of any collaborator will not be within our control and may not be within our power to influence. There
can be no assurance that any collaborator will perform its obligations to our satisfaction or at all, that we will derive any revenue
or profits from such collaborations, or that any collaborator will not compete with us. If any collaboration is not pursued, we
may require substantially greater capital to undertake development and marketing of our proposed products and may not be able to
develop and market such products effectively, if at all. In addition, a lack of development and marketing collaborations may lead
to significant delays in introducing proposed products into certain markets and/or reduced sales of proposed products in such markets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Data provided by collaborators and
others upon which we rely that has not been independently verified could turn out to be false, misleading, or incomplete.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We rely on third-party
vendors, scientists, and collaborators to provide us with significant data and other information related to our projects, clinical
trials, and our business. If such third parties provide inaccurate, misleading, or incomplete data, our business, prospects, and
results of operations could be materially adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our product candidates are novel
and still in development</I></B><I>. </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a pharmaceutical
company focused on the development of drug product candidates, all of which are still in development. Our drug development methods
may not lead to commercially viable drugs for any of several reasons. For example, we may fail to identify appropriate targets
or compounds, our drug candidates may fail to be safe and effective in clinical trials, or we may have inadequate financial or
other resources to pursue development efforts for our drug candidates. Our drug candidates will require significant additional
development, clinical trials, regulatory clearances and additional investment by us or our collaborators before they can be commercialized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Successful development of our products
is uncertain</I></B><I>.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our development of
current and future product candidates is subject to the risks of failure and delay inherent in the development of new pharmaceutical
products, including: delays in product development, clinical testing, or manufacturing; unplanned expenditures in product development,
clinical testing, or manufacturing; failure to receive regulatory approvals; emergence of superior or equivalent products; inability
to manufacture on its own, or through any others, product candidates on a commercial scale; and failure to achieve market acceptance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because of these risks,
our research and development efforts may not result in any commercially viable products. If a significant portion of these development
efforts are not successfully completed, required regulatory approvals are not obtained or any approved products are not commercially
successfully, our business, financial condition, and results of operations may be materially harmed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Clinical trials required for our
product candidates are expensive and time-consuming, and their outcome is uncertain</I></B><I>.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to obtain
FDA approval to market a new drug product, we must demonstrate proof of safety and effectiveness in humans. To meet these requirements,
we must conduct &ldquo;adequate and well controlled&rdquo; clinical trials. Conducting clinical trials is a lengthy, time-consuming,
and expensive process. The length of time may vary substantially according to the type, complexity, novelty, and intended use of
the product candidate, and often can be several years or more per trial. Delays associated with products for which we are directly
conducting clinical trials may cause us to incur additional operating expenses. The commencement and rate of completion of clinical
trials may be delayed by many factors, including, for example: inability to manufacture sufficient quantities of qualified materials
under the FDA's Current Good Manufacturing Practices requirements, commonly known as cGMP, for use in clinical trials; slower than
expected rates of patient recruitment; failure to recruit a sufficient number of patients; modification of clinical trial protocols;
changes in regulatory requirements for clinical trials; the lack of effectiveness during clinical trials; the emergence of unforeseen
safety issues; delays, suspension, or termination of the clinical trials due to the institutional review board responsible for
overseeing the study at a particular study site; and government or regulatory delays or &ldquo;clinical holds&rdquo; requiring
suspension or termination of the trials.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The results from early
clinical trials are not necessarily predictive of results obtained in later clinical trials. Accordingly, even if we obtain positive
results from early clinical trials, we may not achieve the same success in future clinical trials. Clinical trials may not demonstrate
statistically significant safety and effectiveness to obtain the requisite regulatory approvals for product candidates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our clinical trials
may be conducted in patients with CNS conditions, and in some cases, our product is expected to be used in combination with approved
therapies that themselves have significant adverse event profiles. During the course of treatment, these patients could suffer
adverse medical events or die for reasons that may or may not be related to our products. We cannot ensure that safety issues will
not arise with respect to our products in clinical development.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The failure of clinical
trials to demonstrate safety and effectiveness for the desired indications could harm the development of that product candidate
and other product candidates. This failure could cause us to abandon a product candidate and could delay development of other product
candidates. Any delay in, or termination of, our clinical trials would delay the filing of our NDAs with the FDA and, ultimately,
our ability to commercialize our product candidates and generate product revenues. Any change in, or termination of, our clinical
trials could materially harm our business, financial condition, and results of operation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We are subject to extensive and costly
government regulation.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Product candidates
employing our technology are subject to extensive and rigorous domestic government regulation including regulation by the FDA,
the Centers for Medicare and Medicaid Services, other divisions of the United States Department of Health and Human Services, the
United States Department of Justice, state and local governments, and their respective foreign equivalents. The FDA regulates the
research, development, preclinical and clinical testing, manufacture, safety, effectiveness, record-keeping, reporting, labeling,
storage, approval, advertising, promotion, sale, distribution, import, and export of biopharmaceutical products. The FDA regulates
small molecule chemical entities as drugs, subject to a New Drug Application, or NDA, under the Federal Food, Drug, and Cosmetic
Act. If products employing our technologies are marketed abroad, they will also be subject to extensive regulation by foreign governments,
whether or not they have obtained FDA approval for a given product and its uses. Such foreign regulation may be equally or more
demanding than corresponding United States regulation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Government regulation
substantially increases the cost and risk of researching, developing, manufacturing, and selling our products. The regulatory review
and approval process, which includes preclinical testing and clinical trials of each product candidate, is lengthy, expensive,
and uncertain. We or our collaborators must obtain and maintain regulatory authorization to conduct clinical trials. We or our
collaborators must obtain regulatory approval for each product we intend to market, and the manufacturing facilities used for the
products must be inspected and meet legal requirements. Securing regulatory approval requires the submission of extensive preclinical
and clinical data and other supporting information for each proposed therapeutic indication in order to establish the product's
safety and efficacy, and in the case of biologics also potency and purity, for each intended use. The development and approval
process takes many years, requires substantial resources, and may never lead to the approval of a product.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Even if we are able
to obtain regulatory approval for a particular product, the approval may limit the indicated medical uses for the product, may
otherwise limit our ability to promote, sell, and distribute the product, may require that we conduct costly post-marketing surveillance,
and/or may require that we conduct ongoing post-marketing studies. Material changes to an approved product, such as, for example,
manufacturing changes or revised labeling, may require further regulatory review and approval. Once obtained, any approvals may
be withdrawn, including, for example, if there is a later discovery of previously unknown problems with the product, such as a
previously unknown safety issue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we, our collaborators,
or our contract manufacturers fail to comply with applicable regulatory requirements at any stage during the regulatory process,
such noncompliance could result in, among other things delays in the approval of applications or supplements to approved applications;
refusal of a regulatory authority, including the FDA, to review pending market approval applications or supplements to approved
applications; warning letters; fines; import and/or export restrictions; product recalls or seizures; injunctions; total or partial
suspension of production; civil penalties; withdrawals of previously approved marketing applications or licenses; recommendations
by the FDA or other regulatory authorities against governmental contracts; and/or criminal prosecutions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We do not have, and may never obtain,
the regulatory approvals we need to market our product candidates.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following completion
of clinical trials, the results are evaluated and, depending on the outcome, submitted to the FDA in the form of an NDA in order
to obtain FDA approval of the product and authorization to commence commercial marketing. In responding to an NDA, the FDA may
require additional testing or information, may require that the product labeling be modified, may impose post-approval study or
reporting requirements or other restrictions on product distribution, or may deny the application. The FDA has established performance
goals for review of NDAs - six months for priority applications and ten months for standard applications. However, the FDA is not
required to complete its review within these time periods. The timing of final FDA review and action varies greatly, but can take
years in some case and may involve the input of an FDA advisory committee of outside experts. Product sales in the United States
may commence only when an NDA is approved.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To date, we have not
applied for or received the regulatory approvals required for the commercial sale of any of our products in the United States or
in any foreign jurisdiction. None of our product candidates has been determined to be safe and effective, and we have not submitted
an NDA to the FDA or an equivalent application to any foreign regulatory authorities for any of our product candidates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">It is possible that
none of our product candidates will be approved for marketing. Failure to obtain regulatory approvals, or delays in obtaining regulatory
approvals, may adversely affect the successful commercialization of any drugs or biologics that we or our partners develop, may
impose additional costs on us or our collaborators, may diminish any competitive advantages that we or our partners may attain,
and/or may adversely affect our receipt of revenues or royalties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Even if approved, our products will
be subject to extensive post-approval regulation.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Once a product is approved,
numerous post-approval requirements apply. Among other things, the holder of an approved NDA is subject to periodic and other FDA
monitoring and reporting obligations, including obligations to monitor and report adverse events and instances of the failure of
a product to meet the specifications in the NDA. Application holders must submit new or supplemental applications and obtain FDA
approval for certain changes to the approved product, product labeling, or manufacturing process. Application holders must also
submit advertising and other promotional material to the FDA and report on ongoing clinical trials.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Depending on the circumstances,
failure to meet these post-approval requirements can result in criminal prosecution, fines, injunctions, recall or seizure of products,
total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, or refusal to allow us to enter
into supply contracts, including government contracts. In addition, even if we comply with FDA and other requirements, new information
regarding the safety or effectiveness of a product could lead the FDA to modify or withdraw product approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Even if we obtain regulatory approval
to market our product candidates, our product candidates may not be accepted by the market. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Even if the FDA approves
one or more of our product candidates, physicians and patients may not accept it or use it. Even if physicians and patients would
like to use our products, our products may not gain market acceptance among healthcare payors such as managed care formularies,
insurance companies or government programs such as Medicare or Medicaid. Acceptance and use of our products will depend upon a
number of factors including: perceptions by members of the health care community, including physicians, about the safety and effectiveness
of our drug or device product; cost-effectiveness of our product relative to competing products; availability of reimbursement
for our product from government or other healthcare payers; and effectiveness of marketing and distribution efforts by us and our
licensees and distributors, if any.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The degree of market
acceptance of any pharmaceutical product that we develop will depend on a number of factors, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 11%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 86%; text-align: justify">cost-effectiveness;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">the safety and effectiveness of our products, including any significant potential side effects (including drowsiness and dry mouth), as compared to alternative products or treatment methods;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 11%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 86%; text-align: justify">the timing of market entry as compared to competitive products;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">flat or declining use of off-label muscle-relaxant products for fibromyalgia prior to the launch of TNX-102;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">the rate of adoption of our products by doctors and nurses;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">product labeling or product insert required by the FDA for each of our products;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">reimbursement policies of government and third-party payors;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">effectiveness of our sales, marketing and distribution capabilities and the effectiveness of such capabilities of our collaborative partners, if any; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">unfavorable publicity concerning our products or any similar products.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our product candidates,
if successfully developed, will compete with a number of products manufactured and marketed by major pharmaceutical companies,
biotechnology companies and manufacturers of generic drugs. Our products may also compete with new products currently under development
by others. Physicians, patients, third-party payors and the medical community may not accept and utilize any of our product candidates.
If our products do not achieve market acceptance, we will not be able to generate significant revenues or become profitable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because we expect sales
of our current product candidates, if approved, to generate substantially all of our product revenues for the foreseeable future,
the failure of these products to find market acceptance would harm our business and could require us to seek additional financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If we fail to establish marketing,
sales and distribution capabilities, or fail to enter into arrangements with third parties, we will not be able to create a market
for our product candidates. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our strategy with our
lead product candidates is to control, directly or through contracted third parties, all or most aspects of the product development
process, including marketing, sales and distribution. Currently, we do not have any sales, marketing or distribution capabilities.
In order to generate sales of any product candidates that receive regulatory approval, we must either acquire or develop an internal
marketing and sales force with technical expertise and with supporting distribution capabilities or make arrangements with third
parties to perform these services for us. The acquisition or development of a sales and distribution infrastructure would require
substantial resources, which may divert the attention of our management and key personnel and defer our product development efforts.
To the extent that we enter into marketing and sales arrangements with other companies, our revenues will depend on the efforts
of others. These efforts may not be successful. If we fail to develop sales, marketing and distribution channels, or enter into
arrangements with third parties, we will experience delays in product sales and incur increased costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sales of pharmaceutical
products largely depend on the reimbursement of patients' medical expenses by government health care programs and private health
insurers. Without the financial support of the government or third-party payors, the market for our products will be limited. These
third-party payors are increasingly challenging the price and examining the cost effectiveness of medical products and services.
Recent proposals to change the health care system in the United States have included measures that would limit or eliminate payments
for medical products and services or subject the pricing of medical treatment products to government control. Significant uncertainty
exists as to the reimbursement status of newly approved health care products. Third-party payors may not reimburse sales of our
products or enable our collaborators to sell them at profitable prices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business strategy
might involve out-licensing product candidates to or collaborating with larger firms with experience in marketing and selling pharmaceutical
products. There can be no assurance that we will be able to successfully establish marketing, sales, or distribution relationships;
that such relationships, if established, will be successful; or that we will be successful in gaining market acceptance for our
products. To the extent that we enter into any marketing, sales, or distribution arrangements with third parties, our product revenues
will be lower than if we marketed and sold our products directly, and any revenues we receive will depend upon the efforts of such
third-parties. If we are unable to establish such third-party sales and marketing relationships, or choose not to do so, we will
have to establish and rely on our own in-house capabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We, as a company, have
no experience in marketing or selling pharmaceutical products and currently have no sales, marketing, or distribution infrastructure.
To market any of our products directly, we would need to develop a marketing, sales, and distribution force that both has technical
expertise and the ability to support a distribution capability. The establishment of a marketing, sales, and distribution capability
would significantly increase our costs, possibly requiring substantial additional capital. In addition, there is intense competition
for proficient sales and marketing personnel, and we may not be able to attract individuals who have the qualifications necessary
to market, sell, and distribute our products. There can be no assurance that we will be able to establish internal marketing, sales,
or distribution capabilities. If we are unable to, or choose not to establish these capabilities, or if the capabilities we establish
are not sufficient to meet our needs, we will be required to establish collaborative marketing, sales, or distribution relationships
with third parties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>In the event that we are successful
in bringing any products to market, our revenues may be adversely affected if we fail to obtain acceptable prices or adequate reimbursement
for our products from third-party payors. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ability to commercialize
pharmaceutical products successfully may depend in part on the availability of reimbursement for our products from:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 11%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 86%; text-align: justify">government and health administration authorities;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">private health insurers; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">other third party payors, including Medicare.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We cannot predict the
availability of reimbursement for newly-approved health care products. Third-party payors, including Medicare, are challenging
the prices charged for medical products and services. Government and other third-party payors increasingly are limiting both coverage
and the level of reimbursement for new drugs. Third-party insurance coverage may not be available to patients for any of our products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The continuing efforts
of government and third-party payors to contain or reduce the costs of health care may limit our commercial opportunity. If government
and other third-party payors do not provide adequate coverage and reimbursement for any prescription product we bring to market,
doctors may not prescribe them or patients may ask to have their physicians prescribe competing drugs with more favorable reimbursement.
In some foreign markets, pricing and profitability of prescription pharmaceuticals are subject to government control. In the United
States, we expect that there will continue to be federal and state proposals for similar controls. In addition, we expect that
increasing emphasis on managed care in the United States will continue to put pressure on the pricing of pharmaceutical products.
Cost control initiatives could decrease the price that we receive for any products in the future. Further, cost control initiatives
could impair our ability to commercialize our products and our ability to earn revenues from this commercialization.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We face the risk of product liability
claims and may not be able to obtain insurance.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business exposes
us to the risk of product liability claims that are inherent in the development of drugs. If the use of one or more of our or our
collaborators' drugs harms people, we may be subject to costly and damaging product liability claims brought against us by clinical
trial participants, consumers, health care providers, pharmaceutical companies or others selling our products. Our inability to
obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could
prevent or inhibit the commercialization of pharmaceutical products we develop, alone or with collaborators. We currently do not
carry clinical trial insurance or product liability insurance. We intend to obtain such insurance in the future. We cannot predict
all of the possible harms or side effects that may result and, therefore, the amount of insurance coverage we hold now or in the
future may not be adequate to cover all liabilities we might incur. We intend to expand our insurance coverage to include the sale
of commercial products if we obtain marketing approval for our drug candidates in development, but we may be unable to obtain commercially
reasonable product liability insurance for any products approved for marketing. If we are unable to obtain insurance at an acceptable
cost or otherwise protect against potential product liability claims, we will be exposed to significant liabilities, which may
materially and adversely affect our business and financial position. If we are sued for any injury allegedly caused by our or our
collaborators' products, our liability could exceed our total assets and our ability to pay the liability. A product liability
claim or series of claims brought against us would decrease our cash and could cause our stock price to fall.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We use hazardous chemicals in our
business. Potential claims relating to improper handling, storage or disposal of these chemicals could affect us and be time consuming
and costly. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our research and development
processes and/or those of our third party contractors may involve the controlled use of hazardous materials and chemicals. These
hazardous chemicals are reagents and solvents typically found in a chemistry laboratory. Our operations also produce hazardous
waste products. Federal, state and local laws and regulations govern the use, manufacture, storage, handling and disposal of hazardous
materials. While we attempt to comply with all environmental laws and regulations, including those relating to the outsourcing
of the disposal of all hazardous chemicals and waste products, we cannot eliminate the risk of contamination from or discharge
of hazardous materials and any resultant injury. In the event of such an accident, we could be held liable for any resulting damages
and any liability could materially adversely affect our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Compliance with environmental
laws and regulations may be expensive. Current or future environmental regulations may impair our research, development or production
efforts. We might have to pay civil damages in the event of an improper or unauthorized release of, or exposure of individuals
to, hazardous materials. We are not insured against these environmental risks.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we enter into collaborations
with third parties, they might also work with hazardous materials in connection with our collaborations. We may agree to indemnify
our collaborators in some circumstances against damages and other liabilities arising out of development activities or products
produced in connection with these collaborations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the federal,
state and local laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous or radioactive
materials and waste products may require us to incur substantial compliance costs that could materially adversely affect our business,
financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If we retain collaborative partners
and our partners do not satisfy their obligations, we will be unable to develop our partnered product candidates. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event we enter
into any collaborative agreements, we may not have day-to-day control over the activities of our collaborative partners with respect
to any of these product candidates. Any collaborative partner may not fulfill its obligations under these agreements. If a collaborative
partner fails to fulfill its obligations under an agreement with us, we may be unable to assume the development of the products
covered by that agreement or enter into alternative arrangements with a third party. In addition, we may encounter delays in the
commercialization of the product candidate that is the subject of the agreement. Accordingly, our ability to receive any revenue
from the product candidates covered by these agreements will be dependent on the efforts of our collaborative partner. We could
also become involved in disputes with a collaborative partner, which could lead to delays in or termination of our development
and commercialization programs and time-consuming and expensive litigation or arbitration. In addition, any such dispute could
diminish our collaborators&rsquo; commitment to us and reduce the resources they devote to developing and commercializing our products.
Conflicts or disputes with our collaborators, and competition from them, could harm our relationships with our other collaborators,
restrict our ability to enter future collaboration agreements and delay the research, development or commercialization of our product
candidates. If any collaborative partner terminates or breaches its agreement, or otherwise fails to complete its obligations in
a timely manner, our chances of successfully developing or commercializing these product candidates would be materially and adversely
affected. We may not be able to enter into collaborative agreements with partners on terms favorable to us, or at all. Our inability
to enter into collaborative arrangements with collaborative partners, or our failure to maintain such arrangements, would limit
the number of product candidates that we could develop and ultimately, decrease our sources of any future revenues.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>RISKS RELATED TO OUR STOCK </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>There has been a limited trading
market for our Common Stock and almost no market activity to date.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Currently, our Common
Stock is available for quotation on the Over-the-Counter Bulletin Board under the symbol &ldquo;TNXP.&rdquo; However, prior to
February 2012, there was no trading activity in our Common Stock and only a few trades have occurred to date. It is anticipated
that there will be a limited trading market for the Common Stock on the Over-the-Counter Bulletin Board. The lack of an active
market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable.
The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability
to raise capital by selling shares of capital stock and may impair our ability to acquire other companies or technologies by using
Common Stock as consideration.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>You may have difficulty trading and
obtaining quotations for our Common Stock.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Common Stock may
not be actively traded, and the bid and asked prices for our Common Stock on the Over-the-Counter Bulletin Board may fluctuate
widely. As a result, investors may find it difficult to dispose of, or to obtain accurate quotations of the price of, our securities.
This severely limits the liquidity of the Common Stock, and would likely reduce the market price of our Common Stock and hamper
our ability to raise additional capital.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The market price for our Common Stock may be volatile,
and your investment in our common stock could decline in value. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The stock market in
general has experienced extreme price and volume fluctuations. The market prices of the securities of biotechnology and specialty
pharmaceutical companies, particularly companies like ours without product revenues and earnings, have been highly volatile and
may continue to be highly volatile in the future. This volatility has often been unrelated to the operating performance of particular
companies. The following factors, in addition to other risk factors described in this section, may have a significant impact on
the market price of our common stock:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 11%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 86%">announcements of technological innovations or new products by us or our competitors;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>announcement of FDA approval or disapproval of our products or other product-related actions;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>developments involving our discovery efforts and clinical trials;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>developments or disputes concerning patents or proprietary rights, including announcements of infringement, interference or other litigation against us or our potential licensees;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>developments involving our efforts to commercialize our products, including developments impacting the timing of commercialization;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>announcements concerning our competitors, or the biotechnology, pharmaceutical or drug delivery industry in general;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>public concerns as to the safety or efficacy of our products or our competitors&rsquo; products;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>changes in government regulation of the pharmaceutical or medical industry;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>changes in the reimbursement policies of third party insurance companies or government agencies;&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>actual or anticipated fluctuations in our operating results;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>changes in financial estimates or recommendations by securities analysts;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>developments involving corporate collaborators, if any;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>changes in accounting principles; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>the loss of any of our key scientific or management personnel.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the past, securities
class action litigation has often been brought against companies that experience volatility in the market price of their securities.
Whether or not meritorious, litigation brought against us could result in substantial costs and a diversion of management&rsquo;s
attention and resources, which could adversely affect our business, operating results and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Investor relations activities, nominal
&ldquo;float&rdquo; and supply and demand factors may affect the price of our stock.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company expects
to utilize various techniques such as non-deal road shows and investor relations campaigns in order to create investor awareness
for the Company.&nbsp;&nbsp;These campaigns may include personal, video and telephone conferences with investors and prospective
investors in which our business practices are described.&nbsp;&nbsp;The Company may provide compensation to investor relations
firms and pay for newsletters, websites, mailings and email campaigns that are produced by third-parties based upon publicly-available
information concerning the Company.&nbsp;&nbsp;The Company will not be responsible for the content of analyst reports and other
writings and communications by investor relations firms not authored by the Company or from publicly available information.&nbsp;&nbsp;The
Company does not intend to review or approve the content of such analysts&rsquo; reports or other materials based upon analysts&rsquo;
own research or methods.&nbsp;&nbsp;Investor relations firms should generally disclose when they are compensated for their efforts,
but whether such disclosure is made or complete is not under our control.&nbsp;&nbsp; In addition, investors in the Company may
be willing, from time to time, to encourage investor awareness through similar activities.&nbsp;&nbsp;Investor awareness activities
may also be suspended or discontinued which may impact the trading market our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The SEC and FINRA enforce
various statutes and regulations intended to prevent manipulative or deceptive devices in connection with the purchase or sale
of any security and carefully scrutinize trading patterns and company news and other communications for false or misleading information,
particularly in cases where the hallmarks of &ldquo;pump and dump&rdquo; activities may exist, such as rapid share price increases
or decreases.&nbsp;&nbsp;We, and our shareholders may be subjected to enhanced regulatory scrutiny due to the small number of holders
who initially will own the registered shares of our common stock publicly available for resale, and the limited trading markets
in which such shares may be offered or sold which have often been associated with improper activities concerning penny-stocks,
such as the OTC Bulletin Board or the OTCQB Marketplace (Pink OTC) or pink sheets.&nbsp;&nbsp;Until such time as our restricted
shares are registered or available for resale under Rule 144, there will continue to be a small percentage of shares held by a
small number of investors, many of whom acquired such shares in privately negotiated purchase and sale transactions, that will
constitute the entire available trading market.&nbsp;&nbsp;The Supreme Court has stated that manipulative action is a term of art
connoting intentional or willful conduct designed to deceive or defraud investors by controlling or artificially affecting the
price of securities.&nbsp;&nbsp;Often times, manipulation is associated by regulators with forces that upset the supply and demand
factors that would normally determine trading prices.&nbsp;&nbsp;Since a small percentage of the outstanding common stock of the
Company will initially be available for trading, held by a small number of individuals or entities, the supply of our common stock
for sale will be extremely limited for an indeterminate amount of time, which could result in higher bids, asks or sales prices
than would otherwise exist.&nbsp;&nbsp;Securities regulators have often cited thinly-traded markets, small numbers of holders,
and awareness campaigns as components of their claims of price manipulation and other violations of law when combined with manipulative
trading, such as wash sales, matched orders or other manipulative trading timed to coincide with false or touting press releases.&nbsp;&nbsp;There
can be no assurance that the Company&rsquo;s or third-parties&rsquo; activities, or the small number of potential sellers or small
percentage of stock in the &ldquo;float,&rdquo; or determinations by purchasers or holders as to when or under what circumstances
or at what prices they may be willing to buy or sell stock will not artificially impact (or would be claimed by regulators to have
affected) the normal supply and demand factors that determine the price of the stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We do not anticipate paying dividends
on our common stock. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have never declared
or paid cash dividends on our common stock and do not expect to do so in the foreseeable future. The declaration of dividends is
subject to the discretion of our board of directors and will depend on various factors, including our operating results, financial
condition, future prospects and any other factors deemed relevant by our board of directors. You should not rely on an investment
in our company if you require dividend income from your investment in our company. The success of your investment will likely depend
entirely upon any future appreciation of the market price of our common stock, which is uncertain and unpredictable. There is no
guarantee that our common stock will appreciate in value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>



<P STYLE="margin: 0"></P>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We expect that our quarterly results
of operations will fluctuate, and this fluctuation could cause our stock price to decline. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our quarterly operating
results are likely to fluctuate in the future. These fluctuations could cause our stock price to decline. The nature of our business
involves variable factors, such as the timing of the research, development and regulatory pathways of our product candidates, which
could cause our operating results to fluctuate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Due to the possibility
of fluctuations in our revenues and expenses, we believe that quarter-to-quarter comparisons of our operating results are not a
good indication of our future performance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If we or our existing shareholders
sell a substantial number of shares of our common stock in the public market, our stock price may decline. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we or our existing
shareholders sell a large number of shares of our common stock, or the public market perceives that we or our existing shareholders
might sell shares of common stock, particularly with respect to our affiliates, directors, executive officers or other insiders,
the market price of our common stock could decline significantly.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the future, we may
issue additional shares to our employees, directors or consultants, in connection with corporate alliances or acquisitions, or
to raise capital. Due to these factors, sales of a substantial number of shares of our common stock in the public market could
occur at any time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our officers, directors and principal
shareholders own a controlling interest in our voting stock and Investors will not have any voice in our management.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our officers, directors
and principal shareholders, in the aggregate, beneficially own or control the votes of approximately 60.7% of our outstanding Common
Stock. As a result, these stockholders, acting together, will have the ability to control substantially all matters submitted to
our stockholders for approval, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>election of our board of directors;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>removal of any of our directors;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>amendment of our certificate of incorporation or bylaws; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination
involving us.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.25in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of their
ownership and positions, our directors, executive officers and principal shareholders collectively are able to influence all matters
requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition,
sales of significant amounts of shares held by our directors, executive officers or principal shareholders, or the prospect of
these sales, could adversely affect the market price of our Common Stock. Management&rsquo;s stock ownership may discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price
or prevent our stockholders from realizing a premium over our stock price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our common stock is not currently
traded at high volume, and you may be unable to sell at or near ask prices or at all if you need to sell or liquidate a substantial
number of shares at one time.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our common stock is
currently traded, but with very low, if any, volume, based on quotations on the &ldquo;Over-the-Counter Bulletin Board&rdquo;,
meaning that the number of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively
small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which
is still relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that
generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and
would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time
as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in
our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity
that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a
broader or more active public trading market for our common stock will develop or be sustained, or that trading levels will be
sustained.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Shareholders should
be aware that, according to Commission Release No. 34-29093, the market for &ldquo;penny stocks&rdquo; has suffered in recent years
from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales
and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers;
and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware
of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate
the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical
limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns
or practices could increase the future volatility of our share price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Efforts to comply with recently enacted
changes in securities laws and regulations will increase our costs and require additional management resources, and we still may
fail to comply.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As directed by Section
404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring public companies to include a report of management on their
internal controls over financial reporting in their annual reports on Form 10-K. In addition, in the event we are no longer a smaller
reporting company, the independent registered public accounting firm auditing our financial statements would be required to attest
to the effectiveness of our internal controls over financial reporting. Such attestation requirement by our independent registered
public accounting firm would not be applicable to us until the report for the year ended December 31, 2012 at the earliest, if
at all. If we are unable to conclude that we have effective internal controls over financial reporting or if our independent registered
public accounting firm is required to, but is unable to provide us with a report as to the effectiveness of our internal controls
over financial reporting, investors could lose confidence in the reliability of our financial statements, which could result in
a decrease in the value of our securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our common stock is subject to the
&ldquo;penny stock&rdquo; rules of the SEC and the trading market in our securities is limited, which makes transactions in our
stock cumbersome and may reduce the value of an investment in our stock.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Securities and
Exchange Commission (&ldquo;SEC&rdquo;) has adopted Rule 15g-9 which establishes the definition of a &ldquo;penny stock,&rdquo;
for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise
price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt,
the rules require:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>that a broker or dealer approve a person&rsquo;s account for transactions in penny stocks; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity
of the penny stock to be purchased.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: left">In order to approve a person&rsquo;s
account for transactions in penny stocks, the broker or dealer must:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>obtain financial information and investment experience objectives of the person; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient
knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The broker or dealer
must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny
stock market, which, in highlight form:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>sets forth the basis on which the broker or dealer made the suitability determination; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>that the broker or dealer received a signed, written agreement from the investor prior to the transaction.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Generally, brokers
may be less willing to execute transactions in securities subject to the &ldquo;penny stock&rdquo; rules. This may make it more
difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Disclosure also has
to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions
payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies
available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing
recent price information for the penny stock held in the account and information on the limited market in penny stocks.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>FINRA sales practice requirements
may also limit a shareholder&rsquo;s ability to buy and sell our stock.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to the
&ldquo;penny stock&rdquo; rules described above, FINRA has adopted rules that require that in recommending an investment to a customer,
a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending
speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information
about the customer&rsquo;s financial status, tax status, investment objectives and other information. Under interpretations of
these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at
least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our
common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>USE OF PROCEEDS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We will not receive
any proceeds from the sale of common stock offered by the selling stockholders under this prospectus. However, we will receive
up to $9,130,178 in the aggregate from the selling stockholders if they exercise in full, on a cash basis, the warrants to purchase
7,365,292 shares of common stock issued to the selling stockholders that are being offered by the selling stockholders under this
prospectus. All but 30,750 of the warrants entitle the holder to exercise their warrants on a cashless basis under certain conditions.
In the event that any selling stockholder exercises their warrants on a cashless basis, then we will not receive any proceeds from
the exercise of those warrants. We would use such proceeds from the exercise of the warrants for working capital and other corporate
purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The warrant holders
may exercise their warrants at any time until their expiration, as further described under &ldquo;Description of Capital Stock.&rdquo;
Because the warrant holders may exercise the warrants in their own discretion, if at all, we cannot plan on specific uses of proceeds
beyond application of proceeds to general corporate purposes.&nbsp;We have agreed to bear the expenses (other than any underwriting
discounts or commissions or agent&rsquo;s commissions) in connection with the registration of the common stock being offered hereby
by the selling stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our common stock is
currently traded on the Over-the-Counter Bulletin Board under the symbol &ldquo;TNXP.&rdquo; Prior to October 19, 2011, our common
stock was quoted on the Over-the-Counter Bulletin Board under the symbol &ldquo;TAEI.&rdquo; Prior to February 2012, no public
trades occurred in our common stock. For the periods indicated, the following table sets forth the high and low sale prices of
our common stock as reported by NASDAQ.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 60%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fiscal Year 2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">High</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Low</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 64%; text-align: justify">First Quarter</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">2.06</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">2.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Second Quarter (1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.99</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD STYLE="text-align: justify">As of April 25, 2012.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-transform: uppercase"><B>Holders</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of April 25, 2012,
we had approximately 178 holders of our common stock. The number of record holders was determined from the records of our transfer
agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers,
and registered clearing agencies. The transfer agent of our common stock is vStock Transfer, LLC, 77 Spruce Street, Suite 201,
Cedarhurst, NY 11516.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-transform: uppercase"><B>Dividends </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have not declared
or paid any cash dividends on our common stock and we do not anticipate paying any cash dividends to stockholders in the foreseeable
future. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent
upon our financial condition, results of operations, capital requirements, and such other factors as the Board of Directors deem
relevant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS
OF </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Some of the information
in this Form S-1 contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements
by forward-looking words such as &ldquo;may,&rdquo; &ldquo;will,&rdquo; &ldquo;expect,&rdquo; &ldquo;anticipate,&rdquo; &ldquo;believe,&rdquo;
&ldquo;estimate&rdquo; and &ldquo;continue,&rdquo; or similar words. You should read statements that contain these words carefully
because they:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.4in"><FONT STYLE="font-size: 10pt">&bull;</FONT></TD><TD><FONT STYLE="font-size: 10pt">discuss our future expectations;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.4in"><FONT STYLE="font-size: 10pt">&bull;</FONT></TD><TD><FONT STYLE="font-size: 10pt">contain projections of our future results of operations or of our financial condition; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.4in"><FONT STYLE="font-size: 10pt">&bull;</FONT></TD><TD><FONT STYLE="font-size: 10pt">state other &ldquo;forward-looking&rdquo; information.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe it is important
to communicate our expectations. However, there may be events in the future that we are not able to accurately predict or over
which we have no control. Our actual results and the timing of certain events could differ materially from those anticipated in
these forward-looking statements as a result of certain factors, including those set forth under &ldquo;Risk Factors,&rdquo; &ldquo;Business&rdquo;
and elsewhere in this prospectus. See &ldquo;Risk Factors.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Business Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a specialty
pharmaceutical company focusing on developing new pharmaceuticals products that are safer and more effective than widely prescribed
CNS drugs in large and growing markets. The ongoing advances in science and medicine provide a number of opportunities to apply
known active pharmaceutical ingredients to new uses. We use the unfolding understanding of disease and medicine when we search
for potential therapeutic solutions among prescription pharmaceutical agents that have been used safely in patients for other conditions.
We seek to create new dose and formulation options and that are tailored to the new therapeutic uses for these agents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Many CNS drugs have
been identified by physicians who prescribe drugs for some purpose, but observe unexpected improvements in their patients&rsquo;
CNS conditions. One of our goals is to establish formal clinical study programs to determine if such anecdotal observations are,
in fact, reflections of the compound&rsquo;s ability to treat the CNS condition. While some new applications can use the commercially
available form of the drug, in other cases reformulating the active ingredient may improve the active ingredient&rsquo;s safety
or effectiveness in treating the condition. If the formal development programs are proven successful in the clinical tests, we
will seek marketing approval from the FDA.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are currently devoting
our efforts to the development of two lead product candidates. Our two most advanced programs are new dose formulations of cyclobenzaprine,
which is the active pharmaceutical ingredient of two widely prescribed muscle relaxant products. Due to the well-characterized
history of the main active ingredient, we believe our lead products, referred to herein as TNX-102 and TNX-105, have the potential
to progress through a shorter development pathway than is typical for drug products based on novel active ingredients. We expect
TNX-102 could be approved by FDA after two efficacy studies and a safety exposure study that together would expose the minimum
number of FM patients that satisfy FDA&rsquo;s standards, whereas drug products based on novel active ingredients need exposure
to significantly more study subjects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We also have a pipeline
of other product candidates. For commercial reasons, we do not disclose the identities of the active ingredients or targeted indications
in our pipeline until a U.S. patent has been allowed or issued. Consistent with our mission, these product candidates are or likely
will be reformulations of active ingredients that have been used in humans in other products and which are designed for new CNS
therapeutic indications.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In other cases, the
products will be formulated to match earlier (&ldquo;predicate&rdquo;) products closely enough to be considered generic copies
or similar enough to other medications to rely (in part) on their regulatory review and approval. The predicate product may be
approved by the FDA under an NDA or may have been reviewed for safety and effectiveness by the National Academy of Sciences under
the DESI, in which case they would be considered by FDA to be &ldquo;unapproved products&rdquo;. For DESI products, it is our intent
to develop NDA versions by modernizing the chemistry, manufacturing and controls and to perform new clinical studies to support
an NDA filing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In August 2010, we
formed Krele to commercialize products that are generic versions of predicate NDA products. We anticipate that when our branded
products lose patent protection, Krele may market authorized generic versions of them. Krele also may develop or acquire generic
products approved under ANDAs and we may market branded versions (branded generics) of such products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 7, 2011,
we executed and consummated the Share Exchange Agreement with Tonix Sub. Pursuant to the Share Exchange, each share of Tonix Sub&rsquo;s
common stock was exchanged for 0.9 shares of our common stock, and each share of Tonix Sub&rsquo;s Series A and B preferred stock
was exchanged for 4.8 shares of our common stock. Upon completion of the Share Exchange, the Tonix Sub shareholders, including
holders of 1,396,982 restricted shares, which were subject to accelerated vesting, received in exchange for all of their shares,
an aggregate of 22,666,667 shares of our common stock and our existing stockholders retained 4,000,000 shares of common stock.
The 22,666,667 shares issued to the Tonix Sub shareholders constituted approximately 85% of our 26,666,667 shares of common stock
issued and outstanding after the Share Exchange. Upon completion of the Share Exchange, Tonix Sub became our wholly-owned subsidiary.
For accounting purposes, the acquisition has been treated as a recapitalization of Tonix Sub, accompanied by the issuance of our
common stock for the outstanding common stock of Toxic Sub which was recorded at a nominal value. The historical financial statements
are those of Tonix Sub. The accompanying financial statements give retroactive effect to the recapitalization as if it had occurred
on June 7, 2007 (inception date). Also, professional services expenses were allocated to research and development and general and
administrative expenses in the 2010 and cumulative from inception through December 31, 2011 statement of operations to be consistent
with the current period&rsquo;s presentation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Current Operating Trends</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current research
and development efforts are focused on developing our lead products, TNX-102 and TNX-105. Our research and development expenses
consist of manufacturing studies and the cost of drug ingredients used in such studies, fees paid to providers for conducting various
clinical studies as well as for the analysis of the results of such studies and for other medical research addressing the potential
efficacy of our drugs. We believe that significant investment in product development is a competitive necessity, and we plan to
continue these investments in order to be in a position to realize the potential of our product candidates and proprietary technologies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We plan to start the
next phase of clinical trials for our product candidates TNX-102 and TNX-105 over the next 12 months, subject to raising necessary
funds. Clinical trials can be very expensive. If these and additional necessary clinical trials are successful, we plan to prepare
and submit applications to the FDA for marketing approval for our drug candidates. This process entails significant costs. As a
result of these and other factors, we expect our research and development expenses to increase significantly over the next 12 to
24 months.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect that a larger
percentage of our research and development expenses in the future will be incurred in support of our current and future preclinical
and clinical development programs rather than technology development. These expenditures are subject to numerous uncertainties
relating to timing and cost to completion. We test compounds in numerous preclinical studies for safety, toxicology and efficacy.
At the appropriate time, subject to the approval of regulatory authorities, we expect to conduct early-stage clinical trials for
each drug candidate. We anticipate funding these trials ourselves, and possibly with the assistance of federal grants. As we obtain
results from trials, we may elect to discontinue or delay clinical trials for certain products in order to focus our resources
on more promising products. Completion of clinical trials may take several years, and the length of time generally varies substantially
according to the type, complexity, novelty and intended use of a product candidate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Results of Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Fiscal year Ended December 31, 2011
Compared to Fiscal year Ended December 31, 2010</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I><U>Revenues and
Cost of Goods Sold</U></I>. We had no revenues or cost of goods sold during the fiscal years ended December 31, 2011 and 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I><U>Research and
Development Expenses</U>.</I> Research and development expenses for the fiscal year ended December 31, 2011 were $1,158,167, an
increase of $573,869, or 98.2%, from $584,298 for the fiscal year ended December 31, 2010. In 2011, we incurred $342,398 and $318,616
in clinical cost and activities, respectively, as compared to $0 in 2010 for both.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I><U>General and Administrative
Expenses</U>.</I> General and administrative expenses for the fiscal year ended December 31, 2011 were $2,220,361, an increase
of $875,971, or 65%, from $1,344,390 incurred in the fiscal year ended December 31, 2010. This increase is primarily due to payroll
related expenses and professional services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Payroll related expenses
increased to $731,284 in the current year from $413,954 for the fiscal year ended December 31, 2010, an increase of $317,330, or
77%. Payroll related expenses include both cash and non-cash compensation associated with the vesting of restricted stock grants.
The increase in payroll related costs was a result of a full year of payments to our members of the core management team who joined
in June through August of 2010, along with the acceleration of vesting in conjunction with our reverse merger in 2011 of restricted
stock previously issued to our employees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Professional services
for the fiscal year ended December 31, 2011 totaled $1,121,547, an increase of $440,642, or 65%, over the $680,905 recognized for
the fiscal year ended December 31, 2010. Of professional services, legal fees totaled $373,075 for the fiscal year ended December
31, 2011, an increase of $15,657, or 4.4%, from $357,418 incurred for the fiscal year ended December 31, 2010. Consulting fees
totaled $299,144 for the fiscal year ended December 31, 2011, an increase of $139,903 or 87.9%, from $159,241 for the fiscal year
ended December 31, 2010. The increase was primarily a result of $189,691 in regulatory costs in the fiscal year ended December
31, 2011 compared to $0 in 2010, offset by a reduction in public relations expenses of $45,513. Accounting fees incurred in fiscal
2011 amounted to $243,003, an increase of $145,400, or 149%, from $97,603 incurred in fiscal 2010. The increase included costs
associated with the audit of Tonix Sub&rsquo;s financial statements for the year ended December 31, 2010, review of our interim
financial statements and filings with the SEC related to our recent reverse merger, completed in October 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Travel, meals and entertainment
costs for fiscal 2011 were $69,268, an increase of $34,548, or 100%, from $34,720 incurred in fiscal 2010. Travel, meals and entertainment
costs include travel related to medical and life sciences conferences. Rent for fiscal 2011 totaled $128,228, an increase of $85,657,
or 201%, from $42,571 incurred in fiscal 2010, due primarily to the opening of new office space in New York. Depreciation expense
in fiscal 2011 totaled $9,300, an increase of $5,446, or 141%, over the expense of $3,854 incurred in fiscal 2010, as a result
of the purchase of new office computers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I><U>Interest Expense</U></I>.
Interest expense for the fiscal year ended December 31, 2011 totaled $91,585, an increase of $55,803, or 156%, from $35,782 incurred
during the fiscal year ended December 31, 2010. In 2011, our interest costs were comprised primarily of amortization of deferred
financing costs in conjunction with the issuance of our secured convertible debentures in October 2011. We incurred an aggregate
of $249,543 in deferred financing costs, of which we amortized $53,377 as interest expense for the fiscal year ended December 31,
2011. In addition, we incurred interest expense related to $500,000 of notes payable and our secured convertible debentures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I><U>Net Loss</U></I>.
As a result of the foregoing, net loss for the year ended December 31, 2011 was $3,470,113, compared to a net loss of $1,964,470
for the year ended December 31, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Liquidity and Capital Resources</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December 31,
2011, we had a working capital deficit of $781,723. For the year ended December 31, 2011, we used $2,637,538 of cash in operating
activities. Cash provided by financing activities totaled $2,613,000 from the sale of shares of capital stock of $612,000, issuance
of notes payable of $500,000 and net proceeds of $1,501,000 from issuance of secured convertible debentures. In the comparable
2010 period, $1,342,000 was raised through the sale of shares of capital stock and $50,000 through the issuance of demand notes,
which were converted into shares of capital stock in July 2010. At December 31, 2011, we had cash of $41,123 compared to $65,359
at December 31, 2010. Our cash is held in bank deposit accounts. At December 31, 2011, we had $2,075,000 of secured convertible
debentures outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cash used in operations
for the years ended December 31, 2011 and 2010 was $2,637,538, and $1,233,341, respectively, which represent cash outlays for research
and development and general and administrative expenses in such years. Increase in cash outlays principally resulted from clinical
cost and activities, regulatory cost, payroll and rent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cash generated by investing
activities for the year ended December 31, 2011 was $302, compared to a usage of $94,366 in 2010. In 2011, we received a return
of a security deposit from space vacated in New Jersey and in 2010 we placed $60,000 in a restricted cash account as collateral
for the lease on the New York office. In 2011 and 2010, we purchased office furniture and computer equipment of $2,764 and $34,279,
respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In their report dated
March 30, 2012, our independent registered public accounting firm stated that our financial statements for the year ended December
31, 2011 were prepared assuming that we would continue as a going concern. Our ability to continue as a going concern is an issue
raised due to our net losses and negative cash flows from operations since inception and our expectation that these conditions
will continue for the foreseeable future. In addition, we have both working capital and stockholders' deficiencies at December&nbsp;31,
2011 and require additional financing to fund future operations. Further, we do not have any commercial products available for
sale and have not generated revenues and there is no assurance that if approval of our products is received that we will be able
to generate cash flow to fund operations. In addition, there can be no assurance that our research and development will be successfully
completed or that any product will be approved or commercially viable. Our ability to continue as a going concern is subject to
our ability to obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities,
obtaining loans from various financial institutions or being awarded grants from government agencies, where possible. Our continued
net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove
successful.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect to incur
losses from operations for the foreseeable future. We expect to incur increasing research and development expenses, including expenses
related to additional clinical trials. We expect that our general and administrative expenses will increase in the future as we
expand our business development, add infrastructure and incur additional costs related to being a public company, including incremental
audit fees, investor relations programs and increased professional services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our future capital
requirements will depend on a number of factors, including the progress of our research and development of product candidates,
the timing and outcome of regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending and
enforcing patent claims and other intellectual property rights, the status of competitive products, the availability of financing
and our success in developing markets for our product candidates. We believe our existing cash, together with the net proceeds
of the 2012 Financing, will be sufficient to fund our operating expenses and capital equipment requirements for the next six months.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We presently do not
have any available credit, bank financing or other external sources of liquidity. Due to our history and historical operating losses,
our operations have not been a source of liquidity. We will need to obtain additional capital in order to expand operations and
become profitable. 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, stockholders 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Notes Payable</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On September 9, 2011,
Tonix Sub sold $500,000 principal amount of convertible notes (the &ldquo;Notes&rdquo;) to nine accredited investors. The Notes
were due one year from the date of issuance, bear interest at the rate of 8% per annum and were automatically converted into Debentures
in the 2011 Financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>2011 Private Placement</I> &nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Between October and
November, 2011 we consummated the 2011 Financing pursuant to which we sold $2,075,000 principal amount of Debentures for aggregate
cash proceeds of $1,575,000 and the exchange of $500,000 in previously issued Notes of Tonix Sub that were converted into Debentures
in the principal face amount of $500,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Debentures mature
on the earlier of (i) the one year anniversary of the date of issuance or (ii) the date of a Subsequent Financing. The Debentures
bear interest at 8% per annum and are convertible at the holder&rsquo;s option into a Subsequent Financing. In the event that a
Subsequent Financing has not occurred within 12 months from the date of issuance of the Debenture, the holder has the option to
convert the Debenture into the Conversion Shares. In addition, upon conversion or repayment of the Debenture, the holders were
entitled to receive, at the holder&rsquo;s option, either (i) the Conversion Warrant or (ii) the Incentive Shares. The private
placement that closed in January 2012 met the requirements of a Subsequent Financing, therefore, the holders of the Debentures
elected to receive 275,000 Conversion Warrants and 594,000 Incentive Shares. The Conversion Warrants have three year term and $1.00
exercise price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with
the 2011 Financing, we made cash payments to WFG Investments and Seagate of $40,000 and $14,000, respectively, as commissions and
attorney fees of $20,000. In addition, WFG Investments and Seagate earned an aggregate of 30,750 2011 Agent Warrants, which have
terms similar to the Conversion Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>2012 Private Placement</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Between January and
March, 2012, we consummated the 2012 Financing pursuant to which we issued an aggregate of 264.7106 Units to certain investors
for aggregate cash proceeds of $4,692,765 and the exchange of $1,925,000 in previously issued Debentures that were converted into
Units. The 2012 Financing satisfied the requirements for the Subsequent Financing discussed above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each Unit had a purchase
price of $25,000 per Unit and consisted of twenty five thousand (25,000) shares of our Common Stock, 25,000 Class A Warrants and
25,000 Class B Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Class A Warrants
have an exercise price of $1.25 per share of Common Stock and will be exercisable for a period of five years from the date of issuance.
The Class B Warrants were not exercisable by the Purchasers and would be exercised automatically on their expiration date by cashless
exercise or expire without exercise. In the event that the average of our daily volume weighted average price was below $0.75 during
the Measuring Period, then the holder was entitled to receive additional shares of our Common Stock upon the exercise of the Class
B Warrants on the expiration date, which was the 12th trading day after the Announcement Date. In the event that our average daily
volume weighted average price was at or above $0.75 during the Measuring Period, the Class B Warrants would expire unexercised.
The Announcement Date was the earlier of (1) the date on which we announced via press release the results of the pharmacokinetic
study of our TNX-102 drug formulation; or (2) June 1, 2012.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The number of shares
issuable upon the cashless exercise of the Class B Warrant was equal to the quotient obtained by dividing [(A-B) [((C-A) *D)/ A]]
by (A), where:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(A) = &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the
average of the Company&rsquo;s daily volume weighted average price during the Measuring Period;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(B) =&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$0.01,
which is the exercise price of the Class B Warrant;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(C) = &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$1.00,
which is the purchase price of the Class B Warrant; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(D) = &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the
number of shares of common stock purchased by the Class B Warrant holder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">However, for purposes
of this calculation, in no event was the average of our daily volume weighted average price to be less than $0.50. For example,
in the event that an investor purchased one Unit and the average of our daily volume weighted average price was $0.50, then the
Class B Warrant would have been exercised and the holder would have received 24,500 shares of Common Stock. We issued the press
release with the results of the pharmacokinetic study of our TNX-102 drug formulation on April 5, 2012 and effective April 24,
2012, the Class B Warrants expired unexercised.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with
the Financing, we paid Dawson James a cash payment of $466,777, which represented an 8% commission and a 2% non-accountable expense
allowance of the gross proceeds delivered by investors in the 2012 Financing. In addition, Dawson James earned 466,777 2012 Agent
Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Other</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In August 2011, we
authorized the initiation of formulation work and manufacturing of TNX-102 for clinical trials pursuant to a contract with Lipocine
with respect to a research and development project for reformulation work on our leading products for a fee of $235,000, with work
started in the third quarter of 2011. In July 2011, we entered into a contract with a contract research organization in July 2011
to investigate the feasibility of developing a new, proprietary formulation of cyclobenzaprine at a cost of $58,080. In September
2011, we entered into a contract with Pharmanet Canada for contract research work with respect to the pharmacokinetic study for
TNX-102. The full cost of the work to be performed is $637,231. Payment is due in four installments based on the achievement of
certain performance milestones. In October 2011, we entered into an agreement with another contract research organization to develop,
and perform an exploratory pharmacokinetic study on, a new formulation of cyclobenzaprine for an approximate cost of $180,000.
In December 2011, we entered into an agreement with a public relations firm to provide news media placement and political intelligence
from January 2012 through June 2012 for a total cost of $60,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Transactions with Related Parties</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Dr. Seth Lederman,
our Chief Executive Officer and Chairman of the Board, and Dr. Donald Landry, one of our directors, are the primary founders of
Tonix Sub. We have entered into various transactions with several companies under their control, including L&amp;L Technologies,
Plumbline, Targent Pharmaceuticals, LLC and Lederman &amp; Co. In 2010, we entered into two-year consulting agreements with L&amp;L
Technologies for scientific and medical consulting services, and Lederman &amp; Co. for clinical development, strategic, management
and operational consulting services. In consideration for its services, L&amp;L Technologies receives $96,000 per annum. The consulting
agreement renews automatically for subsequent terms of one year at $96,000 per annum. Lederman &amp; Co. received $250,000 per
annum for its services, until August 1, 2011, when it received $127,000 per annum until such time as we closed on the 2012 Financing.
We first closed on the 2012 Financing in January 2012, and effective February 1, 2012, Lederman &amp; Co. receives $250,000 per
annum for its services. The consulting agreement renews automatically for subsequent terms of one year at $250,000 per annum. Additionally,
on September 9, 2011, L&amp;L Technologies, Targent Pharmaceuticals, LLC and Lederman &amp; Co. purchased $265,000 principal amount
of convertible Notes. Such notes were converted into Debentures on October 7, 2011 and in January 2012 such Debentures were converted
into the 2012 Financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Stock Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 2010, Tonix Sub&rsquo;s
board of directors and stockholders approved the terms and provisions of the 2010 Stock Plan (&quot;2010 Plan&quot;) whereby it
reserved 4,564,641 shares of its common stock for issuance pursuant to the 2010 Plan. The 2010 Plan allowed for grants of options
to purchase shares of common stock and awards of restricted common stock to employees, officers, directors, consultants and advisors
of Tonix Sub. Tonix Sub has granted under the 2010 Plan 2,898,689 shares of restricted stock, 349,082 of which were forfeited and
the remaining 2,549,607 shares vested prior to or on October 7, 2011, the date of Share Exchange after which the 2010 Plan ceased
to exist. Our stock based compensation expenses amounted to $ 435,651 in 2011 and $139,882 in 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In February 2012, we
approved the 2012 Incentive Stock Options Plan (&ldquo;2012 Plan&rdquo;). The 2012 Plan provides for the issuance of options to
purchase up to 4,000,000 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 stockholder that owns 10% or more of our common stock). The fair market value of the common stock determined based on quoted
market price or in absence of such quoted market price, by the Board of Directors in a good faith. Additionally, the vesting period
of the grants under the 2012 Plan should not be more than five years and expiration period not more than ten years. We reserved
4,000,000 shares of our common stock for future issuance under the terms of the 2012 Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Lease Commitments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In September 2010,
we entered into a five-year lease for office space in New York City, with monthly payments escalating from approximately $10,000
in first year to approximately $11,000 in fifth year. The Company received a rent credit of $9,420 in each of the months of November
2010, December 2010 and January 2011. We issued a letter of credit in the amount of approximately $60,000 for the benefit of the
landlord which is collateralized by a money market account. Our future minimum lease payments under the operating lease are as
follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp; <B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Year Ending December 31,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: justify; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 79%; text-align: left">2012</TD><TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">124,370</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">127,889</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">2014</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">131,513</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">2015</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">100,719</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">484,491</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Critical Accounting Policies and Estimates</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our discussion and
analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these
financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses.
We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on assumptions
that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe the following
critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial
statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Research and Development</I>.
Tonix outsources its research and development efforts and expenses related costs as incurred, including the cost of manufacturing
product for testing, licensing fees and costs associated with planning and conducting clinical trials. The value ascribed to patents
and other intellectual property acquired was expensed as research and development costs, as it related to particular research and
development projects and had no alternative future uses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Stock Based Compensation</I>.
All stock-based payments to employees and to nonemployee directors for their services as directors consisted of grants of restricted
stock, 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. Because shares of our common stock have not been publicly traded prior to October 7, 2011, we have valued
our stock by considering events that have occurred since the date of grants, transactions involving the sale of our common stock
to independent third parties and the results of a third party valuation of the projected discounted cash flows of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Income Taxes</I>.
Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit
carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting
amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income
tax assets if it is not more likely than not that these deferred income tax assets will be realized. The Company recognizes a tax
benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial
statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized
upon ultimate settlement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Recent Accounting Pronouncements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There were various
updates recently issued, most of which represented technical corrections to the accounting literature or application to specific
industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations
or cash flows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>BUSINESS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Corporate Structure</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We were incorporated
on November 16, 2007 under the laws of the State of Nevada as Tamandare Explorations Inc. From inception through October 2011,
we were involved in the acquisition, exploration and development of natural resource properties in the State of Nevada. On October
7, 2011 (&ldquo;Closing Date&rdquo; and the closing of the share exchange transaction, the &ldquo;Closing&rdquo;), we executed
and consummated a share exchange agreement by and among Tonix Sub and the stockholders of 100% of the equity securities of Tonix
Sub, including, the holders of 5,207,500 shares of common stock, 1,500,000 shares of Series A Preferred Stock and 2,275,527 shares
of Series B Preferred Stock (the &ldquo;Tonix Shareholders&rdquo;), on the one hand, and us and David Moss (&ldquo;Moss&rdquo;),
our then sole officer and director and majority shareholder, on the other hand (the &ldquo;Share Exchange Agreement&rdquo; and
the transaction, the &ldquo;Share Exchange&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the Share Exchange,
the Tonix Shareholders exchanged their shares of Tonix Sub for newly issued shares of our common stock (&ldquo;Common Stock&rdquo;).
As a result, upon completion of the Share Exchange, Tonix Sub became our wholly-owned subsidiary.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon completion of
the Share Exchange, the Tonix Shareholders received an aggregate of 22,666,667 shares of our Common Stock. Moss returned 1,500,000
shares of Common Stock to us, which were retired, and our existing stockholders retained 4,000,000 shares of Common Stock. The
22,666,667 shares issued to the Tonix Shareholders constituted approximately 85% of our 26,666,667 issued and outstanding shares
of Common Stock post-Closing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of the
Share Exchange, we acquired 100% of the capital stock of Tonix Sub and consequently, control of the business and operations of
Tonix Sub and Krele. From and after the Closing Date of the Share Exchange, our primary operations consist of the business and
operations of Tonix Sub and Krele.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 11, 2011,
we changed our name to Tonix Pharmaceuticals Holding Corp. to reflect our new business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Corporate Background</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 1996, Seth Lederman,
MD, and Donald Landry, MD, PhD, formed L&amp;L Technologies, LLC, (&ldquo;L&amp;L&rdquo;), to develop medications for central nervous
system (&ldquo;CNS&rdquo;) conditions. Dr. Lederman is our Chairman and Chief Executive Officer and Dr. Landry is a Director. L&amp;L
was a founder of Janus Pharmaceuticals, Inc., later renamed Vela Pharmaceuticals, Inc., (&ldquo;Vela&rdquo;), which developed various
therapeutics, including a very low dose, or VLD, version of cyclobenzaprine, under an agreement with L&amp;L. Vela decided to focus
its resources on other programs and transferred the rights in VLD cyclobenzaprine and certain other technologies to L&amp;L in
March 2006.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Tonix Sub formed in
June 2007 as Krele Pharmaceuticals, Inc. by L&amp;L and Krele Pharmaceuticals, LLC (now known as Plumbline LLC) (&ldquo;Plumbline&rdquo;).
Dr. Lederman is managing partner of Plumbline. Plumbline possessed rights to certain technology for the treatment of alcohol dependence
and abuse. In connection with founding Tonix Sub, L&amp;L and Plumbline entered into an intellectual property transfer and assignment
agreement with Tonix Sub for the purpose of assigning patents and transferring intellectual property and know-how in exchange for
shares of common stock of Tonix Sub. As a result of economic conditions related to the financial crisis of 2007 and 2008, Tonix
Sub was not successful in raising money to fund its programs until 2009. As a result, Tonix Sub was unable to advance the development
programs and had little activity except for prosecuting and maintaining patents and maintaining contracts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 2009, Tonix Sub
contracted with the Toronto Psychiatric Research Foundation to analyze the sleep data from the 2001 Phase 2a study of 36 patients
with fibromyalgia syndrome, or FM (the &ldquo;Moldofsky Study&rdquo;), who were treated with bedtime VLD cyclobenzaprine or placebo.
The Moldofsky Study was conducted in Canada by the Toronto Psychiatric Research Foundation, and Tonix Sub obtained the data from
this study from L&amp;L. In addition, in 2009, Tonix Sub contracted with Caliper Life Sciences (formerly, NovaScreen Bioscience
Corp.) (&ldquo;Caliper&rdquo;) to analyze the interactions of cyclobenzaprine with certain receptors. In June 2010, Tonix Sub entered
into consulting agreements with L&amp;L and Lederman &amp; Co, LLC (&ldquo;Lederman &amp; Co&rdquo;) and also acquired certain
rights to develop isometheptene mucate as a treatment for certain types of headaches from Lederman &amp; Co., which we are developing
as TNX-201. Dr. Lederman is managing partner of Lederman &amp; Co. Between June 2010 and October 2011, Tonix Sub was active in
recruiting new officers and directors and started dosing normal healthy volunteers for the pharmacokinetic trial for TNX-102.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Lederman &amp; Co predominantly
provides us with clinical development expertise. L&amp;L predominantly provides us with scientific development expertise. Relative
to traditional pharmaceutical development companies, we can be considered a virtual company, since we contract with third-party
vendors to provide many functions that are core to traditional pharmaceutical companies. For example, we have contracted with PharmaNet
Canada, Inc., or PharmaNet Canada, to develop methods for analyzing cyclobenzaprine in the blood and to conduct a human clinical
study to evaluate the performance of our formulation technology. Lederman &amp; Co is responsible for overseeing the scientific
and technical aspects of PharmaNet&rsquo;s contract work product.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In July 2010, Tonix
Sub changed its name to Tonix Pharmaceuticals, Inc. In August 2010, Tonix Sub formed Krele.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Business Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a specialty
pharmaceutical company focused on developing new pharmaceutical products for CNS conditions that may be safer and more effective
than currently available treatments. We use ongoing advances in science and medicine to search for potential therapeutic solutions
among already existing prescription pharmaceutical agents that have been successfully used in patients for other conditions. We
create new dose formulations for these agents with the intent to developing products that are optimized for the new therapeutic
uses or indications that we target. Our projects are in the development phase, and we currently do not market any products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The process of taking
a new drug formulation from concept through testing to approval for a new indication by the U.S. Food and Drug Administration (&ldquo;FDA&rdquo;)
is a time-consuming, costly and high-risk process. Once a drug formulation has been tested in laboratories, we need to conduct
clinical trials of the product candidate to test its uptake into the blood stream, elimination, effectiveness and safety. Neither
laboratory nor animal studies predict the properties of drugs in humans, so designing new formulations can result in a large number
of unpredictable outcomes. The first set of clinical trials, which are sometimes referred to as Phase 1 studies, are performed
by administering new drug formulations to a limited number of healthy human volunteers and are designed to test the initial concept
of the drug formulation and to determine the correct dosage to be tested subsequently on patients affected with the target disorder.
The initial Phase 1 studies can take up to a year to complete, however, since we reformulate versions of approved drugs for new
uses, we may need to devote less time to Phase I studies since our testing is informed by significant prior human research that
we believe allows us to reduce the possible outcomes. The next step in the process is to conduct a larger study in which the new
drug formulation is administered to human patients affected with the targeted disorder, which can be referred to as a first pivotal
study, a Phase 2b study or a Phase 3 study. The first pivotal study for a condition like FM typically takes a year to complete
and then several more months to interpret the data. If the first pivotal study proves the drug is effective and safe, then a second
pivotal study is conducted, which can also be referred to as a Phase 3 study. The second pivotal study for a condition like FM
would typically take 18 months to complete. After the second pivotal study is completed, and if the results are deemed a success,
we would then submit an application to the FDA seeking approval of the new drug product. This application is called a New Drug
Application, or NDA. We believe it would take approximately three months to file the FDA application and another 14 months for
FDA approval. The drug could be marketed shortly after FDA approval. Therefore, it typically takes more than five years to bring
a new formulation of a drug to market for a new indication, and any delays in the process, such as lack of capital necessary to
run clinical trials, unexpected results, adverse effects, or difficulty in recruiting willing subjects for trials, would result
in additional time before a drug could be available for sale.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our lead product candidate,
TNX-102, is a new optimized dosage form of cyclobenzaprine. TNX-102 is being developed for the management of FM. FM is a CNS condition
that is characterized by diffuse musculoskeletal pain, increased pain sensitivity, fatigue and disturbed sleep. Cyclobenzaprine
is the active pharmaceutical ingredient of two FDA approved and widely prescribed muscle relaxant products: Flexeril&reg;, an immediate-release
form, marketed by the McNeil Specialty Pharmaceuticals division of Johnson &amp; Johnson, and Amrix&reg;, a controlled release
form marketed by Cephalon. Generic copies of Flexeril (cyclobenzaprine in the immediate-release form) are available and many patients
receive a generic when their physician prescribes Flexeril. Likewise, generic copies of Amrix are also available. According to
a study conducted by Frost &amp; Sullivan on our behalf relating to the FM market in the United States (&ldquo;Frost and Sullivan&rdquo;),
the immediate-release dose form of cyclobenzaprine is widely used off-label to treat FM. We are working to optimize the dose and
formulation of TNX-102 to treat FM safely and effectively. We plan to subject TNX-102 to the strict testing required for FDA approval,
which we believe will take at least four years and significant clinical studies. We have conducted an initial study of TNX-102
and a comparative pharmacokinetic and bioavailability study. If TNX-102 is ultimately approved by the FDA for the management of
FM, we believe it will be adopted by physicians and reimbursed by managed care companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our other leading product
candidate, TNX-105, which we are also developing, is a new dose form of cyclobenzaprine to treat symptoms of post-traumatic stress
disorder, or PTSD. PTSD is a psychiatric disorder that begins in the aftermath of traumatic experiences. Sleep disturbances, including
nightmares and insomnia, are core features of PTSD and are included in two of the three main symptom clusters. Patients with PTSD
may have any single or combination of symptoms that include re-experiencing, emotional numbing and avoidance, and hyperarousal
reactions that persist for more than one month after the traumatic event. PTSD shares several features with FM, and some patients
are believed to suffer from both PTSD and FM.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cyclobenzaprine is
the active pharmaceutical ingredient in each of our lead product candidates. We are utilizing drug delivery technology to produce
new formulations. In addition to cyclobenzaprine, each formulation of TNX-102 and TNX-105 will contain inactive ingredients, called
excipients that are well-characterized and have been FDA approved previously in other products. As a result, we anticipate seeking
FDA marketing approval of our lead product candidates, TNX-102 and TNX-105, through the NDA process under Section 505(b)(2) of
the U.S. Federal Food, Drug and Cosmetic Act, or the FFDCA, which we also refer to as Section 505(b)(2). This process permits the
FDA to make some safety and effectiveness determinations through review of materials in the public domain or in already approved
NDAs of products containing cyclobenzaprine. This approach would spare us some of the burden of generating all of this data for
ourselves and may allow our lead product candidates to progress through a shorter development pathway than is typical for pharmaceutical
products based on novel active ingredients. We have not filed an NDA for either of our lead product candidates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We also have a pipeline
of several other product candidates that we are constantly evaluating. For example, we are developing TNX-201, which is a treatment
for certain types of headaches and TNX-301, which is a potential treatment for alcohol dependence and addiction. For commercial
reasons, we normally do not disclose the identities of the active ingredients or targeted indications of products in our pipeline
until a U.S. patent has been allowed. Consistent with our mission, these product candidates are, or likely will be, reformulations
of active ingredients that have been used by patients in other FDA-approved products. We anticipate that some of our other pipeline
products will be submitted to the FDA for approval under Section 505(b)(2). In other cases, we expect that the products will be
formulated to match earlier predicate products closely enough to rely, in part, on their regulatory review and status. There may
be instances where the predicate product is a medicine that was reviewed for safety and effectiveness by the National Academy of
Sciences under the Drug Evaluation and Safety Initiative, or DESI, and would be considered by the FDA to be an &ldquo;unapproved
product.&rdquo; For DESI products, it is our intent also to develop NDA versions by modernizing the chemistry, manufacturing and
controls and to perform new clinical studies to support an NDA filing under Section 505(b)(2).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because of our size
and being in the development stage, we do not currently devote a significant amount of time or resources towards our other pipeline
candidates. We anticipate that sometime in 2012 we will begin developing formulations for TNX-201 and possibly TNX-301, but do
not expect to start clinical trials until 2013 at the earliest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Krele&rsquo;s mission
is to commercialize products that are generic versions of predicate NDA products or existing marketed products that it may acquire
from other pharmaceutical companies. We expect that Tonix Sub&rsquo;s relationship to Krele will be similar to that of several
other pharmaceutical companies and their subsidiaries that market generic versions of the parent&rsquo;s branded products at different
periods in their product life-cycle. We anticipate that when one of our branded products loses patent protection, Krele may market
generic versions of it. In such instances, Krele&rsquo;s product would be an &ldquo;authorized generic&rdquo; and would rely on
our NDA. Krele may also develop or acquire generic products approved under Abbreviated New Drug Applications (&ldquo;ANDAs&rdquo;).
For ANDAs, the predicate product is a medicine approved by the U.S. Food and Drug Administration (the &ldquo;FDA&rdquo;) under
an NDA. Tonix Sub may market branded versions of such products that rely on Krele&rsquo;s ANDAs which would be referred to as branded
generics. We do not currently market any products and have only begun the process of obtaining state licenses, which are legally
required before a company can manufacture, distribute and market prescription medications. Krele has been issued a state license
in New York.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Our Strategy</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our objective is to
develop and commercialize our product candidates to treat CNS conditions, including FM and PTSD. The principal components of our
strategy to achieve this objective are to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>pursue development and regulatory approval pathways by reformulating versions of approved drugs for new uses and by using the
Section 505(b)(2) pathway for FDA approval;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>adopt a two-pronged patent strategy by seeking methods of use patents for the active ingredients in our products and by seeking
protection for the formulation technology employed in our products;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>provide clear value propositions to third-party payers, such as managed care companies or government programs like Medicare,
to merit reimbursement for our product candidates; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>enter into collaborations with other pharmaceutical companies with respect to, among others, our FM and PTSD product candidates
and other products that will benefit from development or marketing resources beyond those in our Company.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Pursue development
and regulatory approval pathways</I>. We believe our lead product candidates may be approvable under pathways that are potentially
shorter than those typically available for drug products based on novel active ingredients. By focusing on developing new formulations
of approved drugs for new uses, we believe that we will be able to use the Section 505(b)(2) pathway for FDA approval. This pathway
can reduce the time and expense required for our development programs by allowing our use of previously-generated safety and efficacy
information regarding the active pharmaceutical ingredients in our lead product candidates to support the filing and approval of
our NDA application. Doing so may help reduce the size and scope of our preclinical and clinical trials. The FDA has strict requirements
on the marketing of drugs, and FDA approves each drug for specific uses which are called the label indications. The use of a drug
product for the treatment of a condition other than one of its approved label indications is called off-label use. The development
of an existing FDA-approved drug for the treatment of a condition other than one of its approved label indications is considered
a &ldquo;new use&rdquo;. For companies involved in the ethical development and marketing of prescription drugs in the US, FDA approval
of a new use or new label indication is the only legal basis of marketing claims. Off-label use is not recognized by the FDA or
FDA-regulated companies as a new use.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Adopt a two-pronged
patent strategy.</I> We are pursuing a two-pronged patent strategy by seeking intellectual property protection for our methods
of use for certain known active pharmaceutical ingredients and by seeking patents to protect the formulation technologies we employ.
With respect to the methods of use patents, we believe the therapeutic uses we target are new uses for these active ingredients
and we have been issued patents directed to certain aspects of our new uses. We are seeking additional patents to cover other new
uses. For example, the invention of bedtime VLD cyclobenzaprine as a treatment for FM was novel and unexpected when our patents
were filed in 2000. With respect to formulation patents, we believe our products will be protected by patents that describe inventions
of technology for making new formulations and possibly also by patents that describe the invention of products that achieve novel
and useful blood levels at certain times after administration.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Provide clear value
propositions to third-party payors to merit reimbursement for our product candidates</I>. We are designing our clinical development
programs to demonstrate compelling competitive advantages to patients and prescribers and also to demonstrate value propositions
to third-party payors. We believe TNX-102 might help in the management of FM by reducing pain and other symptoms, such as fatigue.
In addition, we believe that bedtime treatment with TNX-102 will have fewer day time side-effects than off-label bedtime treatment
with immediate release cyclobenzaprine. For FM, we believe an FDA-approved product would capture some of the off-label use of generic
cyclobenzaprine. Because FDA approvals are based on objective data, we believe that third-party payors will provide reimbursement
for an FDA approved product, even at a premium price relative to other drugs that are used off-label, such as immediate-release
cyclobenzaprine, tizanidine, baclofen, carisoprodol or metaxalone. For example, third-party payors reimburse for using FDA approved
Lyrica&reg; and Cymbalta&reg; for fibromyalgia over off-label generic versions of Neurontin&reg; (gabapentin) and generic anti-depressants,
respectively.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Enter into collaborations
to maximize the value of our technology</I>. We believe certain of our drug development candidates, including TNX-102 and TNX-105,
can be developed and marketed more effectively by companies that already have significant drug development and marketing capabilities.
We will seek to enter into collaborations with pharmaceutical or biotechnology companies for the commercialization of these product
candidates at the times we believe most effective.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Our Lead Product Candidates</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our lead product candidates
are TNX-102, for the treatment of FM and TNX-105 for the treatment of PTSD. Both of these consist of cyclobenzaprine in a mixture
of inactive ingredients that are called &ldquo;excipients&rdquo;, which we believe will improve the absorption rate of cyclobenzaprine
in ways that will optimize the product for bedtime treatment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Cyclobenzaprine</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cyclobenzaprine was
first synthesized in 1961 by Merck, and the 10 mg Flexeril immediate-release dose form was FDA approved in 1977 for the relief
of muscle spasm associated with acute, painful musculoskeletal conditions as an adjunct to rest and physical therapy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although a number of
clinical studies have addressed the potential use and benefit of cyclobenzaprine in treating symptoms of FM, to our knowledge these
studies have not motivated a sponsor to pursue FDA approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Based on cyclobenzaprine&rsquo;s
safety and efficacy for treating muscle spasm, in the 1990s, Merck conducted studies to support an application to market a 5 mg
Flexeril tablet (low dose) for the over-the-counter, or OTC, market, where patients can purchase medicine without a physician&rsquo;s
prescription. Although Merck&rsquo;s studies re-affirmed the safety and demonstrated efficacy of 5 mg Flexeril in several large
trials, the OTC division of the FDA rejected the application for use without a prescription, apparently, we believe, because muscle
spasm was deemed a condition that required a physician to diagnose and supervise treatment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Merck divested the
Flexeril franchise to Alza Pharmaceuticals, or Alza. Alza subsequently was acquired by Johnson and Johnson and Flexeril is part
of their McNeil Specialty Pharmaceuticals division. Based largely on the Merck studies, McNeil won approval of Flexeril 5 mg tablets
as a prescription medicine to treat muscle spasm. McNeil promoted Flexeril 5 mg tablets for the three year period of market exclusivity
based on The Drug Price Competition and Patent Term Restoration Act of 1984, generally referred to as the Hatch-Waxman Act. Following
this exclusivity period, several generics entered the market and took market share from Flexeril. McNeil continues to manufacture
Flexeril, but we believe McNeil no longer actively promotes it.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Despite the approved
uses of cyclobenzaprine in treating muscle spasm, we believe current marketed formulations of cyclobenzaprine are limited for treating
FM by unpredictable absorption. As described in the Flexeril package insert, the amount of cyclobenzaprine absorbed into the bloodstream
varies between 33-55% of the dose ingested. The variability in absorption may be due to several factors, including effects of the
stomach pH (acidity or base) on the dissolution of the tablets, as well as the context of either an empty stomach or a recent meal.
Food in the stomach and small intestine from a recent meal contributes to variability in absorbing other drugs. The uncertainties
in absorption rates make it challenging for a physician contemplating a bedtime treatment for FM to ensure the intended therapeutic
effect is achieved without risking side effects like next-day drowsiness, which could result if the patient has too much cyclobenzaprine
remaining in the bloodstream the next day.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If a product could
deliver a predictable absorption rate of cyclobenzaprine, it would mean patients would be less likely to receive too little drug
to receive a therapeutic effect. Conversely, patients would be less likely to be over-dosed, which might lead to potential side
effects, including next-day drowsiness. An optimal VLD cyclobenzaprine product could have faster absorption, faster clearance and
more predictable effects than the immediate release tablet format. We are testing a number of technologies to optimize the properties
of TNX-102 for FM and TNX-105 for PTSD. One of the technologies we are testing is a novel gelatin capsule (gelcap) that employs
a proprietary mixture of lipids with cyclobenzaprine. The proprietary lipid mixture is designed to increase predictability of absorption
of cyclobenzaprine from the gastrointestinal tract into the bloodstream. This formulation is expected to result in increased dosage
precision. However, the science of formulating drugs is not sufficiently advanced to predict the performance of the new gelcaps
or other formulation technologies in humans. We will only learn the extent of our product&rsquo;s advantageous properties when
we conclude testing of TNX-102 in human subjects and the analysis of the data collected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>TNX-102 in Fibromyalgia Syndrome</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">TNX-102, our most advanced
product candidate, is a bedtime pill containing VLD cyclobenzaprine (2.4 mg). The development of TNX-102 is supported by the results
of the Moldofsky Study of VLD cyclobenzaprine in FM patients. A version of TNX-102 has been manufactured in small quantities for
use in human clinical trials. Based on our formulation of TNX-102, we are testing whether it will provide more predictable effects
and decreased risk of next-day drowsiness than commercially available immediate-release cyclobenzaprine tablets. We are testing
a variety of technologies for faster and more efficient absorption relative to currently marketed cyclobenzaprine products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">FM is diagnosed by
groups of symptoms that have been defined by committees of the American College of Rheumatology, or ACR, and a committee of experts
from the organization Outcome Measures in Rheumatology. In 2007, Pfizer&rsquo;s Lyrica (pregabalin) became the first medicine approved
by the FDA for the management of FM. In 2008, Eli Lilly&rsquo;s Cymbalta (duloxetine) became the second medicine approved by the
FDA for the management of FM. In 2009, Savella&reg; (milnacipran) was the third medicine approved by the FDA for the management
of FM. Savella is marketed by Forest Laboratories.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Product Development Path</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Phase 2a Pilot Data in FM Patients</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our motivation to focus
our efforts on developing TNX-102 for FM stems from the results of a clinical study on 36 patients in 2001, the related rights
to which we acquired from L&amp;L. Specifically, this study was a randomized, double-blind, placebo-controlled, dose-escalating
eight week trial conducted at two study centers. The study subjects met ACR criteria for FM.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Patients received VLD
cyclobenzaprine immediate-release 1 mg capsules or corresponding placebo capsules to ingest after dinner and before bedtime. Initially,
patients took one capsule each evening, but over the course of the study, they were allowed to increase the number of tablets taken
in increments of one capsule per week. The maximum number of capsules allowed was four per evening, which would be a total dose
of 4 mg immediate-release cyclobenzaprine.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Patients treated with
VLD cyclobenzaprine demonstrated significant improvements in pain, fatigue and tenderness at week 8 relative to baseline whereas,
placebo-treated patients did not improve (Figure 1). Although this study excluded patients who met formal criteria for major depressive
disorder or any anxiety disorder, there is a high degree of co-existing symptoms of depression and anxiety associated with FM.
VLD cyclobenzaprine treatment resulted in significant reductions in total Hospital Anxiety and Depression Scale, or HAD, which
measures symptoms of anxiety and depression, and the HAD depression subscale which measures depressive symptoms (Figure 1).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="pg49.jpg"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This study showed treatment
with VLD cyclobenzaprine:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>provided benefit in core symptoms of FM, including pain and fatigue;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>improved mood, by demonstrating a significant decrease in HAD scores; and</TD></TR></TABLE>

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<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>was well tolerated, with no serious adverse events, or SAEs, or discontinuations due to adverse events, or AEs.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Pharmacokinetic Study</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have conducted a
human clinical study being conducted by a contract research organization, or CRO, under an US Investigational New Drug Application,
or IND, and a Canadian Clinical Trial Application. We received FDA and Health Canada clearance for this study, which was conducted
in Canada. This study was designed to measure the circulating blood levels of cyclobenzaprine after oral administration of TNX-102,
the first candidate gelcap formulation containing low-dose cyclobenzaprine, in a fed or fasting state, and determine how they compare
to the blood levels resulting from oral administration of the currently marketed, immediate-release cyclobenzaprine product in
a fasting state. Studies that measure the blood levels of drugs over time are called &ldquo;pharmacokinetic studies&rdquo;. This
study enrolled approximately 30 healthy adult volunteers. Each subject received each of the trial doses and conditions in a random
order, in what is called a crossover study design. The crossover design allows the assessment of the variability of drug blood
levels over time in the same people during each phase. We selected PharmaNet Canada to conduct this pharmacokinetic study. The
clinical portion of this study was completed by the end of 2011</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We announced the results
of the plasma levels of cyclobenzaprine on April 5, 2012. Both TNX-102 2.4 mg promicellar gelcaps and cyclobenzaprine 5 mg immediate
release tablets (&ldquo;tablet&rdquo;) were well-tolerated. There were no serious adverse events, which was consistent with our
expectations and the fact that cyclobenzaprine is a widely-used generic treatment for muscle spasm.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The new formulation
preserved fundamental properties of the tablet including the rate of absorption and elimination of cyclobenzaprine. Absorption
was measured by the time to peak plasma concentration, or <FONT STYLE="color: black">T<SUB>max</SUB></FONT>, and elimination was
measured by the half-life, or <FONT STYLE="color: black">T<SUB>&frac12;</SUB>. The finding that the </FONT>TNX-102 2.4 mg promicellar
<FONT STYLE="color: black">gelcap formulation did not change the T<SUB>max</SUB></FONT>, or the <FONT STYLE="color: black">T<SUB>&frac12;
</SUB>of cyclobenzaprine delivered by the </FONT>5 mg immediate release tablets suggests that the new formulation will maintain
clinical effects of immediate release cyclobenzaprine.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">When compared to the
generic cyclobenzaprine 5 mg immediate release tablet administered under fasting conditions, the TNX-102 2.4 mg promicellar gelcap
has a lower extent and rate of absorption, as measured by the &ldquo;area under the curve&rdquo; or &ldquo;AUC&rdquo; of the time
and concentration data and also by the maximum concentration or C<SUB>max</SUB>. <FONT STYLE="color: black">The finding demonstrates
that the T</FONT>NX-102 2.4 mg promicellar gelcap is clearly differentiated and not bioequivalent to the generic cyclobenzaprine
5 mg immediate release tablet, and suggests that a commercial product based on the new formulation would be protected from substitution
by pharmacists for generic cyclobenzaprine.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="color: black">The
difference in blood levels supports the idea that the </FONT>TNX-102 2.4 mg promicellar gelcap could be the basis for a differentiated
product that could provide the kind of benefit observed with very low dose cyclobenzaprine in the Company&rsquo;s Phase 2a study.
This research was published in <I>The Journal of Rheumatology</I>, entitled &ldquo;Effects of Bedtime Very Low Dose (VLD) Cyclobenzaprine
(CBP) on Symptoms and Sleep Physiology in Patients with Fibromyalgia Syndrome (FM): A Double-blind, Randomized, Placebo-controlled
Study,&rdquo; authored by Dr. Harvey Moldofsky, Dr. Herbert Harris, Terence Kwong, W. Tad Archambault, Ph.D. and Dr. Seth Lederman
and the citation is J Rheumatol. 2011 Dec;38(12):2653-63. PMID: 21885490.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No food effect was
observed in the comparison of TNX-102 2.4 mg promicellar gelcaps between fed and fasting states, indicating this formulation provides
dosing precision. We plan at least one additional pharmacokinetic study before selecting a final commercial formulation that will
be tested for efficacy on FM patients in a pivotal or Phase 2b clinical trial starting in the first quarter of 2013. <FONT STYLE="color: black">The
study results support further development of </FONT>TNX-102 as a product that can potentially deliver benefits similar to those
observed in FM patients treated with very low dose cyclobenzaprine in our dose-escalating Phase 2a study.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Prospective Phase 2b Study</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect to advance
the clinical development of TNX-102 for the management of FM by conducting a larger Phase 2b placebo-controlled study. Utilizing
our proprietary formulation, we will seek to replicate and expand upon the efficacy and safety findings of our Moldofsky Study
by administering the commercial form of TNX-102 or placebo to approximately 300 FM patients for twelve weeks. We expect that our
proposed Phase 2b will be one of the two clinical efficacy trials required for FDA approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect the outcome
measures for efficacy in this study will be similar to those utilized by drug products currently approved for use in FM. Specific
efficacy outcome measures will include the Brief Pain Inventory, the Patient Global Impression of Change (PGIC) and the Fibromyalgia
Impact Questionnaire (FIQ). Additional outcome measures for this trial will be carefully planned to further our exploration of
treatment effects in important areas such as sleep, fatigue, mood, sexual function and quality of life. We will seek FDA concurrence
on the study design and expect to engage a CRO to conduct this study on our behalf. We expect the study will begin enrollment in
the first quarter of 2013 and will be completed in the first quarter of 2014. We anticipate this study will cost approximately
$15 million, which includes the cost of manufacturing TNX-102 and placebo.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Prospective Multi-dose Pharmacokinetic
Study</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since cyclobenzaprine
will be used chronically in TNX-102, we will study TNX-102 in comparison to immediate-release cyclobenzaprine in multiple day dosing
(once daily). Subjects will ingest TNX-102 or immediate-release cyclobenzaprine for four or more days. Peak and trough blood levels
of cyclobenzaprine will be measured. The results of this study will provide information regarding blood levels of cyclobenzaprine
when taken in a multiple day regimen.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Prospective Study Comparing Side-effects
of TNX-102 with Immediate-Release Cyclobenzaprine</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We plan to conduct
a small study designed to compare the bedtime use of TNX-102 and immediate-release cyclobenzaprine on next morning drowsiness.
The goal of this study is to determine the potential benefit of TNX-102 compared with immediate-release cyclobenzaprine on next
morning drowsiness.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Prospective Phase 3 Study</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If our Phase 2b study
is successful, then we expect to conduct a Phase 3 study in support of product registration. At this time, we plan to conduct one
large scale, randomized, double-blind, placebo-controlled Phase 3 study in which patients with FM will receive TNX-102 or placebo
for six months. It is likely that the outcome measures for efficacy in this study will be similar to those used in the Phase 2b
study. Other outcome measures will be carefully considered to best support desired label claims and optimal marketing message for
product differentiation. We expect that at least 300 FM patients will be enrolled in this trial.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Safety Exposure Study</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To study the safety
of our product in chronic use, we expect to conduct an open label study in which approximately 300 FM subjects would receive TNX-102
for up to one year. Together with our other studies, we believe this safety exposure study will support the FDA and international
regulatory requirements to provide data for at least 300 subjects treated with TNX-102 for six months and at least 100 subjects
treated for 1 year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Regulatory Strategy</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The approvals of Lyrica,
Cymbalta and Savella establish a regulatory approval standard for management of FM. However, given the heterogeneity of patients
with this disease, it may not prove to be the only pathway or approval requirement. Prior to meeting with the FDA for an End-of-Phase
2 (EOP2) meeting, we plan to strategically assess the regulatory environment and further evaluate our Phase 2 results in order
to determine the optimal design of phase 3 clinical program. The phase 3 study design will be discussed with the FDA at the EOP2
meeting to receive regulatory acceptance for a differentiated product for the management of FM.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We hope to register
TNX-102 with the FDA through the provisions of Section 505(b)(2). This regulatory pathway may help to accelerate product development
and reduce overall business risk. The 505(b)(2)-based product development plan for TNX-102 is designed to leverage the safety data
that has been generated by other manufacturers for cyclobenzaprine-containing products and accepted by the FDA in support of their
product registration. TNX-102 contains significantly less active cyclobenzaprine than other marketed products. We believe that
the safety data package from these products will provide adequate safety margin to support TNX-102 development.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 11, 2011,
we had a pre-IND meeting with the Division of Anesthesia, Analgesia and Addiction Products within the Center for Drug Evaluation
and Research at the FDA to discuss the IND and NDA requirement&nbsp;of TNX-102 for the management&nbsp;of FM. Based on the meeting
outcome, we successfully filed an IND application on October 10, 2011, which received FDA clearance on our IND study on November
10, 2011.&nbsp; The planned IND study is conducted in Canada under&nbsp;a&nbsp;Canadian Clinical Trial Application filed October
7, 2011, which received &ldquo;No Objection Letter&rdquo; on November 7, 2011. We will continue working with the FDA to seek guidance
and agreement on the TNX-102 development program, specifically the necessary data to support the 505(b)(2) NDA regulatory pathway.&nbsp;
As FDA indicated at the pre-IND meeting,&nbsp;the clinical trials in our development plan, if successful, will provide efficacy
and safety data sufficient to support an NDA filing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If NDA approval is
granted for TNX-102, in addition to the 3-year marketing exclusivity granted, TNX-102 is expected to be covered under patents that
extend through at least 2021, during which time it should not be subject to generic substitution. We plan to continue to support
the TNX-102 program with new patent applications as we obtain data from the clinical evaluation of our new formulation in healthy
human subjects and FM patients.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>TNX-105 in Post-traumatic Stress
Disorder</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">TNX-105, our second
most advanced product candidate, is another pill formulation of cyclobenzaprine to be taken at bedtime for PTSD, a psychiatric
disorder that begins in the aftermath of traumatic experiences. We have not yet conducted any clinical trials on PTSD patients.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Parallels Between FM and PTSD</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A number of parallels
have been noted between FM and PTSD. In addition, symptom overlaps may exist between patients diagnosed with FM or PTSD. In a survey
of males with PTSD or major depression (Amital, Fostick et al, Posttraumatic stress disorder, tenderness, and fibromyalgia syndrome:
are they different entities? J. Psychosom Res 2006. 61(5):663-9.2006), 49% of PTSD patients met the ACR criteria for FM compared
to 5% of major depression patients. Conversely, in a different survey of FM patients (Cohen, Neumann et al., Prevalence of post-traumatic
stress disorder in fibromyalgia patients: overlapping syndromes or post-traumatic fibromyalgia syndrome? Semin Arthritis Rheum
2002. 32(1):38-50), 57% of the sample had symptoms associated with PTSD.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Emerging Market Opportunity</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The selective serotonin
reuptake inhibitors Paxil&reg; (paroxetine) and Zoloft&reg; (sertraline) are FDA approved for PTSD, but are not satisfactory treatments
for many patients. Other drugs that show promise for the treatment of PTSD, but are not FDA approved, include antidepressants such
as nefazodone, mirtazapine and trazodone; the antihistamine cyproheptadine; certain atypical antipsychotics such as olanzapine
and risperidone; and an adrenergic alpha-1 receptor blocker, prazosin. Prazosin may decrease nightmares and insomnia and has been
associated with improvements in daytime PTSD symptoms, depression, and quality of life.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our rationale for studying
the effects of cyclobenzaprine in PTSD derives from the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>our clinical studies that very low dose cyclobenzaprine improves FM symptoms, a disorder having significant overlap with PTSD;
and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>in studies conducted by Caliper, cyclobenzaprine interacts with a receptor on brain cells called the serotonin type 2a receptor.
Based on numerous peer-reviewed scientific publications, we have identified a number of compounds that bind this receptor that
have been shown to have effects in treating PTSD. Therefore, it is our belief that cyclobenzaprine, because it binds to the serotonin
type 2a receptor, will have a therapeutic effect in treating PTSD like other compounds that bind to it.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 2009, we engaged
Caliper to learn which receptors in the brain bind cyclobenzaprine. Caliper measures the interactions of receptors with active
pharmaceutical ingredients and has built a proprietary database. Arthur Weissman, PhD is Vice President and Chief Scientific Officer
at Caliper and supervised the receptor study. Dr. Weissman holds a M.S. degree in Physiology, a Ph.D. degree in Neuroscience, has
over 25 years of scientific research and has authored (or co-authored) over 20 peer-reviewed scientific publications. The receptor
studies were conducted at Caliper&rsquo;s facilities. Caliper is constantly conducting receptor studies to expand and refine its
database, so the date of each individual receptor-drug analysis is different. Caliper provided us proprietary data from their database,
which showed cyclobenzaprine binds to the serotonin type 2a receptor.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Product Development Path</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Prospective Phase 2a and 2b Studies</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We anticipate that
the dose for treatment of PTSD symptoms may be higher than that of TNX-102 for FM. We plan to utilize the data obtained from the
pharmacokinetic study of TNX-102 to design a Phase 2a study for TNX-105. We expect that this study will employ the same formulation
technology used for FM, but will be dosed with multiple pills to explore a dose range for efficacy and tolerability in PTSD. The
estimated treatment period will be six to eight weeks in duration.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As part of our contemplated
Phase 2a study, we plan to assess the appropriateness of a number of clinical outcomes for use as primary and secondary measures.
The PTSD clinical study measures used for further development work must provide adequate specificity and sensitivity to measure
the potential effects of cyclobenzaprine. In our Phase 2a study, we anticipate that we will study TNX-105 in less than 50 subjects
with combat-related and/or civilian PTSD. We expect to engage a CRO to conduct this study on our behalf.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">After exploring the
clinical utility and dose range in a Phase 2a study, we intend to advance the clinical development of TNX-105 for the treatment
of PTSD by conducting a larger randomized, double-blind, placebo-controlled study in Phase 2b. The treatment period is estimated
to be eight to twelve weeks in duration. We will seek to replicate and expand upon the efficacy and safety findings of the Phase
2a study in a larger population of PTSD patients. In our Phase 2b study, we anticipate that we will study the drug in 100 to 150
subjects with combat-related and civilian PTSD. We expect to engage a CRO to conduct this study on our behalf.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Prospective Phase 3 Study</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If our Phase 2b study
is successful, we expect to conduct a Phase 3 program in support of an NDA. At this time, our general plan includes two large scale,
randomized, double-blind, placebo-controlled Phase 3 studies, and one open-label extension study. We anticipate that the treatment
duration for the two large studies will be approximately 12-16 weeks in length. The numbers of patients to be evaluated is unknown
at this time. We plan to confer with the FDA concerning the suggested sample sizes in an End-of-Phase 2 program review meeting.
Once completing their participation in one of the two large scale studies, we expect our subjects will have the choice of enrolling
in an available open-label study whereby we can assess the longer-term benefits of TNX-105 therapy in PTSD.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Regulatory Strategy</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The approvals by the
FDA of Paxil (paroxetine) and Zoloft (sertraline) for treating PTSD establish a regulatory approval pathway for symptom reduction
in PTSD. We plan to strategically assess the regulatory environment and further evaluate our Phase 2 results to determine the design
of Phase 3 clinical studies. We believe these studies will result in a differentiated product for the treatment of PTSD. We hope
to register TNX-105 with the FDA through the provisions of Section 505(b)(2).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We anticipate meeting
with the Center for Drug Evaluation and Research at the FDA to discuss TNX-105 at the appropriate time in the future and would
review the basis of our Section 505(b)(2) clinical development plan and discuss any other clinical and nonclinical trials necessary
to support an NDA filing. We believe that the clinical trials in our development plan, if successful, will satisfy the requirements
for sufficient evidence of clinical efficacy and safety to support an NDA.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">TNX-105 is expected
to be covered under patents that have been submitted to the USPTO. The USPTO has not yet allowed or granted any claims protecting
the use of TNX-105.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Drug Delivery Technology</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In June 2007, we entered
into a Feasibility and Option Agreement with Lipocine, Inc. (&ldquo;Lipocine&rdquo;), which was amended in October 2010 (the &ldquo;Feasibility
Agreement&rdquo;). Pursuant to the Feasibility Agreement, we identified and obtained an exclusive worldwide option on technology
from Lipocine that employs mixtures of different types of lipids to envelop cyclobenzaprine molecules in the small intestine and
facilitate absorption into the bloodstream. We believe this approach has potential for more consistent absorption and decreased
variability in blood levels.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Feasibility Agreement
provided for two stages of work, stated as Stage I and Stage II. The Stage I work, which was expected to take approximately four
months, involved developing methods and testing compatibility between Lipocine&rsquo;s technology and our drug formulation. The
Stage II work, which was expected to take between five and six months, involved supporting us in our efforts to conduct a clinical
trial study, based on the Stage I work, and is expected to conclude upon the completion of a final report on the results of the
clinical study (the &ldquo;Final Report&rdquo;). Upon completion of the Final Report, we have the right, within 30 days after the
Final Report, to exercise an exclusive worldwide license to the Lipocine technology.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Feasibility
Agreement, Lipocine completed the Stage I work, which involved studying a number of combinations of lipids for their ability to
form micelles that solubilize the free base of cyclobenzaprine and which might serve as inactive ingredients in a gelatin capsule
formulation. We selected a candidate formulation based on properties that included the dispersion of the active ingredient in simulated
gastric or small-intestinal fluids and the stability of the formulation over time prior to testing. Lipocine was also engaged to
manufacture gelatin capsules of TNX-102 for use in our pharmacokinetic trial.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Both of our cyclobenzaprine-based
product candidates consist of cyclobenzaprine in pills that also contain proprietary ingredients, that are inactive but help the
small intestine absorb cyclobenzaprine. TNX-102 and TNX-105 are formulations of cyclobenzaprine and mixtures of lipids that are
intended as bedtime treatments for FM and PTSD, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have concluded a
study of the stability and dissolution of several candidate formulations in simulated gastric and small-intestinal fluids. The
study was conducted in 2007 at Lipocine&rsquo;s facilities. The first element of the study was to screen lipid ingredients for
use in a gelcap. In this study, various lipid ingredients were mixed with cyclobenzaprine to determine solubility and suitability
for formulating cyclobenzaprine in gelatin capsules, or gelcaps. Based on the results of the screening, four formulations of cyclobenzaprine
hydrochloride were prepared and analyzed for how efficiently they released or dispersed cyclobenzaprine into solutions of simulated
gastric and small-intestinal fluid. Each of the four formulations resulted in about 95% or more of cyclobenzaprine in solution.
Three of four formulations rapidly (at 30 minutes) released more than 90% of cyclobenzaprine into an acidic solution that simulates
gastric conditions. The second element of the study evaluated physical stability of the formulations. The four candidate formulations
were filled into capsules and subjected to stability conditions at high temperature and temperature cycling. None of the four formulations
showed signs of phase separation or crystallization of cyclobenzaprine. All four formulations were stable and none showed signs
of reduction in cyclobenzaprine potency compared to the initial time. From these data, we selected two potential formulations for
further study based on solubility level and speed of dissolution in acid.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Results from this study
showed that certain proprietary lipid mixtures interact with cyclobenzaprine to help solubilize it in simulated gastric and small-intestinal
fluids. Based on the study, we selected a candidate formulation for cyclobenzaprine to be dosed at bedtime. We expect TNX-102 and
TNX-105 will employ the same formulation, but TNX-105 will contain a higher dose of cyclobenzaprine. We believe one or more of
our new formulations will result in more predictable cyclobenzaprine absorption than immediate-release cyclobenzaprine tablets
that are commercially available for daytime use to treat muscle spasm. Since we expect our formulations will be more predictably
absorbed, we believe lower doses of cyclobenzaprine in our proprietary formulations with lipids will provide a similar therapeutic
benefit to the immediate-release cyclobenzaprine studied in our published Phase 2a trial.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In August 2011, we
provided notice to Lipocine that we intended to move forward with the Stage II work. The Stage II clinical trial was initiated
during the fourth quarter of 2011 and the clinical phase has been completed. Some of the data has been collected and some data
is still awaiting the development and validation of assays. We are working to analyze the data and write the Final Report, which
is anticipated to be completed by approximately June 2012. After completion of the Final Report, we will have 30 days to decide
whether to exercise the option to license Lipocine&rsquo;s US patent 6,294,192 &ldquo;Triglyceride-free compositions and methods
for improved delivery of hydrophobic therapeutic agents&rdquo; and US Patent 6,451,339 &ldquo;Compositions and methods for improved
delivery of hydrophobic agents&rdquo;. These patents expire on September 24, 2021 and September 16, 2022, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we elect to exercise
the option, we will execute a license agreement with Lipocine. If we exercise the option to license these patents, we will be obligated
to pay Lipocine low single-digit percentage royalties based on net sales or mid-teen sublicense fees based on the consideration
that we receive from a licensee. The maximum amount of milestone payments we could be required to pay to Lipocine pursuant to the
Feasibility Agreement is $3,000,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Market Dynamics</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe the U.S.
market for products that treat CNS conditions has several characteristics that make it an attractive market for pharmaceuticals,
including that the customer base is driven by physicians who are involved in long-term care of patients with chronic disorders.
Patients with CNS disorders sometimes carry disease burdens that require long-term treatment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe the market
for FDA-approved FM treatments is underserved and that there is a constant need for new treatment options, since many prescription
drugs provide relief only to some of the affected patients or provide relief only for limited periods of time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Until 2007, there were
no FDA-approved drugs to treat FM. A number of effective medicines have been identified by physicians who observe improvements
in a patient&rsquo;s condition as an unintended consequence of prescribing a particular medicine for another purpose. These anecdotal
observations are sometimes substantiated by exposing additional patients in progressively more systematic studies. As information
about a potential benefit is reported in scientific literature, or shared among physicians, an increasing number of physicians
may prescribe such medicines to their patients. This practice, which is not sanctioned by the FDA, is referred to as &ldquo;off-label&rdquo;
prescribing or use. Off-label prescription practices in the U.S. are acceptable under a long-standing principle that grants physicians
the ability to use their professional judgment beyond the FDA recommended uses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Before 2007, a variety
of drugs, often in combination, were utilized off-label to treat symptoms associated with FM. The following three classes of drugs
were prescribed as the primary treatments for FM: (1) pain killers, also referred to as analgesics, (2) antidepressants and (3)
muscle relaxants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 2007, Lyrica (pregabalin)
became the first medicine approved by the FDA for the management of FM. Lyrica previously had been approved and marketed to treat
pain in other conditions. FM shares a number of symptoms with depression, and a number of FM patients are believed to experience
depression as a co-existing condition. In 2008, Cymbalta (duloxetine) became the second medicine approved by the FDA for the management
of FM. Cymbalta previously had been approved and marketed to treat depression. Savella (milnacipran) was the third medicine approved
by the FDA for the management of FM. Savella&rsquo;s active ingredient, milnacipran, is approved in Europe to treat depression.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since Lyrica and Cymbalta
also are marketed for other conditions beyond FM, the sales of these products related specifically to FM can only be estimated.
According to Frost &amp; Sullivan, the overall gross sales for FM prescription drugs in 2010 was believed to be about $1.2 billion,
which has grown since 2007 at a compounded annual growth rate of 18.4%. This significant increase is a result of more FM patients
switching to branded FM prescription drugs that sell for a higher cost than the generic FM prescription drugs previously used.
For example, in 2010, Lyrica prescriptions are estimated to have accounted for 248 million doses for FM and to have generated $478
million in sales, while Cymbalta prescriptions are estimated to have accounted for 93 million doses for FM and to have generated
$342 million in sales. Launched in January 2009, Savella, which is only approved for the treatment of FM, prescriptions accounted
for approximately 43 million doses and generated approximately $68 million in sales in 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Use of the FDA approved
medications for FM is growing while the use of off-label treatments is declining. Overall, in terms of the number of doses of FM
prescription drugs prescribed, Frost &amp; Sullivan expects the FM market to grow at only a 1.2% compounded annual growth rate
from 2007 to 2010. These market dynamics are consistent with the interpretation that Lyrica&rsquo;s growth came at the expense
of off-label pain killers and Cymbalta&rsquo;s and Savella&rsquo;s growth came at the expense of off-label anti-depressants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to Frost
and Sullivan, FM is an emerging market and sales are anticipated to continue growing in future years. Despite the availability
of FDA approved products, we believe the current treatment options for FM continue to leave many patients dissatisfied.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The FM market for muscle
relaxants lacks an FDA-approved product and continues to be satisfied by off-label medicines such as cyclobenzaprine, tizanidine,
baclofen, carisoprodol and metaxalone. These muscle relaxants have generic and branded versions. According to Frost &amp; Sullivan,
48 million doses of the Flexeril brand and its associated immediate-release cyclobenzaprine generic products were prescribed off-label
for FM in 2010 and accounted for approximately 35% of the muscle spasm pills prescribed for FM. However, the off-label cyclobenzaprine
sales for FM in terms of dollars amount to only approximately $10 million, due to the low price of generic cyclobenzaprine.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Challenges in the Market for CNS Therapies</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Developers of pharmaceutical
treatments for syndromes and disorders that affect the CNS face special challenges. In many cases, the causes and exacerbating
factors of CNS conditions remain unknown. Frequently, key symptoms are known only by patient reports and cannot be objectively
validated or measured. Symptoms like pain, fatigue, disturbed sleep or altered mood are characteristics of more than one condition.
Often, physicians may not agree that a particular patient is affected by one or another condition or by more than one co-existing
conditions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">CNS conditions are
typically defined by committees of expert professionals who set criteria based on the presence of several symptoms or groups of
symptoms. Sometimes groups of subjective symptoms are insufficient to describe CNS disorders and further refinement of diagnostic
categories can be achieved by patient demographics, such as gender, age or concurrent medical processes, such as menopause or adolescence.
Many CNS conditions, including syndromes and disorders, have not yet been characterized by laboratory tests, such as blood tests
or x-ray imaging. However, laboratory tests are often important to exclude other conditions, such as inflammatory or infectious
processes. Consequently, a CNS condition is sometimes called a diagnosis of exclusion because inflammation and infection should
typically be ruled out by laboratory tests before applying the criteria of groups of symptoms to diagnose it.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Once a CNS condition
is diagnosed, physicians may select from among treatment options based on a patient&rsquo;s symptoms and history. Some medications
improve or relieve only one or another symptom in a condition. Consequently, physicians may prescribe several different medications
concurrently to treat individual symptoms or groups of symptoms. A desirable quality for CNS medications is the ability to relieve
more than one symptom of a CNS condition. Another desirable quality for CNS medications is safety, particularly if a medicine is
safe enough to be used with other medicines concurrently or at different times of the day.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Opportunity for New Treatments of FM</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe the market
for the treatment of FM is underserved which we believe fuels a need for new therapeutic options. Due to the market acceptance
of FM treatments (such as Lyrica, Cymbalta and Savella), we believe there will be a growing interest in alternative drug treatment
options.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that if
TNX-102 won FDA approval, it would be an appealing option because it has an entirely different mechanism of action from the currently
approved products and we expect TNX-102 will be recommended for use before bedtime. Lyrica is recommended for twice or three-times
daily dosing. Cymbalta was found effective at once-daily dosing and is generally restricted to daytime use and not recommended
for bedtime use. Cymbalta and Savella act on the CNS in ways that are believed to interfere with sleep.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Competition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our industry is highly
competitive and subject to rapid and significant technological change. Our potential competitors include large pharmaceutical and
biotechnology companies, specialty pharmaceutical and generic drug companies, academic institutions, government agencies and research
institutions. We believe that key competitive factors that will affect the development and commercial success of our product candidates
are efficacy, safety, tolerability, reliability, price and reimbursement level. Many of our potential competitors, including many
of the organizations named below, have substantially greater financial, technical and human resources than we do and significantly
greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of products
and the commercialization of those products. Accordingly, our competitors may be more successful than we may be in obtaining FDA
approval for drugs and achieving widespread market acceptance. Our competitors&rsquo; drugs may be more effective, or more effectively
marketed and sold, than any drug we may commercialize and may render our product candidates obsolete or non-competitive before
we can recover the expenses of developing and commercializing any of our product candidates. We anticipate that we will face intense
and increasing competition as new drugs enter the market and advanced technologies become available. Further, the development of
new treatment methods for the conditions we are targeting could render our drugs non-competitive or obsolete.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The markets for medicines
to treat FM, PTSD and other CNS conditions are well developed and populated with established drugs marketed by large and small
pharmaceutical, biotechnology and generic drug companies. Pfizer (Lyrica), Eli Lilly (Cymbalta) and Forest Laboratories/Cyprus
Biosciences (Savella) market FDA approved drugs for FM. Pfizer (Zoloft) and GlaxoSmithKline (Paxil) market FDA approved drugs for
PTSD.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of September 15,
2011 several companies are pursuing treatments for FM. Chelsea Therapeutics International, Inc. (CHTP) is developing droxidopa
for the treatment of hypotension associated with fibromyalgia. Droxidopa is a precursor of the neurotransmitter norephinephrine
which suggests it would compete with Cymbalta and Savella which also increase norephinephrine activity. Clinical trials in the
U.S. are registered with the FDA and reported on the website, www.ClinicalTrials.gov. A trial of Amrix is recruiting subjects (trial
NCT01041495), which may indicate that Cephalon is developing its long-acting formulation of cyclobenzaprine to treat symptoms of
FM. Another trial of Ultracet&reg; (tramadol and acetaminophen combination) is listed (trial NCT00766675), which may indicate that
Johnson and Johnson is developing Ultracet to treat symptoms of FM.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A number of companies
are specifically engaged in developing drugs for PTSD. According to ClinicalTrials.gov, ongoing or recent trials of medicines include:
quetiapine by AstraZeneca (trial NCT00237393) and by Mclean Hospital (trial NCT01066156), levetiracetam by UCB (trial NCT00413296),
&Delta;9-THC by Hadassah Medical Organization (trial NCT00965809), paroxetine hydrochloride hydrate by GlaxoSmithKline (trial NCT00557622),
topiramate by Ortho-McNeil Janssen Scientific Affairs (trial NCT00203463), hydrocortisone by Lightfighter Trust (trial NCT01090518),
mirtazapine by Research Foundation for Mental Hygiene (trial NCT01178671) and by Department of Veterans Affairs (trial NCT00302107),
orvepitant by GlaxoSmithKline (trial NCT01000493), d-cycloserine by Weill Medical College of Cornell University (trial NCT00875342),
duloxetine by Yale University (trial NCT00763178), ziprasidone by Pfizer (trial NCT00208208),and aripiprazole by Durham VA Medical
Center (trial NCT00489866). Other medications that may be used for the treatment of PTSD include anti-depressants such as: nefazodone
and trazodone; the antihistamine cyproheptadine and certain atypical antipsychotics such as olanzapine and risperidone. Several
of these products are supported by companies such as AstraZeneca, GlaxoSmithKline and Pfizer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A potential competing
medication for treating FM symptoms at bedtime had been Rekinla&reg; which was being developed by Jazz Pharmaceuticals, or Jazz.
The active ingredient in Rekinla is sodium oxybate, which results in profound sedation and amnesia. Sodium oxybate is the active
ingredient in XYREM&reg;, approved by the FDA for the treatment of excessive daytime sleepiness and cataplexy, the sudden loss
of muscle tone, in adult patients with narcolepsy. Rekinla is administered at bedtime and a second dose is administered by awakening
the patient four hours later. Jazz&rsquo; studies of Rekinla showed that a treatment that affects sleep quality can improve FM
symptoms to meet FDA requirements for an effective product. While Jazz obtained compelling evidence supporting the efficacy of
its treatment on FM symptoms, the FDA rejected their application to market Rekinla for treating FM in 2010. Sodium oxybate is a
controlled substance under the auspices of the Drug Enforcement Administration (DEA). In June 2011, Jazz publicly announced their
intention to cease development of Rekinla for FM.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Intellectual Property</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Proprietary protection
for our product candidates, technology and processes are important to our business and we seek patent protection in the U.S. and
internationally when we deem appropriate. We also rely on trade secrets, know-how and continuing technological advances to protect
various aspects of our core technology. We require our employees, consultants and scientific collaborators to execute confidentiality
and invention assignment agreements with us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We own numerous patents
and have patent applications pending in the United States and abroad. In addition, we have one trademark application pending.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our commercial success
will depend in part on obtaining and maintaining patent protection and trade secret protection of our current and future product
candidates and the methods used to manufacture them, as well as successfully defending these patents against third-party challenges.
Our ability to stop third parties from making, using, selling, offering to sell or importing our products depends on the extent
to which we have rights under valid and enforceable patents or trade secrets that cover these activities. We cannot assure you
that our pending patent applications will result in issued patents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Approved Patents</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current patents
owned are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 13%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left; vertical-align: bottom">&nbsp;Number</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 55%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left; vertical-align: bottom">&nbsp;Name</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 17%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left; vertical-align: bottom">&nbsp;Jurisdiction</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 12%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left; vertical-align: bottom">Expiration<BR> Date</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">6,541,523</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Methods For Treating Or Preventing Fibromyalgia Using Very Low Doses Of Cyclobenzaprine&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>U.S.A.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>August 11, 2020</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">6,395,788</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Methods And Compositions For Treating Or Preventing Sleep Disturbances And Associated Illnesses Using Very Low Doses Of Cyclobenzaprine&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>U.S.A.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>August 11, 2020</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">6,358,944</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Methods And Compositions For Treating Generalized Anxiety Disorder&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>U.S.A.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>August 11, 2020</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">EP 1202722</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Uses of Compositions for Treating or Preventing Sleep Disturbances Using Very&nbsp; Low Doses of Cyclobenzaprine&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>European Patent Office, Belgium, France, Ireland, Luxembourg, Monaco, Portugal, Switzerland and United Kingdom</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>August 11, 2020</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">AT 299369</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Uses of Compositions for Treating or Preventing Sleep Disturbances Using Very&nbsp; Low Doses of Cyclobenzaprine&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Austria</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>August 11, 2020</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">DE 60021266</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Uses of Compositions for Treating or Preventing Sleep Disturbances Using Very&nbsp; Low Doses of Cyclobenzaprine&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Germany</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>August 11, 2020</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">NZ 516749</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Uses of Compositions for Treating or Preventing Sleep Disturbances Using Very&nbsp; Low Doses of Cyclobenzaprine&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>New Zealand</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>August 11, 2020</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">ES 2245944</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Uses of Compositions for Treating or Preventing Sleep Disturbances Using Very&nbsp; Low Doses of Cyclobenzaprine&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Spain</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>August 11, 2020</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">HK 1047691</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Uses of Compositions for Treating or Preventing Sleep Disturbances Using Very&nbsp; Low Doses of Cyclobenzaprine&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Hong Kong</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>August 11, 2020</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">8,093,300</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Compositions and Methods for Increasing Compliance with Therapies using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>U.S.A.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>May 25, 2023</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: justify">AU 2002354017</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Compositions and Methods for Increasing Compliance with Therapies using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Australia</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD NOWRAP>November 4, 2022</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">CA 2463987</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Compositions and Methods for Increasing Compliance with Therapies using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Canada</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>November 4, 2022</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">EP 1441708</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Compositions and Methods for Increasing Compliance with Therapies using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">European Patent Office, Austria, Belgium, Switzerland, Denmark,
        Luxembourg, Monaco, Germany,</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">France, Portugal and</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">United Kingdom</P></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>November 4, 2022</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">NZ 532583</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&ldquo;Compositions and Methods for Increasing Compliance with Therapies using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism&rdquo;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>New Zealand</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>November 4, 2022</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>



<P STYLE="margin: 0"></P>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Patent Applications</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current patent
applications that are pending are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 15%; border-bottom: black 1pt solid; font-weight: bold; text-align: justify">&nbsp;Number</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 67%; border-bottom: black 1pt solid; font-weight: bold; text-align: justify">&nbsp;Name</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 15%; border-bottom: black 1pt solid; font-weight: bold; text-align: justify">&nbsp;Jurisdiction</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">12/948,828</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&ldquo;Methods And Compositions For Treating Symptoms Associated With Post-Traumatic Stress Disorder Using Cyclobenzaprine&rdquo;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">U.S.A.</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">61/449,838</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&ldquo;Methods and Compositions for Treating Depression Using Cyclobenzaprine&rdquo;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">U.S.A.</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">13/157,270</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&ldquo;Method for Improving Fatigue Using Low Dose Cyclobenzaprine&rdquo;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">U.S.A.</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">PCT/US <BR>
10/02979</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&ldquo;Methods And Compositions For Treating Symptoms Associated With Post-Traumatic Stress Disorder Using Cyclobenzaprine&rdquo;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">PCT</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">PCT/US <BR>
11/01529</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&ldquo;Method for Treating Cocaine Addiction&rdquo;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">PCT</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">12/151,200</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&ldquo;Method For Treating Neurodegenerative Dysfunction&rdquo;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">U.S.A.</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">CA 2723688</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&ldquo;Method For Treating Neurodegenerative Dysfunction&rdquo;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">Canada</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">EP 2299822</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&ldquo;Method For Treating Neurodegenerative Dysfunction&rdquo;</TD>
    <TD>&nbsp;</TD>
    <TD>European Patent Office</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Trademark Application</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have one trademark
application that is pending as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 15%; border-bottom: black 1pt solid; font-weight: bold; text-align: justify">&nbsp;Number</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 67%; border-bottom: black 1pt solid; font-weight: bold; text-align: justify">&nbsp;Name</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 15%; border-bottom: black 1pt solid; font-weight: bold; text-align: justify">Jurisdiction</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">85088881</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">Tonix Pharmaceuticals</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">U.S.A.</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Research and Development</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have one employee
dedicated to research and development. We anticipate that our research and development expenditures will increase several fold
as we move TNX-102 and TNX-105 into clinical development and investigate other product candidates for incorporation into our portfolio.
We need to raise additional capital to fund our development plans and there is no certainty that we will be successful in continuing
to attract new investments. Our research and development operations are located in New York, NY. We expect to use third parties
to conduct our preclinical and clinical trials.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Manufacturing</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We intend to contract
with third parties for the manufacture of our compounds for investigational purposes, for preclinical and clinical testing and
for any FDA approved products for commercial sale. We contracted with Lipocine Inc. to manufacture TNX-102 used in our completed
pharmacokinetic study. We will need to contract with a larger scale cGMP contract manufacturer for product to be used in further
studies of TNX-102, which we do not anticipate any problems in securing as needed. All of our compounds are small molecules, generally
constructed using industry standard processes and use readily accessible raw materials.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Government Regulation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The FDA and other federal,
state, local and foreign regulatory agencies impose substantial requirements upon the clinical development, approval, labeling,
manufacture, marketing and distribution of drug products. These agencies regulate, among other things, research and development
activities and the testing, approval, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, advertising
and promotion of our product candidates. The regulatory approval process is generally lengthy and expensive, with no guarantee
of a positive result. Moreover, failure to comply with applicable FDA or other requirements may result in civil or criminal penalties,
recall or seizure of products, injunctive relief including partial or total suspension of production, or withdrawal of a product
from the market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The FDA regulates,
among other things, the research, manufacture, promotion and distribution of drugs in the United States under the FFDCA and other
statutes and implementing regulations. The process required by the FDA before prescription drug product candidates may be marketed
in the United States generally involves the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol; text-align: justify">&middot;</TD>
    <TD STYLE="width: 85%; text-align: justify">completion of extensive nonclinical laboratory tests, animal studies and formulation studies, all performed in accordance with the FDA&rsquo;s Good Laboratory Practice regulations;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: justify">&middot;</TD>
    <TD STYLE="text-align: justify">submission to the FDA of an IND, which must become effective before human clinical trials may begin;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">for some products, performance of adequate and well-controlled human clinical trials in accordance with the FDA&rsquo;s regulations, including Good Clinical Practices, to establish the safety and efficacy of the product candidate for each proposed indication;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">submission to the FDA of an NDA;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">satisfactory completion of an FDA preapproval inspection of the manufacturing facilities at which the product is produced to assess compliance with current Good Manufacturing Practice, or cGMP, regulations; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">FDA review and approval of the NDA prior to any commercial marketing, sale or shipment of the drug.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The testing and approval
process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our product
candidates will be granted on a timely basis, if at all.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Nonclinical tests include
laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate toxicity in animals and
other animal studies. The results of nonclinical tests, together with manufacturing information and analytical data, are submitted
as part of an IND to the FDA. Some nonclinical testing may continue even after an IND is submitted. The IND also includes one or
more protocols for the initial clinical trial or trials and an investigator&rsquo;s brochure. An IND automatically becomes effective
30&nbsp;days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions relating to
the proposed clinical trials as outlined in the IND and places the clinical trial on a clinical hold. In such cases, the IND sponsor
and the FDA must resolve any outstanding concerns or questions before any clinical trials can begin. Clinical trial holds also
may be imposed at any time before or during studies due to safety concerns or non-compliance with regulatory requirements. An independent
institutional review board, or IRB, at each of the clinical centers proposing to conduct the clinical trial must review and approve
the plan for any clinical trial before it commences at that center. An IRB considers, among other things, whether the risks to
individuals participating in the trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves
the consent form signed by the trial participants and must monitor the study until completed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Clinical Trials</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Clinical trials involve
the administration of the product candidate to human subjects under the supervision of qualified medical investigators according
to approved protocols that detail the objectives of the study, dosing procedures, subject selection and exclusion criteria, and
the parameters to be used to monitor participant safety. Each protocol is submitted to the FDA as part of the IND.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Human clinical trials
are typically conducted in three sequential phases, but the phases may overlap, or be combined.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 85%; text-align: justify">Phase 1 clinical trials typically involve the initial introduction of the product candidate into healthy human volunteers. In Phase 1 clinical trials, the product candidate is typically tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">Phase 2 clinical trials are conducted in a limited patient population to gather evidence about the efficacy of the product candidate for specific, targeted indications; to determine dosage tolerance and optimal dosage; and to identify possible adverse effects and safety risks.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 85%; text-align: justify">Phase 3 clinical trials are undertaken to evaluate clinical efficacy and to test for safety in an expanded patient population at geographically dispersed clinical trial sites. The size of Phase 3 clinical trials depends upon clinical and statistical considerations for the product candidate and disease, but sometimes can include several thousand patients. Phase 3 clinical trials are intended to establish the overall risk-benefit ratio of the product candidate and provide an adequate basis for product labeling.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Clinical testing must
satisfy extensive FDA regulations. Reports detailing the results of the clinical trials must be submitted at least annually to
the FDA and safety reports must be submitted for serious and unexpected adverse events. Success in early stage clinical trials
does not assure success in later stage clinical trials. The FDA, an IRB or we may suspend a clinical trial at any time on various
grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>New Drug Applications</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Assuming successful
completion of the required clinical trials, the results of product development, nonclinical studies and clinical trials are submitted
to the FDA as part of an NDA. An NDA also must contain extensive manufacturing information, as well as proposed labeling for the
finished product. An NDA applicant must develop information about the chemistry and physical characteristics of the drug and finalize
a process for manufacturing the product in accordance with cGMP. The manufacturing process must be capable of consistently producing
quality product within specifications approved by the FDA. The manufacturer must develop methods for testing the quality, purity
and potency of the final product. In addition, appropriate packaging must be selected and tested and stability studies must be
conducted to demonstrate that the product does not undergo unacceptable deterioration over its shelf life. Prior to approval, the
FDA will conduct an inspection of the manufacturing facilities to assess compliance with cGMP.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The FDA reviews all
NDAs submitted before it accepts them for filing. The FDA may request additional information rather than accept an NDA for filing.
In this event, the NDA must be resubmitted with the additional information and is subject to review before the FDA accepts it for
filing. After an application is filed, the FDA may refer the NDA to an advisory committee for review, evaluation and recommendation
as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory
committee, but it considers them carefully when making decisions. The FDA may deny approval of an NDA if the applicable regulatory
criteria are not satisfied. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently
than we interpret the same data. The FDA may issue a complete response letter, which may require additional clinical or other data
or impose other conditions that must be met in order to secure final approval of the NDA. If a product receives regulatory approval,
the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited,
which could restrict the commercial value of the product. In addition, the FDA may require us to conduct Phase 4 testing which
involves clinical trials designed to further assess a drug&rsquo;s safety and effectiveness after NDA approval, and may require
surveillance programs to monitor the safety of approved products which have been commercialized. Once issued, the FDA may withdraw
product approval if ongoing regulatory requirements are not met or if safety or efficacy questions are raised after the product
reaches the market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Section&nbsp;505(b)(2) NDAs</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are two types
of NDAs: the full NDA and the Section&nbsp;505(b)(2) NDA. When possible, we intend to file Section&nbsp;505(b)(2) NDAs that might,
if accepted by the FDA, save time and expense in the development and testing of our product candidates. A full NDA is submitted
under Section&nbsp;505(b)(1) of the FFDCA, and must contain full reports of investigations conducted by the applicant to demonstrate
the safety and effectiveness of the drug. A Section&nbsp;505(b)(2) NDA may be submitted for a drug for which one or more of the
investigations relied upon by the applicant was not conducted by or for the applicant and for which the applicant has no right
of reference from the person by or for whom the investigations were conducted. A Section&nbsp;505(b)(2) NDA may be submitted based
in whole or in part on published literature or on the FDA&rsquo;s finding of safety and efficacy of one or more previously approved
drugs, which are known as reference drugs. Thus, the filing of a Section&nbsp;505(b)(2) NDA may result in approval of a drug based
on fewer clinical or nonclinical studies than would be required under a full NDA. The number and size of studies that need to be
conducted by the sponsor depends on the amount and quality of data pertaining to the reference drug that are publicly available,
and on the similarity of and differences between the applicant&rsquo;s drug and the reference drug. In some cases, extensive, time-consuming,
and costly clinical and nonclinical studies may still be required for approval of a Section&nbsp;505(b)(2) NDA.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because we are developing
new formulations of previously approved chemical entities, such as cyclobenzaprine, our drug approval strategy is to submit Section&nbsp;505(b)(2)
NDAs to the FDA. The FDA may not agree that our product candidates are approvable as Section&nbsp;505(b)(2) NDAs. If the FDA determines
that Section&nbsp;505(b)(2) NDAs are not appropriate and that full NDAs are required for our product candidates, the time and financial
resources required to obtain FDA approval for our product candidates could substantially and materially increase, and our products
might be less likely to be approved. If the FDA requires full NDAs for our product candidates, or requires more extensive testing
and development for some other reason, our ability to compete with alternative products that arrive on the market more quickly
than our product candidates would be adversely impacted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Based on our intent
to file under Section 505(b)(2) with respect to our two lead product candidates, we believe it is unlikely the development process
for these product candidates will follow the ordinary course of Phase 1, Phase 2 and Phase 3 studies. Our human pharmacokinetic
study of reformulated cyclobenzaprine pills will represent the first use of TNX-102 in humans and could therefore be described
as &ldquo;Phase 1.&rdquo; However, because the study compared TNX-102 to existing approved formulations of cyclobenzaprine and
specified the comparable ability to deliver effective levels of cyclobenzaprine to the bloodstream of FM patients, this study provided
a reference to the therapeutic effects previously observed in our dose-ranging clinical study of immediate-release cyclobenzaprine
capsules in FM patients. For these reasons, rather than always identifying clinical trials by Phase, we find it more illustrative
to describe in a narrative form the purpose of the studies and the nature and potential significance of the results. Because our
double-blind, randomized, placebo-controlled, dose-ranging study on bedtime cyclobenzaprine was performed in Canada, we did not
meet with the FDA&rsquo;s Center for Drug Evaluation and Research to discuss our approach and plans until August 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Patent Protections</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An applicant submitting
a Section&nbsp;505(b)(2) NDA must certify to the FDA with respect to the patent status of the reference drug upon which the applicant
relies in support of approval of its drug. With respect to every patent listed in the FDA&rsquo;s Orange Book, which is the FDA&rsquo;s
list of approved drug products, as claiming the reference drug or an approved method of use of the reference drug, the Section&nbsp;505(b)(2)
applicant must certify that: (1)&nbsp;there is no patent information listed by the FDA for the reference drug; (2)&nbsp;the listed
patent has expired; (3)&nbsp;the listed patent has not expired, but will expire on a particular date; (4)&nbsp;the listed patent
is invalid, unenforceable, or will not be infringed by the manufacture, use, or sale of the product in the Section&nbsp;505(b)(2)
NDA; or (5)&nbsp;if the patent is a use patent, that the applicant does not seek approval for a use claimed by the patent. If the
applicant files a certification to the effect of clause (1), (2)&nbsp;or (5), FDA approval of the Section&nbsp;505(b)(2) NDA may
be made effective immediately upon successful FDA review of the application, in the absence of marketing exclusivity delays, which
are discussed below. If the applicant files a certification to the effect of clause (3), the Section&nbsp;505(b)(2) NDA approval
may not be made effective until the expiration of the relevant patent and the expiration of any marketing exclusivity delays.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If the Section&nbsp;505(b)(2)
NDA applicant provides a certification to the effect of clause (4), referred to as a paragraph IV certification, the applicant
also must send notice of the certification to the patent owner and the holder of the NDA for the reference drug. The filing of
a patent infringement lawsuit within 45&nbsp;days of the receipt of the notification may prevent the FDA from approving the Section&nbsp;505(b)(2)
NDA for 30&nbsp;months from the date of the receipt of the notification unless the court determines that a longer or shorter period
is appropriate because either party to the action failed to reasonably cooperate in expediting the action. However, the FDA may
approve the Section&nbsp;505(b)(2) NDA before the 30&nbsp;months have expired if a court decides that the patent is invalid, unenforceable,
or not infringed, or if a court enters a settlement order or consent decree stating the patent is invalid or not infringed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Notwithstanding the
approval of many products by the FDA pursuant to Section&nbsp;505(b)(2), over the last few years certain brand-name pharmaceutical
companies and others have objected to the FDA&rsquo;s interpretation of Section&nbsp;505(b)(2). If the FDA&rsquo;s interpretation
of Section&nbsp;505(b)(2) is successfully challenged in court, the FDA may be required to change its interpretation of Section&nbsp;505(b)(2)
which could delay or even prevent the FDA from approving any Section&nbsp;505(b)(2) NDA that we submit. The pharmaceutical industry
is highly competitive, and it is not uncommon for a manufacturer of an approved product to file a citizen petition with the FDA
seeking to delay approval of, or impose additional approval requirements for, pending competing products. If successful, such petitions
can significantly delay, or even prevent, the approval of the new product. Moreover, even if the FDA ultimately denies such a petition,
the FDA may substantially delay approval while it considers and responds to the petition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Marketing Exclusivity</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Market exclusivity
provisions under the FFDCA can delay the submission or the approval of Section&nbsp;505(b)(2) NDAs, thereby delaying a Section&nbsp;505(b)(2)
product from entering the market. The FFDCA provides five-year marketing exclusivity to the first applicant to gain approval of
an NDA for a new chemical entity, or NCE, meaning that the FDA has not previously approved any other drug containing the same active
moiety. This exclusivity prohibits the submission of a Section&nbsp;505(b)(2) NDA for any drug product containing the active ingredient
during the five-year exclusivity period. However, submission of a Section&nbsp;505(b)(2) NDA that certifies that a listed patent
is invalid, unenforceable, or will not be infringed, as discussed above, is permitted after four years, but if a patent infringement
lawsuit is brought within 45&nbsp;days after such certification, FDA approval of the Section&nbsp;505(b)(2) NDA may automatically
be stayed until 7 1/2&nbsp;years after the NCE approval date. The FFDCA also provides three years of marketing exclusivity for
the approval of new and supplemental NDAs for product changes, including, among other things, new indications, dosage forms, routes
of administration or strengths of an existing drug, or for a new use, if new clinical investigations, other than bioavailability
studies, that were conducted or sponsored by the applicant are deemed by FDA to be essential to the approval of the application.
Five-year and three-year exclusivity will not delay the submission or approval of another full NDA; however, as discussed above,
an applicant submitting a full NDA under Section&nbsp;505(b)(1) would be required to conduct or obtain a right of reference to
all of the preclinical and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other types of exclusivity
in the United States include orphan drug exclusivity and pediatric exclusivity. The FDA may grant orphan drug designation to a
drug intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals
in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that
the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered
from sales in the United States for that drug. Seven-year orphan drug exclusivity is available to a product that has orphan drug
designation and that receives the first FDA approval for the indication for which the drug has such designation. Orphan drug exclusivity
prevents approval of another application for the same drug for the same orphan indication, for a period of seven years, regardless
of whether the application is a full NDA or a Section&nbsp;505(b)(2) NDA, except in limited circumstances, such as a showing of
clinical superiority to the product with orphan exclusivity. Pediatric exclusivity, if granted, provides an additional six months
to an existing exclusivity or statutory delay in approval resulting from a patent certification. This six-month exclusivity, which
runs from the end of other exclusivity protection or patent delay, may be granted based on the voluntary completion of a pediatric
study in accordance with an FDA-issued &ldquo;Written Request&rdquo; for such a study.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Section&nbsp;505(b)(2)
NDAs are similar to full NDAs filed under Section&nbsp;505(b)(1) in that they are entitled to any of these forms of exclusivity
if they meet the qualifying criteria. They also are entitled to the patent protections described above, based on patents that are
listed in the FDA&rsquo;s Orange Book in the same manner as patents claiming drugs and uses approved for NDAs submitted as full
NDAs. <I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Other Regulatory Requirements</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Maintaining substantial
compliance with appropriate federal, state and local statutes and regulations requires the expenditure of substantial time and
financial resources. Drug manufacturers are required to register their establishments with the FDA and certain state agencies,
and after approval, the FDA and these state agencies conduct periodic unannounced inspections to ensure continued compliance with
ongoing regulatory requirements, including cGMPs. In addition, after approval, some types of changes to the approved product, such
as adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval.
The FDA may require post-approval testing and surveillance programs to monitor safety and the effectiveness of approved products
that have been commercialized. Any drug products manufactured or distributed by us pursuant to FDA approvals are subject to continuing
regulation by the FDA, including:&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 85%; text-align: justify">record-keeping requirements;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">reporting of adverse experiences with the drug;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">providing the FDA with updated safety and efficacy information;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">reporting on advertisements and promotional labeling;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">drug sampling and distribution requirements; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">complying with electronic record and signature requirements.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the FDA
strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market. There
are numerous regulations and policies that govern various means for disseminating information to health-care professionals as well
as consumers, including to industry sponsored scientific and educational activities, information provided to the media and information
provided over the Internet. Drugs may be promoted only for the approved indications and in accordance with the provisions of the
approved label.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The FDA has very broad
enforcement authority and the failure to comply with applicable regulatory requirements can result in administrative or judicial
sanctions being imposed on us or on the manufacturers and distributors of our approved products, including warning letters, refusals
of government contracts, clinical holds, civil penalties, injunctions, restitution, and disgorgement of profits, recall or seizure
of products, total or partial suspension of production or distribution, withdrawal of approvals, refusal to approve pending applications,
and criminal prosecution resulting in fines and incarceration. The FDA and other agencies actively enforce the laws and regulations
prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject
to significant liability. In addition, even after regulatory approval is obtained, later discovery of previously unknown problems
with a product may result in restrictions on the product or even complete withdrawal of the product from the market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Food and Drug Administration Amendments
Act of 2007</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In September 2007,
the Food and Drug Administration Amendments Act of 2007, or FDAAA, became law. This legislation grants significant new powers to
the FDA, many of which are aimed at improving drug safety and assuring the safety of drug products after approval. In particular,
the new law authorizes the FDA to, among other things, require post-approval studies and clinical trials, mandate changes to drug
labeling to reflect new safety information, and require risk evaluation and mitigation strategies for certain drugs, including
certain currently approved drugs. In addition, the new law significantly expands the federal government&rsquo;s clinical trial
registry and results databank and creates new restrictions on the advertising and promotion of drug products. Under the FDAAA,
companies that violate these and other provisions of the new law are subject to substantial civil monetary penalties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The FDA has not yet
implemented many of the provisions of the FDAAA, so we cannot predict the impact of the new legislation on the pharmaceutical industry
or our business. However, the requirements and changes imposed by the FDAAA may make it more difficult, and more costly, to obtain
and maintain approval for new pharmaceutical products, or to produce, market and distribute existing products. In addition, the
FDA&rsquo;s regulations, policies and guidance are often revised or reinterpreted by the agency or the courts in ways that may
significantly affect our business and our products. It is impossible to predict whether additional legislative changes will be
enacted, or FDA regulations, guidance or interpretations changed, or what the impact of such changes, if any, may be.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Employees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of April 25, 2012,
we had three full time employees, Benjamin Selzer, our Chief Operating Officer, Leland Gershell, our Chief Financial Officer, and
Bruce Daugherty, our Senior Director of Drug Development and Controller, as well as one part-time senior director of research.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, we rely
on consultants instead of employees for critical activities, including Seth Lederman who serves as our Chief Executive Officer
and as President of Tonix Sub pursuant to a consulting agreement with Lederman &amp; Co., and Seth Lederman and Donald Landry who
provide scientific consulting pursuant to a consulting agreement with L&amp;L Technologies, LLC. None of our employees are represented
by a labor union, and we believe that our relations with our employees are good.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF PROPERTIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We maintain our principal
office at 509 Madison Avenue, Suite 306, New York, New York 10022.&nbsp;&nbsp;Our telephone number at that office is (212) 980-9155
and our fax number is (212) 923-5700. Our current office space consists of approximately 2,355 square feet. The lease expires in
September 2015. The base rent is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="width: 50%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid">Lease Period</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Amount Per Annum</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 67%; text-align: left">October 1, 2010 &ndash; September 30, 2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 30%; text-align: right">120,105.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">October 1, 2011 &ndash; September 30, 2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">123.496.20</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">October 1, 2012 &ndash; September 30, 2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">126,989.14</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">October 1, 2013 &ndash; September 30, 2014</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">130,586.86</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">October 1, 2014 &ndash; September 30, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">134,292.52</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that our
existing facilities are suitable and adequate to meet our current business requirements. We maintain websites at www.tonixpharma.com
and www.krele.com and the information contained on those websites is not deemed to be a part of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LEGAL PROCEEDINGS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From time to time,
we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm
our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in
the aggregate, a material adverse effect on our business, financial condition or operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MANAGEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The names of our executive
officers and directors and their age, title, and biography&nbsp;as of&nbsp;April 25, 2012&nbsp;are set forth below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 39%; border-bottom: black 1pt solid; font-weight: bold; text-align: center">Name</TD>
    <TD STYLE="width: 1%; padding-left: 5.4pt; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 9%; border-bottom: black 1pt solid; padding-left: 5.4pt; font-weight: bold; text-align: center">Age</TD>
    <TD STYLE="width: 1%; padding-left: 5.4pt; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 50%; border-bottom: black 1pt solid; font-weight: bold; text-align: center">Title</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Seth Lederman</TD>
    <TD STYLE="padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="text-align: center">54</TD>
    <TD STYLE="padding-left: 5.4pt">&nbsp;</TD>
    <TD>President, CEO and Chairman of the Board of Directors</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Leland Gershell</TD>
    <TD STYLE="padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="text-align: center">40</TD>
    <TD STYLE="padding-left: 5.4pt">&nbsp;</TD>
    <TD>Chief Financial Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Benjamin Selzer</TD>
    <TD STYLE="padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="text-align: center">35</TD>
    <TD STYLE="padding-left: 5.4pt">&nbsp;</TD>
    <TD>Chief Operating Officer, Secretary and Treasurer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Bruce Daugherty</TD>
    <TD STYLE="padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="text-align: center">54</TD>
    <TD STYLE="padding-left: 5.4pt">&nbsp;</TD>
    <TD>Senior Director of Drug Development and Controller</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Stuart Davidson</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">54</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Patrick Grace</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">55</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Donald Landry</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">57</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Ernest Mario</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">73</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Charles Mather IV</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">51</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>John Rhodes</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">55</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Directors are elected
annually and hold office until the next annual meeting of the stockholders of the Company and until their successors are elected.
Officers are elected annually and serve at the discretion of the Board of Directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Seth Lederman,
MD</I></B> became our President, Chief Executive Officer, Chairman of the Board and a Director in October 2011. Dr. Lederman founded
Tonix Sub in June of 2007 and has acted as its Chairman of the Board of Directors since inception and as President since June 2010.
Dr. Lederman has been the Chairman of Krele since its inception in August 2010. Since 1996, Dr. Lederman has been an Associate
Professor at Columbia University. As an Assistant Professor at Columbia, Dr. Lederman discovered and characterized the CD40-ligand
and invented therapeutic candidates to treat autoimmune diseases and transplant rejection. Dr. Lederman has been a Manager of L&amp;L
Technologies LLC since 1996. In addition, Dr. Lederman has been the Managing Member of Seth Lederman Co, LLC since January 2007
and the Managing Member of Lederman &amp; Co, LLC since 2002, both of which are biopharmaceutical consulting and investing companies.
Dr. Lederman has also been the Managing Member of Targent Pharmaceuticals since 2000, and Managing Member of Plumbline LLC since
2002. Targent Pharmaceuticals, LLC was a founder of Targent Pharmaceuticals Inc. on which Board of Directors Dr. Lederman served
from inception in 2001 until the sale of its assets to Spectrum Pharmaceuticals Inc. in 2006. Between January 2007 and November
2008, Dr. Lederman was a Managing Partner of Konanda Pharma Partners, LLC, a Director of Konanda Pharma Fund I, LP, and a Managing
Partner of Konanda General Partner, LLC, which were related private growth equity fund entities. As well, between January 2007
and November 2008, Dr. Lederman was Chairman of Validus Pharmaceuticals, Inc. and Fontus Pharmaceuticals, Inc., which were portfolio
companies of the Konanda private growth equity fund. Since December 2011, Dr. Lederman has served as CEO and Chairman of Leder
Laboratories Inc. and Starling Pharmaceuticals Inc, which are biopharmaceutical development companies. Between 2006 and 2011, Dr.
Lederman was a director of Research Corporation, a New York-based non-profit Dr. Lederman received his BA degree in Chemistry from
Princeton University in 1979 and his MD from Columbia University in 1983. Dr. Lederman has been a New York State licensed physician
since 1985. Dr.&nbsp;Lederman&rsquo;s significant experience with our patent portfolio and his experience as an entrepreneur, seed
capital investor, fund manager, and director of start-up biopharmaceutical companies were instrumental in his selection as a member
of the board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Leland Gershell,
MD PhD</I></B> became our Chief Financial Officer on April 1, 2012. From May 2011 to December 2011, Dr. Gershell was Managing Director
and Senior Analyst at Madison Williams and Company, where he was responsible for equity research coverage of specialty pharmaceutical
and biotechnology companies. From April 2010 to October 2010, Dr. Gershell was Senior Analyst at Favus Institutional Research,
where he was responsible for issuing research reports on a variety of healthcare companies to institutional investors. From October
2008 to October 2009, Dr. Gershell was Senior Analyst at Apothecary Capital, a healthcare investment firm. From November 2004 to
September 2008, Dr. Gershell was an equity research analyst at Cowen and Company, most recently as Vice President, where he was
responsible for the equity research coverage of small and middle capitalization biotechnology companies. Dr. Gershell earned his
M.D. and Ph.D. in Organic Chemistry from Columbia University and his B.A. magna cum laude in Chemistry and Asian Studies from Dartmouth
College. Dr. Gershell is an inventor on Columbia&rsquo;s patents for SAHA/vorinostat, which is marketed by Merck as Zolinza&reg;
and is the first histone deacetylase (HDAC) inhibitor to receive FDA approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Benjamin Selzer</I></B>
became our Chief Operating Officer in October 2011 and our interim Chief Financial Officer, Secretary and Treasurer in February
2012. Mr. Selzer resigned as our interim Chief Financial Officer on April 1, 2012. Mr. Selzer has served as the Chief Operating
Officer of Tonix Sub since April 2011. Between February 2011 and April 2011, Mr. Selzer served as Tonix Sub&rsquo;s Chief Business
Officer. Between May 2009 and January 2011, Mr. Selzer was a private consultant. Previously, Mr. Selzer was the Executive Director,
International Operations and Alliance Management at Aton Pharma, Inc. from April 2008 to May 2009 and Director, Business Development
at Reliant Pharmaceuticals, Inc. from July 2004 to March 2008. From 1999 through 2004, Mr. Selzer was a healthcare investment banker
at Banc of America Securities LLC, Lehman Brothers Inc., and Warburg Dillon Read LLC in New York. Mr. Selzer received his BA in
Economics from The Johns Hopkins University.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Bruce Daugherty</I></B>
became our Senior Director of Drug Development and Controller on April 1, 2012. Since January 2009, Dr. Daugherty has worked as
a consultant to academia and biotechnology companies in drug discovery/development and licensing through his consulting company,
LeClair Pharma Consulting, LLC. Dr. Daugherty was a consultant to our company between November 2011 and March 2012. In 2009, Dr.
Daugherty was employed at Assumption College in Mendham, New Jersey, where he was a lecturer in Biology for freshman students.
From 1987 to 2008, Dr. Daugherty was employed at Merck &amp; Co., where he was a scientist in drug discovery and development. Dr.
Daugherty earned his MBA from Emory University&rsquo;s Goizueta Business School, his PhD in Molecular Genetics and Microbiology
from UMDNJ-Robert Wood Johnson Medical School, his MS in Zoology from Rutgers University and his BA in Biology from Washington
University in St. Louis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Stuart Davidson</I></B>
became a Director in October 2011. Between July 2010 and October 2011, Mr. Davison served as a director of Tonix Sub. Since 1994,
Mr. Davidson has been a Managing Partner of Labrador Ventures. Prior to Labrador, Mr. Davidson founded and served as CEO of Combion,
Inc., which was acquired by Incyte. He also served as President of Alkermes, Inc., a biotechnology company focused on drug delivery.
Mr. Davidson received his Bachelor&rsquo;s Degree from Harvard College in 1978 and his MBA from Harvard Business School in 1984.
Mr.&nbsp;Davidson&rsquo;s prior experience as a venture capital investor, entrepreneur, and biotechnology industry executive experience
leading pharmaceutical companies was instrumental in his selection as a member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Patrick Grace</I></B>
became a Director in October 2011. Between June 2007 and October 2011, Mr. Grace served as a director of Tonix Sub. Since 1996,
he&nbsp;has been a director of Chemed Corporation.&nbsp;Mr.&nbsp;Grace was the co-founder of and has&nbsp;served as the Managing
Partner of Apollo&nbsp;Philanthropy Partners, L.L.C. since October&nbsp;2008. He has also been President of&nbsp;MLP&nbsp;Capital,
Inc., New York, New York, an&nbsp;investment holding company, since&nbsp;1996. Mr.&nbsp;Grace served in various senior management&nbsp;roles
with W. R. Grace &amp;&nbsp;Co. from 1977-1995, and was last President&nbsp;and CEO of Grace&nbsp;Logistics Services, Inc. From
January&nbsp;2002 to August&nbsp;2002, Mr. Grace was also President and Chief Executive Officer of Kingdom Group, LLC (&ldquo;Kingdom&rdquo;),
New York, New York (a provider of turnkey compressed natural gas fueling systems), which filed for bankruptcy January&nbsp;2002,
and he was Executive Vice President of Kingdom from August&nbsp;1999 to December&nbsp;2000. Mr. Grace&nbsp;was a liberal arts major
at the University of&nbsp;Notre&nbsp;Dame and earned a MBA in finance&nbsp;from Columbia University. Mr. Grace&rsquo;s&nbsp;extensive
executive experience, along with&nbsp;his membership on the board of&nbsp;directors of&nbsp;a public company was instrumental in
his&nbsp;selection as a member of&nbsp;our board of&nbsp;directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Donald W. Landry,
MD, PhD</I></B> became a Director in October 2011. Between June 2007 and October 2011, Dr. Landry served as a director of Tonix
Sub. Dr. Landry has been a member of the faculty of Columbia University since 1986, and has served as the Samuel Bard Professor
of Medicine, Chair of the Department of Medicine and Physician-in-Chief at New York Presbyterian Hospital/Columbia University since
2008. Dr. Landry was a co-founder and has been a member of L&amp;L Technologies, LLC since 1996. Dr. Landry received his BS degree
in Chemistry from Lafayette College in 1975, his PhD in Organic Chemistry from Harvard University in 1979 and his M.D. from Columbia
University in 1983. Dr. Landry has been a New York State licensed physician since 1985. In 2008, Dr. Landry was awarded the Presidential
Citizens Medal, the second-highest award that the President can confer upon a civilian. Dr.&nbsp;Landry&rsquo;s significant medical
and scientific background was instrumental in his selection as a member of the board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Ernest Mario,
PhD</I></B> became a Director in October 2011. Between September 2010 and October 2011, Dr. Mario served as a director of Tonix
Sub. Dr. Mario is a former Deputy Chairman and Chief Executive of Glaxo Holdings plc and a former Chairman and Chief Executive
Officer of ALZA Corporation. Since August 2007, Dr. Mario has served as a Director of Celgene Corporation, a Director of Boston
Scientific since October 2001 and currently is the Lead Director of Pharmaceutical Product Development, Inc. From 2003 to 2007,
he was Chairman and Chief Executive of Reliant Pharmaceuticals, Inc. Since August 2007, Dr.&nbsp;Mario has served as the Chief
Executive Officer and Chairman of Capnia, Inc., a privately held specialty pharmaceutical company in Palo Alto, CA. He is Chairman
of the American Foundation for Pharmaceutical Education and serves as an advisor to the pharmacy schools at the University of Rhode
Island and The Ernest Mario School of Pharmacy at Rutgers University. In 2007, Dr.&nbsp;Mario was awarded the Remington Medal by
the American Pharmacists&rsquo; Association, pharmacy&rsquo;s highest honor. Dr.&nbsp;Mario received a PhD and an MS in physical
sciences from the University of Rhode Island and a BS in pharmacy from Rutgers University. Dr.&nbsp;Mario brings to his service
as a director his significant executive leadership experience, including his experience leading several pharmaceutical companies,
as well as his membership on public company boards and foundations. He also has extensive experience in financial and operations
management, risk oversight, and quality and business strategy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Charles Mather
IV</I></B> became a Director in October 2011. Between April and October 2011, Mr. Mather served as a director of Tonix Sub. Mr.
Mather has been the Head of Private and Alternative Capital and Co-Head of ECM at Janney Montgomery Scott since December 2009.
Between October 2008 and December 2009, Mr. Mather served as an independent consultant to various securities firms. Between May
2007 and September 2008, Mr. Mather was the head of the Structured Equity Group at Jefferies Group Inc. Prior to that, Mr. Mather
held various senior investment banking positions at Cowen and Company, including as Co-Head of the Private Equity Group. Mr. Mather
received a BA in History from Brown University and an MBA in Finance from The Wharton School, University of Pennsylvania. Mr.&nbsp;Mather&rsquo;s
extensive experience as an investment banker was instrumental in his selection as a member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>John Rhodes</I></B>
became a Director in October 2011. Between October 2010 and October 2011, Mr. Rhodes served as a director of Tonix Sub. Mr. Rhodes
has been a director of Dewey Electronics Company, a manufacturer of electronic and electromechanical systems for the military and
commercial markets, since 2005. Between April 2007 and June 2010, Mr. Rhodes was a Senior Advisor to Good Energies, Inc., a renewable
energy company. Mr. Rhodes is a former Vice President of Booz Allen Hamilton, Inc. Mr. Rhodes is a graduate of Princeton University
and the Yale School of Management. Mr.&nbsp;Rhodes&rsquo; extensive business and consulting experience, along with his membership
on the board of directors of a public company was instrumental in his selection as a member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Family Relationships</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">None.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;Board Independence</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are not required
to have any independent members of the Board of Directors. The board of directors has determined that (i) Seth Lederman, has a
relationship which, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director and is not an &ldquo;independent director&rdquo; as defined in the Marketplace Rules of
The NASDAQ Stock Market and (ii) Stuart Davidson, Patrick Grace, Donald Landry, Ernest Mario, Charles Mather and John Rhodes are
each an independent director as defined in the Marketplace Rules of The NASDAQ Stock Market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Meetings and Committees of the Board
of Directors</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the fiscal year
ended December 31, 2011, our board of directors held two meetings and approved certain actions by unanimous written consent. We
currently have one board committee, the audit committee. The board as a whole carries out the functions of the compensation and
nominating committees. We expect our directors to attend all board and committee meetings and to spend the time needed and meet
as frequently as necessary to properly discharge their responsibilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Audit Committee</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Audit Committee
consists of Patrick Grace and Charles Mather, with Mr. Grace elected as Chairman of the Committee. Our Board of Directors has determined
that each of Messrs. Grace and Mather are &ldquo;independent&rdquo; as that term is defined under applicable SEC rules and under
the current listing standards of the NASDAQ Stock Market. Mr. Grace is our audit committee financial expert.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Audit Committee&rsquo;s
responsibilities include: (i) reviewing the independence, qualifications, services, fees, and performance of the independent auditors,
(ii) appointing, replacing and discharging the independent auditor, (iii) pre-approving the professional services provided by the
independent auditor, (iv) reviewing the scope of the annual audit and reports and recommendations submitted by the independent
auditor, and (v) reviewing our financial reporting and accounting policies, including any significant changes, with management
and the independent auditor. The Audit Committee has&nbsp;reviewed and discussed with management the Company&rsquo;s audited financial
statements for the year ended December&nbsp;31, 2011.&nbsp;&nbsp;Based on the reviews and discussions referred to above, the Audit
Committee has recommended to the Board of Directors that the financial statements referred to above be included in this Form 10-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Involvement in Certain Legal Proceedings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Directors and Executive
Officers have not been involved in any of the following events during the past ten years:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 6%; text-align: justify">1.</TD>
    <TD STYLE="width: 82%; text-align: justify">any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">2.</TD>
    <TD STYLE="text-align: justify">any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">3.</TD>
    <TD STYLE="text-align: justify">being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">4.</TD>
    <TD STYLE="text-align: justify">being found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">5.</TD>
    <TD STYLE="text-align: justify">being subject of, or a party to, any federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">6.</TD>
    <TD STYLE="text-align: justify">being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXECUTIVE COMPENSATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
provides certain summary information concerning compensation awarded to, earned by or paid to our Chief Executive Officer, the
two highest paid executive officers and up to two other highest paid individuals whose total annual salary and bonus exceeded $100,000
for fiscal years 2011 and 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Name&nbsp;&amp;&nbsp;Principal<BR> Position</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Year</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; padding-bottom: 1pt; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Salary&nbsp;<BR>
    ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; padding-bottom: 1pt; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Bonus&nbsp;<BR>
    ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Stock<BR> Awards<BR> ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Option<BR> Awards<BR> ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; padding-bottom: 1pt; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Non-Equity&nbsp;<BR> Incentive&nbsp;Plan<BR> &nbsp;Compensation&nbsp;<BR>
    ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Change&nbsp;in<BR> Pension<BR> Value&nbsp;and<BR>
    Non-<BR>
Qualified<BR> Deferred<BR> Compensation<BR> Earnings&nbsp;($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; padding-bottom: 1pt; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">All&nbsp;Other<BR> &nbsp;Compensation&nbsp;<BR> ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total<BR> ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 17%; text-align: left"><FONT STYLE="font-size: 8pt">Seth Lederman (1)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">2011</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">300,750</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">(3)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">300,750</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Chief Executive Officer</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2010</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">69,738</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">(2)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">205,833</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">(3)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">275,571</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Rhonda Rosen (4)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2011</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">140,463</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">140,463</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Chief Financial Officer</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2010</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">93,750</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">8,865</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">(5)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">102,615</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">David J. Moss (6)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2011</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Chief Executive Officer</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2010</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Mark Lawson (7)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2010</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
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<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Chief Executive Officer</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
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<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Robert Gebert (8)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2010</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Chief Executive Officer</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
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<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Susan Oliver (9)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2011</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">113,249</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">113,249</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">Secretary</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 4%">(1)</TD>
    <TD STYLE="width: 92%; text-align: justify">Dr. Lederman become our President and Chief Executive Officer on October 7, 2011. His compensation reflects payments made to him either through Tonix or Tonix Sub.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(2)</TD>
    <TD STYLE="text-align: justify">Represents (i) 52,362 shares of common stock granted to Lederman &amp; Co., LLC, and (ii) 256,575 shares of common stock granted to L&amp;L Technologies, LLC, which stock was vested at a value of $0.23/share as of December 31, 2010.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(3)</TD>
    <TD STYLE="text-align: justify">Represents $96,000 and $56,000 of consulting fees paid to L&amp;L Technologies, $198,750 and $145,833 of consulting fees paid to Lederman &amp; Co. and $6,000 and $4,000 of director fees paid for the years ended December 31, 2011 and 2010, respectively.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(4)</TD>
    <TD STYLE="text-align: justify">Ms. Rosen become our Chief Financial Officer on October 7, 2011. Her compensation reflects payments made to her either through Tonix or Tonix Sub. Ms. Rosen was terminated effective February 16, 2012.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(5)</TD>
    <TD STYLE="text-align: justify">Represents 39,272 shares of common stock granted and vested at a value of $0.23/share as of December 31, 2010.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(6)</TD>
    <TD STYLE="text-align: justify">Mr. Moss become our Chief Executive Officer on November 22, 2010 and resigned effective October 7, 2011.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(7)</TD>
    <TD STYLE="text-align: justify">Mr. Lawson become our Chief Executive Officer on January 14, 2010 and resigned on November 22, 2010.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(8)</TD>
    <TD STYLE="text-align: justify">Mr. Gebert resigned as our Chief Executive Officer on January 14, 2010.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>(9)</TD>
    <TD STYLE="text-align: justify">Ms. Oliver was terminated effective October 20, 2011.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Option/SAR Grants in Fiscal Year Ended December 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">None.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Outstanding Equity Awards at Fiscal Year-End Table</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">None.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Equity Compensation Plan Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Plan&nbsp;category</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of<BR> securities&nbsp;to<BR> be&nbsp;issued<BR> upon<BR> exercise&nbsp;of<BR> outstanding<BR> options<BR> (a)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted-<BR> average<BR> exercise<BR> price&nbsp;of<BR> outstanding<BR> options<BR> (b)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Securities<BR> remaining<BR> available&nbsp;for<BR> future<BR> issuance<BR> under&nbsp;equity<BR> compensation<BR> plans<BR> (excluding<BR> securities<BR> reflected&nbsp;in<BR> column&nbsp;(a))<BR> (c)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: left">Equity compensation plans approved by security holders</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">4,000,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Equity compensation plans not approved by security holders</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">-</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">-</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">4,000,000</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Employment Contracts and Termination
of Employment and Change-In-Control Arrangements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Employment Agreement with Leland Gershell</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective April 1,
2012, we entered into an employment agreement (the &ldquo;Gershell Agreement&rdquo;) with Dr. Gershell to serve as Chief Financial
Officer. The base salary under the Gershell Agreement is $175,000 per annum, which shall increase to $325,000 per annum upon our
consummation of an equity sale of securities in excess of $20 million (the &ldquo;Gershell Threshold&rdquo;). The Gershell Agreement
provides for at-will employment and can be terminated at any time by either party, provided, however, that if we terminate Dr.
Gershell for any reason other than cause (as defined in the Gershell Agreement), then Dr. Gershell shall be entitled to six weeks
of severance, which severance payment shall increase to six months if such termination occurs after the Gershell Threshold. In
addition, Dr. Gershell is entitled to participate in any and all benefit plans, from time to time, in effect for our employees,
along with vacation, sick and holiday pay in accordance with its policies established and in effect from time to time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Employment Agreement with Benjamin Selzer</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective April 2,
2012, we entered into an employment agreement (the &ldquo;Selzer Agreement&rdquo;) with Benjamin Selzer to serve as Chief Operating
Officer. The Selzer Agreement replaces and terminates the employment agreement Mr. Selzer had previously entered into with Tonix
Sub. The base salary under the Selzer Agreement is $175,000 per annum, which shall increase to $250,000 per annum effective October
7, 2012, and shall increase to $320,000 per annum upon our consummation of an underwritten public offering of equity securities
in excess of $10 million net to us (the &ldquo;Selzer Threshold&rdquo;). In the event that the Selzer Threshold occurs subsequent
to October 7, 2012, Mr. Selzer shall be entitled to retroactive adjustment of the base salary to the $320,000 per annum rate, not
to exceed an aggregate adjustment of $170,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selzer Agreement
has an initial term of two years, and renews thereafter for additional one year terms unless either party provides 90 days written
notice prior to the termination of a term not to extend the Selzer Agreement. If we terminate Mr. Selzer after the Selzer Threshold
and for any reason other than cause (as defined in the Selzer Agreement), then Mr. Selzer shall be entitled to six months of severance.
In addition, Mr. Selzer is entitled to participate in any and all benefit plans, from time to time, in effect for our employees,
along with vacation, sick and holiday pay in accordance with its policies established and in effect from time to time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Director Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
sets forth summary information concerning the total compensation paid to our non-employee directors in 2011 for services to our
company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fees&nbsp;Earned<BR> or&nbsp;Paid&nbsp;in<BR> Cash&nbsp;($)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Stock<BR> Awards&nbsp;($)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total&nbsp;($)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 36%; text-align: left">Stuart&nbsp;Davidson</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 19%; text-align: right">6,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 19%; text-align: right">-</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 19%; text-align: right">6,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Patrick Grace</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Donald Landry</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Ernest Mario</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Charles Mather IV</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">John Rhodes</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">6,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">6,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-left: 9pt; padding-bottom: 2.5pt">Total:</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">34,000</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double">-</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">34,000</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other than as disclosed
below, since January 1, 2011, there have been no transactions, or proposed transactions, which have materially affected or will
materially affect us in which any director, executive officer or beneficial holder of more than 5% of the outstanding common, or
any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest.
We have no policy regarding entering into transactions with affiliated parties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 4, 2010, Tonix
Sub entered into a consulting agreement with Lederman &amp; Co., LLC, of which our Chairman, CEO and President Seth Lederman is
the Managing Member. Pursuant to this agreement, Lederman &amp; Co. shall provide clinical development, strategic, management and
operational consulting services. In exchange for its services, Tonix Sub shall pay Lederman &amp; Co. compensation of $250,000
per annum and issued to Lederman &amp; Co. 261,784 shares of its common stock, 20% of which vested on the date of the agreement
and the remainder vesting in equal amounts on each of the first, second, third and fourth anniversaries of the date of the agreement.
On August 1, 2011, the cash compensation was reduced to $127,000 per annum. On February 1, 2012, the cash compensation was increased
to $250,000 per annum. Immediately prior to the Share Exchange, the unvested shares of common stock vested.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 4, 2010, Tonix
Sub entered into a technology transfer and assignment agreement with Lederman &amp; Co., LLC. Pursuant to this agreement, Lederman
&amp; Co. transferred intellectual property rights related to isometheptene mucate to Tonix Sub. In exchange for the assignment
of the intellectual property rights, Tonix Sub issued to Lederman &amp; Co. 1,308,921 shares of its common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 4, 2010 Tonix
Sub entered into a consulting agreement with L&amp;L Technologies, LLC, of which our Chairman, CEO and President Seth Lederman
is the Manager. Pursuant to this agreement, L&amp;L Technologies shall provide scientific and medical consulting services. In exchange
for its services, Tonix Sub shall pay L&amp;L Technologies compensation of $96,000 per annum, or such greater amount as the Board
may designate from time to time, and issued to L&amp;L Technologies 1,026,194 shares of its common stock, 25% of which vested on
the date of the agreement and the remainder vesting in equal amounts on each of the first, second and third anniversaries of the
date of the agreement. Immediately prior to the Share Exchange, the unvested shares of common stock vested.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
sets forth certain information regarding beneficial ownership of our common stock as of April 25, 2012:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 92%">by each person who is known by us to beneficially own more than 5% of our common stock;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>by each of our officers and directors; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>by all of our officers and directors as a group.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless otherwise indicated
in the footnotes to the following table, each person named in the table has sole voting and investment power and that person&rsquo;s
address is c/o Tonix Pharmaceuticals Holding Corp., 509 Madison Avenue, Suite 306, New York New York 10022.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">NAME OF OWNER</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">TITLE OF<BR> CLASS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">NUMBER OF<BR> SHARES OWNED (1)</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">PERCENTAGE OF<BR> COMMON STOCK (2)</TD><TD>&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 29%; text-align: left">Seth Lederman</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 22%; text-align: center; padding-left: 10pt">Common Stock</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 22%; text-align: right">12,116,044</TD><TD STYLE="width: 1%">(3)</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 22%; text-align: right">35.06</TD><TD STYLE="width: 1%; text-align: left">%</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Benjamin Selzer</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">532,350</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.55</TD><TD STYLE="text-align: left">%</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Leland Gershell</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">50,000</TD><TD>(4)</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Bruce Daugherty</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">0</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Stuart Davidson</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,338,288</TD><TD>(5)</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.90</TD><TD STYLE="text-align: left">%</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Patrick Grace</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">130,906</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Donald Landry</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2,342,877</TD><TD>(6)</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.83</TD><TD STYLE="text-align: left">%</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Ernest Mario</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,163,745</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.39</TD><TD STYLE="text-align: left">%</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Charles Mather IV</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">110,369</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">John Rhodes</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">901,936</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.63</TD><TD STYLE="text-align: left">%</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Officers and Directors as a Group (10 persons)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">14,857,001</TD><TD>(7)</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42.74</TD><TD STYLE="text-align: left">%</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Lederman &amp; Co., LLC (8)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">5,963,565</TD><TD>(9)</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.35</TD><TD STYLE="text-align: left">%</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Eli Lederman (10)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2,352,810</TD><TD>(11)</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.85</TD><TD STYLE="text-align: left">%</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">L&amp;L Technologies, LLC (12)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,924,857</TD><TD>(13)</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.61</TD><TD STYLE="text-align: left">%</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">National Holdings Corporation (14)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,865,406</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.44</TD><TD STYLE="text-align: left">%</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">David J. Moss (15)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 10pt">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2,116,818</TD><TD>(16)</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.13</TD><TD STYLE="text-align: left">%</TD>
    </TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<!-- Field: Rule-Page --><DIV STYLE="text-align: left; margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 7%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;* Denotes less than 1%</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(1) Beneficial Ownership is determined
in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of
common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days
of April 25, 2011 are deemed outstanding for computing the percentage of the person holding such option or warrant but are not
deemed outstanding for computing the percentage of any other person.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(2) Percentage based upon 34,278,432 shares
of common stock issued and outstanding as of April 25, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(3) Includes 5,873,565 shares of common
stock and 90,000 shares of common stock underlying warrants owned by Lederman &amp; Co., LLC, 1,904,857 shares of common stock
and 20,000 shares of common stock underlying warrants owned by L&amp;L Technologies, Inc., 1,179,424 shares of common stock and
165,000 shares of common stock underlying warrants owned by Targent Pharmaceuticals, LLC and 73,961 shares owned by the Seth M.
Lederman 1999 Trust. Seth Lederman, as the Managing Member of Lederman &amp; Co., LLC and Targent Pharmaceuticals, LLC, the Manager
of L&amp;L Technologies, Inc. and the Trustee of the Seth M. Lederman 1999 Trust, has investment and voting control over the shares
held by these entities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(4) Includes 25,000 shares of common stock
underlying warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(5) Includes 1,090,882 shares of common
stock and 50,000 shares of common stock underlying warrants owned by Lysander, LLC and 130,906 shares owned by Oystercatcher Trust.
Stuart Davidson, as the Member of Lysander, LLC and Trustee of Oystercatcher Trust, has investment and voting control over the
shares held by these entities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(6) Includes 1,904,857 shares of common
stock and 20,000 shares of common stock underlying warrants owned by L&amp;L Technologies, Inc. Donald Landry, as a Member of L&amp;L
Technologies, Inc., has investment and voting control over the shares held by this entity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(7) Includes 5,873,565 shares of common
stock and 90,000 shares of common stock underlying warrants owned by Lederman &amp; Co., LLC, 1,904,857 shares of common stock
and 20,000 shares of common stock underlying warrants owned by L&amp;L Technologies, Inc., 1,179,424 shares of common stock and
165,000 shares of common stock underlying warrants owned by Targent Pharmaceuticals, LLC, 73,961 shares owned by the Seth M. Lederman
1999 Trust, 1,090,882 shares of common stock and 50,000 shares of common stock underlying warrants owned by Lysander, LLC, 130,906
shares owned by Oystercatcher Trust and 25,000 shares of common stock underlying warrants owned by Leland Gershell.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(8) Seth Lederman, our President and Chief
Executive Officer, has investment and voting control over the shares held by this entity. The mailing address for this entity is
245 E. 93 <SUP>rd</SUP> St. 14E, New York, New York 10128.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(9) Includes 90,000 shares of common stock
underlying warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(10) The mailing address for this beneficial
owner is Malt House Cottage, Hurley, Berkshire, SL6 5LT, United Kingdom.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(11) Includes 50,000 shares of common stock
underlying warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(12) Seth Lederman, our President and Chief
Executive Officer and Donald Landry, a Director, have investment and voting control over the shares held by this entity. The mailing
address for this entity is 245 E. 93 <SUP>rd</SUP> St. 14E, New York, New York 10128.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(13) Includes 20,000 shares of common stock
underlying warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(14) Mark Goldwasser, C.E.O. has investment
and voting control over the shares held by this entity. The mailing address for this entity is 120 Broadway, 27 <SUP>th</SUP> Floor,
New York, NY 10271.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(15) The mailing address for this beneficial
owner is 23046 Avenida de la Carlota, Suite 600, Laguna Hills, CA 92653.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(16) Includes 230,000 shares of common
stock underlying warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF SECURITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>COMMON STOCK </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are authorized to
issue up to 75,000,000 shares of our common stock, par value $0.001 per share. As of April 25, 2012, there were 34,278,432 shares
of our common stock issued and outstanding. The outstanding shares of our common stock are validly issued, fully paid and nonassessable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Holders of our common
stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of our common stock do not
have cumulative voting rights. Therefore, holders of a majority of the shares of our common stock voting for the election of directors
can elect all of the directors. Holders of our common stock representing a majority of the voting power of our capital stock issued,
outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of stockholders.
A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such
as liquidation, merger or an amendment to our articles of incorporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Holders of our common
stock are entitled to share in all dividends that our Board of Directors, in its discretion, declares from legally available funds.
In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in
all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over
our common stock. Our common stock has no pre-emptive, subscription or conversion rights and there are no redemption provisions
applicable to our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>PREFERRED STOCK </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are not authorized
to issue shares of Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>OPTIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">None.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>WARRANTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with
the 2011 Financing, we issued Conversion Warrants to purchase 275,000 shares of Common Stock. In addition, we issued 2011 Agent
Warrants to the placement agents to purchase an aggregate of 30,750 shares of Common Stock. The Conversion Warrants have a three
year term and $1.00 exercise price. The 2011 Agent Warrants have a $1.00 exercise price and 15,000 have a two year term and the
remaining 15,750 have a three year term. The Conversion Warrants may be exercised on a cashless basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with
the 2012 Financing, we issued Class A Warrants to purchase 6,617,765 shares of Common Stock. In addition, we issued 2012 Agent
Warrants to the placement agent to purchase 466,777 shares of Common Stock. The Class A Warrants have a five year term and $1.25
exercise price. The 2012 Agent Warrants have a seven year term and $1.25 exercise price. The Class A Warrants and 2012 Agent Warrants
may be exercised on a cashless basis and contain customary anti-dilution protection.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>CONVERTIBLE SECURITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">None.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INDEMNIFICATION FOR SECURITIES ACT LIABILITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Chapter 78 of the Nevada
Revised Statutes (&ldquo;NRS&rdquo;) provides that a corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys&rsquo;
fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action,
suit or proceeding if he is not liable pursuant to NRS Section 78.138 or acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. NRS Chapter 78 further provides that a corporation similarly may indemnify
any such person serving in any such capacity who was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses
(including attorneys&rsquo; fees) actually and reasonably incurred in connection with the defense or settlement of such action
or suit if he is not liable pursuant to NRS Section 78.138 or acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent
that the court or other court of competent jurisdiction in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court or other court of competent jurisdiction shall deem proper.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our bylaws provide
that we may indemnify our officers, directors, employees, agents and any other persons to the maximum extent permitted by the NRS.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PLAN OF DISTRIBUTION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are registering
the shares of common stock previously issued and the shares of common stock issuable upon exercise of the warrants to permit the
resale of these shares of common stock by the holders of the common stock and warrants from time to time after the date of this
prospectus.&nbsp;&nbsp;We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common
stock.&nbsp;&nbsp;We will bear all fees and expenses incident to our obligation to register the shares of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The selling stockholders
may sell all or a portion of the shares of common stock held by them and offered hereby from time to time directly or through one
or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers,
the selling stockholders will be responsible for underwriting discounts or commissions or agent&rsquo;s commissions. The shares
of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at
varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions, which may involve
crosses or block transactions, pursuant to one or more of the following methods:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">on any national securities exchange or quotation service on which
the securities may be listed or quoted at the time of sale;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">in the over-the-counter market;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">in transactions otherwise than on these exchanges or systems or in
the over-the-counter market;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">through the writing or settlement of options, whether such options
are listed on an options exchange or otherwise;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">an exchange distribution in accordance with the rules of the applicable
exchange;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">privately negotiated transactions;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">settlement of short sales entered into after the effective date of
the registration statement of which this prospectus is a part;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">in transactions through broker-dealers that agree with the Selling
Stockholders to sell a specified number of such shares at a stipulated price per share;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">a combination of any such methods of sale; or</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.7in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">any other method permitted pursuant to applicable law.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The selling stockholders may also sell shares
under Rule 144 under the Securities Act of 1933, as amended (the &ldquo;<U>Securities Act</U>&rdquo;), if available, rather than
under this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the selling
stockholders may transfer the shares of common stock by other means not described in this prospectus. If the selling stockholders
effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders
or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal
(which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of
common stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short
and deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection
with such short sales. The selling stockholders may also loan or pledge shares of common stock to broker-dealers that in turn may
sell such shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The selling stockholders
may pledge or grant a security interest in some or all of the warrants or shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock
from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus. The selling stockholders also may transfer and donate the shares of
common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To the extent required
by the Securities Act and the rules and regulations thereunder, the selling stockholders and any broker-dealer participating in
the distribution of the shares of common stock may be deemed to be &ldquo;underwriters&rdquo; within the meaning of the Securities
Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a particular offering of the shares of common stock is made, a prospectus
supplement, if required, will be distributed, which will set forth the aggregate amount of shares of common stock being offered
and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other
terms constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed or re-allowed
or paid to broker-dealers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following selling
stockholders are deemed an &quot;underwriter&quot; as that term is defined under the Securities Exchange Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, and the rules and regulations of such acts, in connection with the sale of their
common stock under this prospectus: Dawson James Securities, Inc., a registered broker-dealer; WFG Investments, Inc., a registered
broker-dealer; Seagate Advisors Inc., an offshore registered broker-dealer; Thomas Hands, Donald Shek, Tom Curtis, Bret Shapiro,
Joseph Balagot and Jonathan Blum; all of whom are employees or affiliates of Dawson James Securities, Inc. With the exception of
the foregoing, no other underwriter or person has been engaged to facilitate the sale of shares of common stock in this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the securities
laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers.
In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is available and is complied with.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There can be no assurance
that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement,
of which this prospectus forms a part.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The selling stockholders
and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders
and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged
in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock.
All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage
in market-making activities with respect to the shares of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We will pay all expenses
of the registration of the shares of common stock pursuant to the registration rights agreement, estimated to be approximately
$108,333 in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with
state securities or &ldquo;blue sky&rdquo; laws; provided, however, a selling stockholder will pay all underwriting discounts and
selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some liabilities under the
Securities Act in accordance with the registration rights agreements or the selling stockholders will be entitled to contribution.
We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act that
may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, in accordance
with the related registration rights agreements or we may be entitled to contribution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Once sold under the
registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands
of persons other than our affiliates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SELLING STOCKHOLDERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus relates
to the offering by the selling stockholders identified in the table below of up to 14,543,807 shares of common stock, par value
$0.001 per share.&nbsp;All of the shares of common stock offered by this prospectus are being sold by the selling stockholders.
These shares consist of (i) 585,750 shares and warrants to purchase 275,000 shares were issued to investors in our 2011 Financing,
(ii) warrants to purchase 30,750 shares issued to placement agents in connection with the 2011 Financing, (iii) 6,592,765 shares
and warrants to purchase 6,592,765 shares were issued to investors in our 2012 Financing, (ii) warrants to purchase 466,777 shares
issued to a placement agent in connection with the 2012 Financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The table below has
been prepared based upon the information furnished to us by the selling stockholders.&nbsp;The selling stockholders identified
below may have sold, transferred or otherwise disposed of some or all of their shares since the date on which the information in
the following table is presented in transactions exempt from, or not subject to, the registration requirements of the Securities
Act.&nbsp;Information concerning the selling stockholders may change from time to time and, if necessary, we will amend or supplement
this prospectus accordingly.&nbsp;We cannot provide an estimate as to the number of shares of common stock that will be held by
the selling stockholders upon termination of the offering covered by this prospectus because the selling stockholders may offer
some or all of their shares of common stock under this prospectus. The selling stockholders may also sell, transfer or otherwise
dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act or
pursuant to another effective registration statement covering those shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following selling
stockholders are deemed an &quot;underwriter&quot; as that term is defined under the Securities Exchange Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, and the rules and regulations of such acts, in connection with the sale of their
common stock under this prospectus: Dawson James Securities, Inc., a registered broker-dealer; WFG Investments, Inc., a registered
broker-dealer; Seagate Advisors Inc., an offshore registered broker-dealer; Thomas Hands, Donald Shek, Tom Curtis, Bret Shapiro,
Joseph Balagot and Jonathan Blum; all of whom are employees or affiliates of Dawson James Securities, Inc. With the exception of
the foregoing, no other underwriter or person has been engaged to facilitate the sale of shares of common stock in this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Dawson James Securities,
Inc. and WFG Investments, Inc. are registered broker-dealers and FINRA member firms, and Seagate Advisors Inc., an offshore registered
broker-dealer, are listed as selling stockholders in this prospectus. Each of these entities served as placement agents in our
2011 Financing or 2012 Financing, and received, in addition to cash commissions, warrants to purchase an aggregate of 466,777,
15,000, and 15,750&nbsp;shares of our common stock, respectively, with an exercise price of $1.25, $1.00, and $1.00 per share,
respectively. The registration statement of which this prospectus forms a part includes the shares of common stock underlying the
warrants held by these firms and Thomas Hands, Donald Shek, Tom Curtis, Bret Shapiro, Joseph Balagot and Jonathan Blum, all of
whom are employees or affiliates of Dawson James Securities, Inc.. The SEC has indicated that it is their position that any broker-dealer
firm which is a selling stockholder is deemed an underwriter and therefore these firms and such associated persons may be deemed
an underwriter with respect to the securities being sold by them.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
sets forth, based on information provided to us by the selling stockholders or known to us, the name of each selling stockholder,
the nature of any position, office or other material relationship, if any, which the selling stockholder has had, within the past
three years, with us or with any of our predecessors or affiliates, and the number of shares of our common stock beneficially owned
by the stockholder before this offering.&nbsp;The number of shares owned are those beneficially owned, as determined under the
rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose.&nbsp;Under these
rules, beneficial ownership includes any shares of common stock as to which a person has sole or shared voting power or investment
power and any shares of common stock which the person has the right to acquire within 60 days through the exercise of any option,
warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation
of a trust, discretionary account or similar arrangement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have assumed all
shares of common stock reflected on the table will be sold from time to time in the offering covered by this prospectus.&nbsp;Because
the selling stockholders may offer all or any portions of the shares of common stock listed in the table below, no estimate can
be given as to the amount of those shares of common stock covered by this prospectus that will be held by the selling stockholders
upon the termination of the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Selling&nbsp;Stockholder</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of&nbsp;<BR> Common&nbsp;<BR>
    Stock&nbsp;Owned&nbsp;<BR> Before&nbsp;this&nbsp;<BR> Offering</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of&nbsp;<BR> Common&nbsp;Stock&nbsp;<BR>
    Underlying<BR> Warrants&nbsp;Owned&nbsp;<BR> Before&nbsp;this&nbsp;<BR> Offering&nbsp;&nbsp;(1)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percentage&nbsp;of&nbsp;<BR>
    Common&nbsp;Stock&nbsp;<BR> Beneficially&nbsp;<BR> Owned&nbsp;Before&nbsp;<BR> this&nbsp;Offering&nbsp;(2)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of&nbsp;<BR> Common&nbsp;<BR>
    Stock&nbsp;Being&nbsp;<BR> Offered&nbsp;in&nbsp;<BR> this&nbsp;Offering</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of<BR> Common<BR>
    Stock<BR> Owned<BR>
    After&nbsp;this<BR> Offering (3)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percentage of&nbsp;<BR> Common
    Stock&nbsp;<BR>
    Beneficially<BR> Owned After&nbsp;this<BR> Offering (2)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: left"><FONT STYLE="font-size: 8pt">Targent Pharmaceuticals, LLC (4)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">1,179,424</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">165,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">3.90</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">384,450</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">959,974</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">2.31</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Lederman &amp; Co, LLC (5)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">5,873,565</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">90,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">17.35</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">209,700</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">5,753,865</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">13.82</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Sandor Capital Master Fund, L.P. (6)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">832,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.55</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">932,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">300,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">JSL Kids Partners (7)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">233,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">233,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">L &amp; L Technologies, LLC (8)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,904,857</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">20,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">5.61</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">30,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,894,857</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4.55</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">John Selzer (9)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">300,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Lysander LLC (10)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,157,382</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.52</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">116,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,090,882</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2.62</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Ernest Mario (11)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,113,745</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.39</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">116,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,047,245</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2.51</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Donald W. Landry (12)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">393,020</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.22</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">58,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">359,770</FONT></TD><TD STYLE="text-align: left"></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Charles E. Mather III (13)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">13,300</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">23,300</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Adam B. Connors</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">33,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">58,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Eli Lederman (14)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,302,810</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">6.85</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">116,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,236,310</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">5.37</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">The London Trust (15)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">99,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">149,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">John Rhodes (16)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">851,936</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2.63</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">116,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">785,436</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.89</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Ryan Fernan</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">33,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">58,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Charles E. Mather IV (17)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,569</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">23,300</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">87,269</FONT></TD><TD STYLE="text-align: left"></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Frank C. Condella, Jr.</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">142,337</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">58,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">109,087</FONT></TD><TD STYLE="text-align: left"></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">David Moss</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,886,818</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">230,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">6.13</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">345,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,771,818</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4.25</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">The Hashad Family Trust (18)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">199,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">150,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.02</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">349,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Continental Trust Corporation Limited (19)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">266,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.35</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">466,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Dorothy M. Ix</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">75,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">John N. Alessandro</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">36,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">36,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">72,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Jack and Marcy Garson</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.16</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">CL Anderson and Associates Profit Sharing Plan (20)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">James C. Miller</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Bengt Elvir Ling</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Michael Mulieri</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Brett Nesland</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">99,750</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">75,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">174,750</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Iredell and Virginia Iglehart, III, TBE</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">44,636</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">19,636</FONT></TD><TD STYLE="text-align: left"></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</Font></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Korrigan AG (21)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">133,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">233,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Gregory Harrison</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Carl Stevens</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Robert B. Stanger</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Jeffrey &amp; Jennifer Stagnoli</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Vincent Rose. Jr.</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Richard A. Wienecke, II</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Terry and Denis Altenburg</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</font></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<!-- Field: Page; Sequence: 79; Value: 1 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->74<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Selling&nbsp;Stockholder</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of&nbsp;<BR> Common&nbsp;<BR>
    Stock&nbsp;Owned&nbsp;<BR> Before&nbsp;this&nbsp;<BR> Offering</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of&nbsp;<BR> Common&nbsp;Stock&nbsp;<BR>
    Underlying<BR> Warrants&nbsp;Owned&nbsp;<BR> Before&nbsp;this&nbsp;<BR> Offering&nbsp;&nbsp;(1)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percentage&nbsp;of&nbsp;<BR> Common&nbsp;Stock&nbsp;<BR>
    Beneficially&nbsp;<BR> Owned&nbsp;Before&nbsp;<BR> this&nbsp;Offering&nbsp;(2)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of&nbsp;<BR> Common&nbsp;<BR>
    Stock&nbsp;Being&nbsp;<BR> Offered&nbsp;in&nbsp;<BR> this&nbsp;Offering</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of<BR> Common<BR> Stock<BR>
    Owned<BR>
    After&nbsp;this<BR> Offering (3)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percentage of&nbsp;<BR> Common Stock&nbsp;<BR>
    Beneficially<BR> Owned After&nbsp;this<BR> Offering (2)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: left"><FONT STYLE="font-size: 8pt">Gilbert E. Ludwig IRA</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Geoffrey Poremba, IRA</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">58,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">58,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">116,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Theo Olison, IRA</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Timothy &amp; Patricia Gillis</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Denis Robert Daun</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">18,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">18,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">36,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Alessandro Lamon</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Woody S. Byars, IRA</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">John Sloan Jr., IRA</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">John Blum Jr.</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Mary Louise Marcin</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">John Grohe</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Jeffrey E. Burt</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,700</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,700</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,400</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Wardenburg 2009 Family Trust (22)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Frank and Hope Patton</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">13,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">13,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">26,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">WP O'Reilly &amp; Associates Ltd. (23)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">SLMI Holdings LLC (24)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Pamela Corson, IRA</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Brian Wolf</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">Jan Backvall</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">65,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">65,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">130,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Fred Militello</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">18,750</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">18,750</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">37,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Kevin Lydon</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Cadence Investments IV, LLLP (25)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">70,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">70,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">140,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Francis and Jeffrey Chan</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Alan David Cohen</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Kerston Coombs</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">37,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">37,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">75,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Constantine Hagepanos</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Peter Kaplan</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Gerald and Seena Sperling JTWROS</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.16</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Bunkap Industries, Inc. (26)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Steven Etra</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">170,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">170,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">340,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Cadence Investments III LLLP (27)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">60,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">60,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">120,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Michael Berenhaus</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Donald S. Darendinger Revocable Trust UA 07/03/2007 (28)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">John Black</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Bruce Robinson</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Joe A. Holle</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Christopher Moore</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Raymond G. Tinney 1995 Inter Vivos Trust U/A (29)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Jason Curtis</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">19,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">19,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">38,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Stanley &amp; Larisa Minkin</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">David Hansen</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Michael Brodherson</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Umesh B Malyavantham, IRA</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<!-- Field: Page; Sequence: 80; Value: 1 -->
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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Selling&nbsp;Stockholder</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of&nbsp;<BR> Common&nbsp;<BR>
    Stock&nbsp;Owned&nbsp;<BR> Before&nbsp;this&nbsp;<BR> Offering</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of&nbsp;<BR> Common&nbsp;Stock&nbsp;<BR>
    Underlying<BR> Warrants&nbsp;Owned&nbsp;<BR> Before&nbsp;this&nbsp;<BR> Offering&nbsp;&nbsp;(1)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percentage&nbsp;of&nbsp;<BR> Common&nbsp;Stock&nbsp;<BR>
    Beneficially&nbsp;<BR> Owned&nbsp;Before&nbsp;<BR> this&nbsp;Offering&nbsp;(2)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of&nbsp;<BR> Common&nbsp;<BR>
    Stock&nbsp;Being&nbsp;<BR> Offered&nbsp;in&nbsp;<BR> this&nbsp;Offering</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of<BR> Common<BR> Stock<BR>
    Owned<BR>
    After&nbsp;this<BR> Offering (3)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percentage of&nbsp;<BR> Common Stock&nbsp;<BR>
    Beneficially<BR> Owned After&nbsp;this<BR> Offering (2)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: left"><FONT STYLE="font-size: 8pt">William S. Atkins Living Trust dtd. 8/14/1998 (30)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">James Rees</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">37,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">37,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">75,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">F. Richard Stark</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Paul &amp; Teri Sallwasser Joint Tenants</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Dr. Carl Eric Mayer Revocable Trust (31)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">John E. Nash</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">B Mark Paull</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Dominic Martos</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Bayard Henry</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Robert J. Rosenberg</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Virginia Anne Cahal</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">250,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">250,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.45</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">500,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Melvyn Gober</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">William C. Kottke</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">30,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Jim &amp; Mike Narutowicz, JTWROS</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">George Rosch</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Donald Myrtue</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Mark Wiley</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">20,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">20,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">40,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Ashley Weatherford, IRA</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Kyl Scott, IRA</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">47,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">47,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">94,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">William &amp; Rosalyn Gershell, JTWROS (32)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Cheryl Martos</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Charles McElheney, IRA</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">James E. Anderson</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Niamh O.Reilly</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">75,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">75,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">150,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">John D. Marks</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Timothy Douglas Quartly-Watson</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Gerald &amp; Janice Johnson, JTWROS</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Robert A. Kiesz</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">George A. Long, III</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">David Hawks</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Martha Blackwood Zeh</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Gurpreet S. Ahluwalia</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">30,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">30,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">60,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Susan Doukas</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">James Streett</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Jacques Lee Smith</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">John R. Rogers</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">30,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">30,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">60,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Joseph Mulieri</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Elizabeth Burrow Living Trust (33)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Susan Loewenstein</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Becky A. Davis</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">John Sloan Jr., IRA</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Kerry Staton</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<!-- Field: Page; Sequence: 81; Value: 1 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Selling&nbsp;Stockholder</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of&nbsp;<BR> Common&nbsp;<BR>
    Stock&nbsp;Owned&nbsp;<BR> Before&nbsp;this&nbsp;<BR> Offering</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of&nbsp;<BR> Common&nbsp;Stock&nbsp;<BR>
    Underlying<BR> Warrants&nbsp;Owned&nbsp;<BR> Before&nbsp;this&nbsp;<BR> Offering&nbsp;&nbsp;(1)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percentage&nbsp;of&nbsp;<BR> Common&nbsp;Stock&nbsp;<BR>
    Beneficially&nbsp;<BR> Owned&nbsp;Before&nbsp;<BR> this&nbsp;Offering&nbsp;(2)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of&nbsp;<BR> Common&nbsp;<BR>
    Stock&nbsp;Being&nbsp;<BR> Offered&nbsp;in&nbsp;<BR> this&nbsp;Offering</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares&nbsp;of<BR> Common<BR> Stock<BR>
    Owned<BR>
    After&nbsp;this<BR> Offering (3)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percentage of&nbsp;<BR> Common Stock&nbsp;<BR>
    Beneficially<BR> Owned After&nbsp;this<BR> Offering (2)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: left"><FONT STYLE="font-size: 8pt">Philip Stark</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Thomas J. Minton and Mary Jo R. Minton</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">F. Larry Holcomb</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">JJ2002 Inc. (34)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Jason Morjain</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Robert &amp; Elsie Mathews</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Leland and Lauren Gershell (35)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Cadence Investments III LLLP (27)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">20,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Cadence Investments IV LLLP (25)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">30,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Gerard W. Walterhoefer &amp; Nancy Lynn Walterhoefer</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,515</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,515</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,030</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Bruce Robinson</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">200,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.16</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Nigel Francis Burrow Living Trust (36)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">24,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">24,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">49,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">JJB GA SF LLC (37)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">75,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">75,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">150,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Patrick &amp; Zoe Lynch, JTWROS</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Mario Cabrera</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">PES Property Corp 401k Profit Sharing Plan (38)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Eric Schweiger</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">20,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Cecelia Maben, IRA</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Geoffrey Poremba, IRA</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">13,300</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">13,300</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">26,600</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Michael White</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Edward Karr</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">8,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">8,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Joseph Rudick</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">WFG Investments, Inc. (39)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Seagate Advisors Inc. (40)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,750</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,750</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Dawson James Securities, Inc. (41)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">60,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">177,973</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">177,973</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">60,000</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Thomas Hands</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">31,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">31,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Donald Shek</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">31,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">31,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Tom Curtis</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">34,565</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">34,565</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Bret Shapiro</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">26,767</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">26,767</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Joseph Balagot</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">16,547</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">16,547</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Jonathan Blum</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">148,925</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">*&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">148,925</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">TOTALS:</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">23,754,664</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">7,365,292</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">74.73</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">14,543,807</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">16,576,149</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">39.80</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">*</TD><TD STYLE="text-align: justify">Represents less than 1%.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%; text-align: justify">(1)</TD>
    <TD STYLE="width: 95%; text-align: justify">Represents shares of our common stock remaining issuable under warrants issued in connection with the 2011 Financing and 2012 Financing. All warrants are immediately exercisable.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(2)</TD>
    <TD STYLE="text-align: justify">Applicable percentage ownership before the offering is based on 34,278,432 shares of common stock outstanding as of April 25, 2012.&nbsp; Applicable percentage ownership after the offering is based on 41,643,724 shares of common stock, which includes the 7,365,292 shares of common stock issuable upon exercise of all of the outstanding warrants to purchase common stock registered pursuant to this prospectus.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(3)</TD>
    <TD STYLE="text-align: justify">Assumes that (i) all of the shares of common stock to be registered on the registration statement of which this prospectus is a part, including all shares of common stock underlying warrants held by the selling stockholders, are sold in the offering and (ii) that no other shares of common stock are acquired or sold by the selling stockholder prior to the completion of the offering. However, subject to the restrictions of transfer agreed to by the selling stockholders (see &ldquo;Plan of Distribution&rdquo; in this prospectus), the selling stockholders may sell all, some or none of the shares offered pursuant to this prospectus and may sell other shares of our common stock that they may own pursuant to another registration statement under the Securities Act or sell some or all of their shares pursuant to an exemption from the registration provisions of the Securities Act, including under Rule 144.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%; text-align: justify">(4)</TD>
    <TD STYLE="width: 95%; text-align: justify">Seth Lederman, our chairman and chief executive officer, is the managing member of Targent Pharmaceuticals, LLC and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(5)</TD>
    <TD STYLE="text-align: justify">Seth Lederman, our chairman and chief executive officer, is the managing member of Lederman &amp; Co, LLC and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(6)</TD>
    <TD STYLE="text-align: justify">John Lemak is the manager of Sandor Capital Master Fund, L.P. and has voting and investment power over the securities owned by it. Mr. Lemak is affiliated with WFG Investments, Inc., a registered broker-dealer.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(7)</TD>
    <TD STYLE="text-align: justify">John Lemak is the manager of JSL Kids Partners and has voting and investment power over the securities owned by it. Mr. Lemak is affiliated with WFG Investments, Inc., a registered broker-dealer.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(8)</TD>
    <TD STYLE="text-align: justify">Seth Lederman, our chairman and chief executive officer, is the manager of L&amp;L Technologies, LLC and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(9)</TD>
    <TD STYLE="text-align: justify">John Selzer is the brother of Benjamin Selzer, our Chief Operating Officer.&nbsp; Benjamin Selzer disclaims beneficial ownership of the securities held by John Selzer.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(10)</TD>
    <TD STYLE="text-align: justify">Stuart Davidson, a member of our board of directors, is a member of Lysander LLC and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(11)</TD>
    <TD STYLE="text-align: justify">Ernest Mario is a member of our board of directors.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(12)</TD>
    <TD STYLE="text-align: justify">Donald W. Landry is a member of our board of directors.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(13)</TD>
    <TD STYLE="text-align: justify">Charles E. Mather III is the father of Charles E. Mather IV, a member of our board of directors.&nbsp; Charles E. Mather IV disclaims beneficial ownership of the securities held by Charles E. Mather III.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(14)</TD>
    <TD STYLE="text-align: justify">Eli Lederman is the brother of Seth Lederman, our chairman and chief executive officer.&nbsp; Seth Lederman disclaims beneficial ownership of the securities held by Eli Lederman.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(15)</TD>
    <TD STYLE="text-align: justify">Tara Callen is the trustee of The London Trust and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(16)</TD>
    <TD STYLE="text-align: justify">John Rhodes is a member of our board of directors.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(17)</TD>
    <TD STYLE="text-align: justify">Charles Mather IV is a member of our board of directors.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(18)</TD>
    <TD STYLE="text-align: justify">Adel Hashad and Farida Hashad are the trustees of the Hashad Family Trust and have voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(19)</TD>
    <TD STYLE="text-align: justify">Colin G. Hames is the Director of Continental Trust Corporation Limited and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(20)</TD>
    <TD STYLE="text-align: justify">Charles L. Anderson is the trustee of the CL Anderson and Associates Profit Sharing Plan and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(21)</TD>
    <TD STYLE="text-align: justify">David Craven and Geoffrey Long are the Directors of Korrigan AG and have voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(22)</TD>
    <TD STYLE="text-align: justify">Peter Wardenburg is the trustee of Wardenburg Family Trust and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(23)</TD>
    <TD STYLE="text-align: justify">Niamh O&rsquo;Reilly is the Managing Director of WP O&rsquo;Reilly Associates Ltd. and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(24)</TD>
    <TD STYLE="text-align: justify">Arthur Slack is the managing partner of SLMI Holdings LLC and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(25)</TD>
    <TD STYLE="text-align: justify">John Rogers is the general partner of Cadence Investments IV, LLLP and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(26)</TD>
    <TD STYLE="text-align: justify">Peter Kaplan is the president of Bunker Industries, Inc. and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(27)</TD>
    <TD STYLE="text-align: justify">John Rogers is the general partner of Cadence Investments III, LLLP and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(28)</TD>
    <TD STYLE="text-align: justify">Donald S. Darendinger is the trustee of the Donald S. Darendinger Revocable Trust and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(29)</TD>
    <TD STYLE="text-align: justify">Raymond Tinney is the trustee of the Raymond G. Tinney 1995 Inter Vivos Trust and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(30)</TD>
    <TD STYLE="text-align: justify">William S. Atkins and Sally S. Atkins are the trustees of the William S. Atkins Living Trust and have voting and investment power over the securities owned by it.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%; text-align: justify">(31)</TD>
    <TD STYLE="width: 95%; text-align: justify">Carl Erik Mayer is the trustee of the Dr. Carl Erik Mayer Revocable Trust and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(32)</TD>
    <TD STYLE="text-align: justify">William and Rosalyn Gershell are the parents of Leland Gershell, our chief financial officer.&nbsp; Leland Gershell disclaims beneficial ownership of the securities held by William and Rosalyn Gershell.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(33)</TD>
    <TD STYLE="text-align: justify">Elizabeth Burrow is the trustee of the Elizabeth Burrow Living Trust and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(34)</TD>
    <TD STYLE="text-align: justify">Jason Morjian is the president of JJ2002 Inc. and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(35)</TD>
    <TD STYLE="text-align: justify">Leland Gershell is our chief financial officer.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(36)</TD>
    <TD STYLE="text-align: justify">Nigel Burrow is the trustee of the Nigel Burrow Living Trust and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(37)</TD>
    <TD STYLE="text-align: justify">John Smithgall is the Co-Manager of JJB GA SF LLC and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(38)</TD>
    <TD STYLE="text-align: justify">Peter Subesan is the president of PES Property Corp 401(k) Profit Sharing Plan and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(39)</TD>
    <TD STYLE="text-align: justify">Wilson H. Williams is the President and Chief Executive Officer of WFG Investments, Inc. and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(40)</TD>
    <TD STYLE="text-align: justify">Mabel Moreno is the President and Owner of Seagate Advisors Inc. and has voting and investment power over the securities owned by it.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(41)</TD>
    <TD STYLE="text-align: justify">Thomas Hands is the President of Dawson James Securities, Inc. and has voting and investment power over the securities owned by it.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>2011 Private Placement</I> &nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Between October and
November, 2011 we consummated the 2011 Financing pursuant to which we sold $2,075,000 principal amount of Debentures for aggregate
cash proceeds of $1,575,000 and the exchange of $500,000 in previously issued Notes of Tonix Sub that were converted into Debentures
in the principal face amount of $500,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon conversion or
repayment of the Debenture, the holders were entitled to receive, at the holder&rsquo;s option, either (i) the Conversion Warrant
or (ii) the Incentive Shares. The private placement that closed in January 2012 met the requirements of a Subsequent Financing,
therefore, the holders of the Debentures elected to receive 275,000 Conversion Warrants and 594,000 Incentive Shares. In connection
with the 2011 Financing, we issued the 2011 Agent Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Incentive Shares
and shares underlying the Conversion Warrants and 2011 Agent Warrants are registered pursuant to this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>2012 Private Placement</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Between January and
March, 2012, we consummated the 2012 Financing pursuant to which we issued an aggregate of 264.7106 Units.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each Unit had a purchase
price of $25,000 per Unit and consisted of twenty five thousand (25,000) shares of our Common Stock, 25,000 Class A Warrants and
25,000 Class B Warrants. The Class A Warrants have an exercise price of $1.25 per share of Common Stock and will be exercisable
for a period of five years from the date of issuance. In connection with the 2012 Financing, we issued the 2012 Agent Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The shares included
in the Units and shares underlying the Class A Warrants and 2012 Agent Warrants are registered pursuant to this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LEGAL MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sichenzia Ross Friedman
Ference LLP, New York, New York will issue an opinion with respect to the validity of the shares of common stock being offered
hereby.&nbsp;&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXPERTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">EisnerAmper LLP, an
independent registered public accounting firm, has audited, as set forth in its report thereon appearing elsewhere herein, our
financial statements at December 31, 2011 and 2010 and for the years then ended that appear in the prospectus. The financial statements
referred to above are included in this prospectus in reliance upon the independent registered public accounting firm&rsquo;s report
on their given authority as experts in accounting and auditing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AVAILABLE INFORMATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have filed a registration
statement on Form S-1 under the Securities Act of 1933, as amended, relating to the shares of common stock being offered by this
prospectus, and reference is made to such registration statement. This prospectus constitutes the prospectus of Tonix Pharmaceuticals
Holding Corp., filed as part of the registration statement, and it does not contain all information in the registration statement,
as certain portions have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are subject to the
informational requirements of the Securities Exchange Act of 1934 which requires us to file reports, proxy statements and other
information with the Securities and Exchange Commission. Such reports, proxy statements and other information may be inspected
at public reference facilities of the SEC at 100 F Street, N.E., Washington D.C. 20549. Copies of such material can be obtained
from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. Because we file
documents electronically with the SEC, you may also obtain this information by visiting the SEC's Internet website at <FONT STYLE="text-underline-style: none; color: windowtext">http://www.sec.gov</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INDEX TO FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INDEX TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the Years Ended December 31, 2011 and 2010</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%">
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="width: 80%">Report of Independent Registered Public Accounting Firm</TD>
    <TD STYLE="width: 5%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 15%; text-align: center">F-1</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>Consolidated balance sheets as of December 31, 2011 and 2010</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">F-2</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Consolidated statements of operations for the years ended December 31, 2011 and 2010 and for the period from June 7, 2007 (date of inception) through December 31, 2011</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">F-3</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>Consolidated statements of stockholders&rsquo; deficiency for the years ended December 31, 2011, 2010, 2009, 2008 and for the period from June 7, 2007 (date of inception) through December 31, 2007</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">F-4</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Consolidated statements of cash flows for the years ended December 31, 2011 and 2010 and for the period from June 7, 2007 (date of inception) through December 31, 2011</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">F-5</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>Notes to consolidated financial statements</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">F-6 to F-16</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Board of Directors and Stockholders</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Tonix Pharmaceuticals Holding Corp.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated
balance sheets of Tonix Pharmaceuticals Holding Corp. (a development stage company) (the &ldquo;Company&rdquo;) as of December
31, 2011 and 2010, the related consolidated statements of operations and cash flows for the years then ended and for the period
from June 7, 2007 (inception) through December 31, 2011 and the consolidated statements of stockholders&rsquo; deficiency for each
of the four years in the period ended December 31, 2011 and for the period from June 7, 2007 (inception) through December 31, 2007.
These financial statements are the responsibility of the Company&rsquo;s management. Our responsibility is to express an opinion
on these financial statements based on our audits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not
engaged to perform an audit of the Company&rsquo;s internal control over financial reporting. Our audits include consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company&rsquo;s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In our opinion, the financial statements
referred to above present fairly, in all material respects, the consolidated financial position of Tonix Pharmaceuticals Holding
Corp. as of December 31, 2011 and 2010, the consolidated results of its operations and its cash flows for the years ended December
31, 2011 and 2010 and for the period from June 7, 2007 (inception) through December 31, 2011 and consolidated changes in stockholders&rsquo;
deficiency for each of the four years in the period ended December 31, 2011 and for the period June 7, 2007 through December 31,
2007, in conformity with accounting principles generally accepted in the United States of America.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the
Company has incurred recurring net losses and negative cash flows from operations, has both working capital and stockholders' deficiencies
at December 31, 2011 and requires additional financing to fund future operations. These events and conditions, among others referred
to in Note 2, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans concerning
these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the
outcome of this uncertainty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 40%; border-bottom: black 1pt solid">/s/EisnerAmper LLP</TD>
    <TD STYLE="width: 60%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>EisnerAmper LLP</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>New York, New York</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>March 30, 2012</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.8pt; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING
CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.8pt; text-align: center"><B>(Formerly known as Tamandare
Explorations Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.8pt; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.8pt; text-align: center"><B>CONSOLIDATED BALANCE SHEETS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.8pt; text-align: center"><B>DECEMBER 31, 2011 AND 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.8pt; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Current assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">41,123</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">65,359</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Prepaid expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">102,430</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">23,313</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">143,553</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">88,672</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Furniture and equipment, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,550</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,086</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Deferred financing costs, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">196,166</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Restricted cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60,177</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60,087</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Security deposit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,156</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">425,446</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">184,001</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">LIABILITIES AND STOCKHOLDERS' DEFICIENCY</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Current liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">695,198</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">317,745</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accrued expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,229</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,533</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accrued interest, including $5,006 to related parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,306</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Liability to placement agent</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,543</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Convertible Debentures</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">150,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total current liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">925,276</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">340,278</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Convertible Debentures, including $265,000 to related parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,925,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Deferred rent payable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">29,083</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">19,174</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,879,359</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">359,452</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Commitments (Note 6)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Stockholders' deficiency:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Common stock, $0.001 par value; 75,000,000 shares authorized, 27,066,667 and 18,034,483 shares issued and outstanding as of December 31, 2011 and 2010, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27,067</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,035</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Additional paid in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,913,700</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,731,081</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Deficit accumulated during development stage</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(6,394,680</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,924,567</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Total stockholders' deficiency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,453,913</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(175,451</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">425,446</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">184,001</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See notes to consolidated financial statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.8pt; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING
CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.8pt; text-align: center"><B>(Formerly known as Tamandare
Explorations Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.8pt; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.8pt; text-align: center"><B>CONSOLIDATED STATEMENTS OF
OPERATIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.8pt; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">From&nbsp;June&nbsp;7,&nbsp;2007</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">(date&nbsp;of&nbsp;inception)</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Year&nbsp;ended&nbsp;December&nbsp;31,</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Through</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">December&nbsp;31,&nbsp;2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Costs and expenses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 61%; text-align: left">Research and development</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,158,167</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">584,298</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,951,954</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">General and administrative</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,220,361</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,344,390</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,255,247</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,378,528</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,928,688</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,207,201</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Operating loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,378,528</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,928,688</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,207,201</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Gain on extinguishment of debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,908</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Interest expense, net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(91,585</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(35,782</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(195,387</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net loss</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(3,470,113</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,964,470</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(6,394,680</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net loss per common share, basic and&nbsp; diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.16</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.18</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Weighted average common shares outstanding, basic and diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">21,425,632</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11,175,096</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See notes to consolidated financial statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
DEFICIENCY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Deficit</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Accumulated</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Additional</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">During</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Common&nbsp;stock</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Paid&nbsp;in</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Development</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Shares</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Amount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Capital</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Stage</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Total</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 35%; text-align: left">Shares issued to founders for intellectual property in June 2007 ($0.15 per share)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">589,014</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">589</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">87,161</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">87,750</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Shares issued to bankers for services in June 2007 ($0.15 per share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65,446</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,684</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,750</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Compensation related to restricted share awards issued to directors in November 2007</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,187</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,187</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(537,001</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(537,001</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Balance at December 31, 2007</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">654,460</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">655</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">121,032</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(537,001</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(415,314</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Compensation related to cancelled restricted share awards in December 2008</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">72,563</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">72,563</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(202,262</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(202,262</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Balance at December 31, 2008</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">654,460</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">655</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">193,595</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(739,263</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(545,013</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Conversion of senior convertible notes into capital stock in June 2009 ($0.03 per share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,200,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">192,800</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Shares issued to directors in July 2009 ($0.15 per share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,414</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,649</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,680</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Capital contribution in June 2009</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,725</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,725</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(220,834</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(220,834</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Balance at December 31, 2009</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,885,875</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,886</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">414,769</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(960,097</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(537,442</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Conversion of demand notes into capital stock in July 2010 ($0.23 per share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,094,547</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,095</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">477,905</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">480,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Conversion of accrued interest on demand notes into capital stock in July 2010 ($0.23 per share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">301,430</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">301</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68,777</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">69,078</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Issuance of capital stock in August to December 2010 ($0.23 per share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,856,005</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,856</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,336,145</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,342,001</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Shares issued to founders for intellectual property in June 2010 ($0.23 per share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,308,921</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,309</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">294,191</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">295,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Issuance of restricted shares to directors, employees and consultants in June to November 2010 ($0.24 per share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">587,705</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">588</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,294</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,882</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,964,470</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,964,470</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Balance at December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,034,483</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,035</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,731,081</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,924,567</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(175,451</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Vesting and issuance of capital stock in January to September 2011 ($0.23 per share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,670,548</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,670</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">609,330</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">612,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Vesting and issuance of restricted shares to directors, employees and consultants in February to April&nbsp; 2011 and vesting of restricted shares pursuant to Share Exchange in October 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,961,636</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,962</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">433,689</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">435,651</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Common stock issued in connection with the share exchange transaction in October 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Common stock issued in October 2011 in exchange for services rendered ($0.36 per share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">400,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">143,600</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">144,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,470,113</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,470,113</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 9pt">Balance at December 31, 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">27,066,667</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">27,067</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,913,700</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(6,394,680</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2,453,913</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See notes to consolidated financial statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">From&nbsp;June&nbsp;7,&nbsp;2007</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">(date&nbsp;of&nbsp;inception)</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Year&nbsp;ended&nbsp;December&nbsp;31,</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Through</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">December&nbsp;31,&nbsp;2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">CASH&nbsp;FLOWS&nbsp;FROM&nbsp;OPERATING&nbsp;ACTIVITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 61%; text-align: left">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(3,470,113</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(1,964,470</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(6,394,680</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Adjustments to reconcile net loss to net cash used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,854</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,312</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Amortization of deferred financing costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,377</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,377</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Common stock issued in exchange for intellectual property</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">295,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">383,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Stock based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">435,651</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,882</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">686,713</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Gain on extinguishment of debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7,908</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Changes in operating assets and liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(79,117</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(19,315</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(102,430</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">377,453</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">294,132</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">695,198</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accrued interest</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,306</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,691</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,306</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accrued expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(12,304</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(34,789</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">110,940</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Deferred rent payable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,909</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">19,174</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">29,083</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Net cash used in operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,637,538</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,233,341</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,490,839</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">CASH FLOWS FROM INVESTING ACTIVITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Purchase of furniture and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,764</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(34,279</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(42,862</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Repayment of security deposit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,156</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Payment of restricted cash</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(90</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(60,087</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(60,177</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Net cash provided by (used in) investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">302</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(94,366</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(103,039</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">CASH FLOWS FROM FINANCING ACTIVITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Proceeds from demand notes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">480,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Proceeds from notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">500,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">700,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Proceeds from Convertible Debentures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,501,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,501,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Proceeds from the sale of capital stock</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">612,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,342,001</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,954,001</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Net cash provided by financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,613,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,392,001</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,635,001</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net (decrease) increase in cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(24,236</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64,294</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,123</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Cash, beginning of the period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">65,359</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,065</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Cash, end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">41,123</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">65,359</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">41,123</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Non cash investing and financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Senior convertible notes exchanged for preferred shares</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">200,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">200,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Capital contribution of accrued interest on convertible notes</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">23,725</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Demand notes together with accrued interest converted into capital stock</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">549,078</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">549,078</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Common stock issued for deferred financing costs</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">144,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">144,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See notes to consolidated financial statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DECEMBER 31, 2011 AND 2010&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>NOTE 1 &ndash;BUSINESS AND RECAPITALIZATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Tonix Pharmaceuticals Holding Corp. through
its wholly owned subsidiary Tonix Pharmaceuticals, Inc. is attempting to develop safer and more effective versions of widely prescribed
central nervous system (&quot;CNS&quot;) drugs. While some new applications can use the commercially available form of the drug,
in other cases reformulating the active ingredient improves its safety or effectiveness in treating the CNS condition. When formal
development programs have proven successful in clinical tests, Tonix Pharmaceuticals, Inc. intends to seek marketing approval from
the Food and Drug Administration (&quot;FDA&quot;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On August 16, 2010, Tonix Pharmaceuticals,
Inc. formed Krele LLC (&quot;Krele&quot;) in the state of Delaware. Krele is a limited liability corporation whose sole member
is Tonix Pharmaceuticals Inc. Krele was established to commercialize products that are generic versions of predicate new drug application
products or versions of drug efficacy study implementation products. The Company expects that its relationship to Krele will be
similar to that of several other pharmaceutical companies and their subsidiaries that market generic versions of the parent's branded
products at different periods in their product life-cycle.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On October 7, 2011, Tonix Pharmaceuticals, Inc. (formerly Krele
Pharmaceuticals, Inc. incorporated on June 7, 2007 in the State of Delaware) and a publicly traded non-operating shell company
Tamandare Explorations Inc. (&ldquo;Tamandare&rdquo;), incorporated under the laws of the State of Nevada, along with certain other
parties executed and consummated a share exchange agreement (the &ldquo;Share Exchange&rdquo;). Pursuant to the Share Exchange,
each share of Tonix Pharmaceuticals Inc.&rsquo;s common stock was exchanged for 0.9 shares of Tamandare&rsquo;s common stock and
each share of Tonix Pharmaceuticals, Inc.&rsquo;s Series A and B preferred stock was exchanged for 4.8 shares of Tamandare&rsquo;s
common stock. Upon completion of the Share Exchange, the Tonix Pharmaceuticals, Inc. shareholders, including holders of restricted
shares, which were subject to accelerated vesting, received in exchange for all of their shares, an aggregate of 22,666,667 shares
of Tamandare&rsquo;s common stock and Tamandare&rsquo;s existing stockholders retained 4,000,000 shares of common stock. The 22,666,667
shares issued to the Tonix Pharmaceuticals, Inc. shareholders constituted approximately 85% of Tamandare&rsquo;s 26,666,667 issued
and outstanding shares of common stock after the Share Exchange. Upon completion of the Share Exchange, Tonix Pharmaceuticals,
Inc. became Tamandare&rsquo;s wholly-owned subsidiary and in October 2011 Tamandare was renamed Tonix Pharmaceuticals Holding Corp.
As the owners and management of Tonix Pharmaceuticals, Inc. obtained voting and operating control of Tamandare after the Share
Exchange and Tamandare was non-operating, had no assets or liabilities and did not meet the definition of a business, the transaction
has been accounted for as a recapitalization of Tonix Pharmaceuticals, Inc., accompanied by the issuance of its common stock for
outstanding common stock of Tamandare, which was recorded at a nominal value. The accompanying financial statements and related
notes give retroactive effect to the recapitalization as if it had occurred on June 7, 2007 (inception date) and accordingly all
share and per share amounts have been adjusted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Basis of presentation:</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The consolidated financial statements include
the accounts of Tonix Pharmaceuticals Holding Corp. and&nbsp;its wholly owned subsidiaries, Tonix Pharmaceuticals, Inc. and Krele
LLC (hereafter referred to as the &ldquo;Company&rdquo; or &ldquo;Tonix&rdquo;). All significant intercompany balances and transactions
have been eliminated in consolidation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As the Company is devoting substantially
all of its efforts to establishing a new business, and while planned principal operations have commenced, there has been no revenue
generated from sales, license fees or royalties, the Company is considered a development stage enterprise. Accordingly, the Company's
consolidated financial statements are presented in accordance with authoritative accounting guidance related to a development stage
enterprise. Financial position, results of operations and cash flows of a development stage enterprise are presented in conformity
with generally accepted accounting principles that apply to established operating enterprises.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DECEMBER 31, 2011 AND 2010&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a development stage enterprise, the
Company's primary efforts are devoted to conducting research and development for the treatment of CNS diseases. The Company has
experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the
foreseeable future. In addition, the Company has both working capital and stockholders' deficiencies at December&nbsp;31, 2011
and requires additional financing to fund future operations. Although, in the first quarter of 2012, the Company raised approximately
$4,700,000 (see Note 11), it&rsquo;s expected that cash used in operations will increase significantly over the next several years.
The Company intends to raise additional capital to complete the development and commercialization of its current product candidates
through equity or debt financing; however the Company does not have any commitments or definitive or binding arrangements for such
funds. There can be no assurance that such funds, if available at all, can be obtained on terms reasonable to the Company. If the
Company is unsuccessful in raising additional capital it will need to reduce costs and operations substantially. Further, the Company
does not have any commercial products available for sale and has not generated revenues and there is no assurance that if 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 approved or
commercially viable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The above factors raise substantial doubt
as to the Company's ability to continue as a going concern. The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern and do not include any adjustments that may result from the outcome
of this uncertainty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Use of estimates</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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 and assumptions used in the fair value of stock-based
compensation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Research and Development costs</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company outsources its research and
development efforts and expenses related costs as incurred, including the cost of manufacturing product for testing, licensing
fees and costs associated with planning and conducting clinical trials. The value ascribed to patents and other intellectual property
acquired was expensed in 2007 and 2010 as research and development costs, as it related to particular research and development
projects and had no alternative future uses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Reclassifications</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying 2010 financial statements
together with cumulative amounts from inception have been reclassified to allocate professional services expenses to research and
development and general and administrative expenses to be consistent with current year presentation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Furniture and equipment</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Furniture 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 and five years for furniture and all other equipment. Expenditures for maintenance and
repairs are expensed as incurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Income taxes</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Deferred income tax assets and liabilities
are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences
between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted
tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is not more likely than
not that these deferred income tax assets will be realized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognizes a tax benefit from
an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities,
based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a
position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
As of December&nbsp;31, 2011 and 2010, the Company has not recorded any unrecognized tax benefits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DECEMBER 31, 2011 AND 2010&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Stock-based compensation</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All stock-based payments to employees and
to nonemployee directors for their services as directors, including grants of restricted stock 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 vesting 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Per share data:</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Basic and diluted net loss per common share
is calculated by dividing net loss, by the weighted average number of outstanding shares of common stock, adjusted to give effect
to the exchange ratio in the Share Exchange in October 2011 (see Note 1), which was accounted for as recapitalization of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2011, upon completion of the
share exchange referred to above, the Company issued Convertible Debentures in the amount of $2,075,000 which as of December 31,
2011 were convertible into approximately 3,985,000 common shares. In computing diluted net loss per share, no effect has been given
to such shares as their effect would be antidilutive. See Notes 5 and 10 for subsequent issuance of securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>NOTE 3 &ndash; FURNITURE AND EQUIPMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Furniture and equipment as of December
31, 2011 and 2010 is summarized as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 98%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left">Office furniture and equipment</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">42,862</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">40,098</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less:&nbsp; accumulated depreciation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(17,312</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(8,012</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">25,550</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">32,086</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Depreciation expense for the years ended December 31, 2011 and
2010 was $9,300 and $3,854, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>NOTE 4 - RESTRICTED CASH</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Restricted cash at December 31, 2011 and
2010 collateralizes a letter of credit in the amount of approximately $60,000 issued in connection with the lease of office space
in New York City (see Note 6).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 5 - CONVERTIBLE DEBENTURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On October 7, 2011, concurrently with the
Share Exchange, the Company issued secured Convertible Debentures (&ldquo;Convertible Debentures&rdquo;) in the amount of $1,625,000
of which $1,125,000 were sold to certain investors for aggregate cash proceeds of $1,065,000, net of selling commissions to a placement
agent of $40,000 and $20,000 of legal fees, and $500,000 were exchanged for 8% Notes Payable (&ldquo;Notes Payable&rdquo;) issued
on September 9, 2011. In addition, 400,000 shares of common stock with the fair market value of $144,000 were issued to a second
placement agent. On November 16, the Company issued Convertible Debentures in the amount of $450,000 for aggregate cash proceeds
of $436,000, net of selling commissions to a third placement agent of $14,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DECEMBER 31, 2011 AND 2010&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Convertible Debentures mature on the
earlier of (i) one year from the date of issuance or (ii) the date of closing of a private placement of equity, equity equivalent,
convertible debt or debt financing in which the Company receives gross proceeds, in one or more transactions, of at least $3,425,000
(a &ldquo;Subsequent Financing&rdquo;). The Convertible Debentures bear interest at 8% per annum and are convertible at the holder&rsquo;s
option into a Subsequent Financing. In the event that a Subsequent Financing has not occurred within 12 months from the date of
issuance of the Convertible Debentures, the holder has the option to convert into a number of shares of the Company's common stock
equal to 1% of the Company's shares of common stock on a fully diluted basis for every $125,000 of Convertible Debentures (the
&ldquo;Conversion Shares&rdquo;) or an aggregate of approximately 3,985,000 shares based on the outstanding shares of the Company
common stock as of December 31, 2011. A Subsequent Financing comprised of Units consisting of common stock and warrants took place
on January 20, 2012 and $1,925,000 of debentures were exchanged for Units (see Note 10). The remaining $150,000 of debentures were
repaid. As a result of the exchange, $1,925,000 principal amount of debentures are classified as a non-current liability in the
accompanying balance sheet at December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Upon conversion or repayment of the Convertible
Debenture, the holder is entitled to receive, at the holder&rsquo;s option, either (i) a warrant (the &ldquo;Warrant&rdquo;), which
has a three year term and is exercisable at the offering price in a Subsequent Financing, to purchase such number of shares of
the Company's common stock equal to the principal amount of the Convertible Debenture divided by the offering price in a Subsequent
Financing, (the &ldquo;Warrant Shares&rdquo;) or (ii) shares of the Company's common stock equal to 33% of the principal amount
of the Debenture divided by the offering price in a Subsequent Financing (the &ldquo;Incentive Shares&rdquo;). The value of the
Warrant Shares or Incentive Shares will be measured and number of such shares determined upon occurrence of any Subsequent Financing.
The Conversion Shares, Warrant Shares and Incentive Shares are entitled to piggyback registration rights. Upon the Subsequent Financing
on January 20, 2012, the holders $1,925,000 principal amount of Convertible Debentures elected to receive 250,000 Warrants exercisable
at $1 per share and 536,250 Incentive Shares, and holders of the remaining $150,000 principal amount of Convertible Debentures,
which were redeemed, received 25,000 Warrants exercisable at $1 per share and 57,750 Incentive Shares. The value of the Warrants
and Incentive Shares will be charged to operations in the first quarter of 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition to selling commissions paid
to the placement agents on the sale of certain Convertible Debentures, the placement agents received warrants which expire in October
2013 and November 2013, respectively, and are exercisable at the offering price in a Subsequent Financing to purchase shares of
the Company's common stock equal to 3% and 9%, respectively, of the gross proceeds delivered by purchasers introduced by such placement
agents divided by the purchase price per share in the Subsequent Financing. In the event that the Subsequent Financing has not
occurred within 12 months from the date of issuance of the Convertible Debentures, the placement agents will receive, in lieu of
the warrants, shares of common stock equal to 3% and 9%, respectively, of the number of shares of the Company's common stock such
purchasers are entitled to receive upon conversion of their Convertible Debentures or an aggregate of approximately 88,000 shares
based on the outstanding shares of the Company's common stock as of December 31, 2011. The Company recognized a liability to placement
agents to issue shares of its common stock based on their fair value of approximately $32,000 as of December 31, 2011. Upon the
Subsequent Financing on January 20, 2012, the placement agents become entitled to receive 30,750 warrants exercisable at $1.00
per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following expenses in connection with
the issuance of Convertible Debenture are recorded as deferred financing costs: fair value of 400,000 shares of the Company&rsquo;s
common stock issued to the placement agent valued at $144,000, cash payments to the placement agents of $54,000, legal expenses
of $20,000 and fair value of the liability to placement agent to issue the Company&rsquo;s shares of common stock in the amount
of $32,000. The deferred financing costs are being amortized using the effective interest method over the twelve month term of
the Convertible Debentures. During the year ended December 31, 2011, amortization of deferred financing costs amounted to approximately
$53,000 and charged to interest expenses in the statement of operations. The unamortized balance will be charged to operations
in connection with the extinguishment of the debentures resulting from their exchange for the Units and repayment in 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to a Pledge and Security Agreement
and Subsidiary Guaranty, the Company granted the Debenture holders a first priority lien on all its assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>NOTE 6 - COMMITMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Operating leases</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On September 28, 2010, the Company entered
into a five-year lease for office space in New York City, with monthly payments escalating from approximately $10,000 in first
year to approximately $11,000 in fifth year. The Company received a rent credit of $9,420 in each of the months of November 2010,
December 2010 and January 2011. The Company has posted a letter of credit in the amount of approximately $60,000 for the benefit
of the landlord which is collateralized by a money market account (see Note 7 - Restricted Cash).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DECEMBER 31, 2011 AND 2010&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Future minimum lease payments under the operating lease are
as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 98%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Year Ending December 31,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: left">2012</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">124,370</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">127,889</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">2014</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">131,513</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">2015</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">100,719</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: right; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">484,491</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Rent expense charged to operations, which
differs from rent paid due to the rent credits and to increasing amounts of base rent, is calculated by allocating total rental
payments on a straight-line basis over the term of the lease. During the years ended December 31, 2011 and 2010, rent expense was
$128,228 and $42,570, respectively and as of December 31, 2011 and 2010 deferred rent payable was $29,083 and $19,174, respectively.
The Company utilized office space in New York City provided by founders without remuneration until October 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Consulting agreements</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2010, the Company entered into
a two-year consulting agreement with L&amp;L Technologies, an entity controlled by a member of the Company&rsquo;s Board of Directors,
for scientific and medical consulting services. In consideration for such services, L&amp;L Technologies will receive $96,000 per
annum and 1,026,194 shares of restricted common stock which were granted at the inception of the agreement. The consulting agreement
renews automatically for subsequent terms of one year at $96,000 per annum. The restricted shares vest as follows: 25% on the grant
date (June 4, 2010) and 25% on each of the first and second annual anniversaries of the grant date and, if the consulting agreement
is renewed, 25% on the third anniversary of the grant date. Vesting of the unvested 513,097 restricted shares accelerated on October
7, 2011, the date of the Share Exchange.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2010, the Company entered into
a two-year consulting agreement with Lederman &amp; Co., an entity controlled by a member of the Company&rsquo;s Board of Directors,
for clinical development, strategic, management and operational consulting services. In consideration for such services, Lederman
&amp; Co. will receive $250,000 per annum and 261,784 shares of restricted common stock which were granted at the inception of
the agreement. The consulting agreement renews automatically for subsequent terms of one year at $250,000 per annum. The restricted
shares vest as follows: 20% on the grant date (June 4, 2010) and 20% on each of the first and second anniversaries of the grant
date and, if the consulting agreement is renewed, 20% on each of the third and fourth anniversaries of the grant date. Vesting
of the unvested 157,087 restricted shares accelerated on October 7, 2011, the date of the Share Exchange.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2010, the Company entered into
an agreement with Burns McClellan, Inc. to provide media and investor relations services, including preparation of investor presentations
and press releases, media outreach and training and investor targeting and introductions, for a fee of $20,000 per month, plus
expenses. The agreement was terminated in January 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2010, the Company entered into
an agreement with Frost &amp; Sullivan to prepare an assessment of the U.S. fibromyalgia market, including current market size
and historical and projected growth rates, as well as a formal presentation supporting their findings for a fee of $109,400, all
of which was recognized in 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In July 2011, the Company entered into
an agreement with Catalent Pharma Solutions, LLC to investigate, for $58,080, the feasibility of developing the active pharmaceutical
ingredient (&ldquo;API&rdquo;) used in TNX-102, one of the Company&rsquo;s product candidates, for use in a new, proprietary formulation</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2011, the Company entered into
an agreement with Porter, LeVay &amp; Rose, Inc. to provide media and investor relations services, including preparation of investor
presentations and press releases, media outreach and training and investor targeting and introductions, for a fee of $12,000 per
month, plus expenses.&nbsp;&nbsp;Also in August 2011, the Company entered into an agreement with JFC Technologies, LLC (&ldquo;JFC&rdquo;)
for product development work for an initial fee of $75,000, of which $35,000 was paid upon signing. In September 2011, JFC was
acquired by Cyalume Specialty Products, Inc. (&ldquo;Cyalume&rdquo;) and the Company&rsquo;s agreement was transferred to Cyalume.&nbsp;&nbsp;Additionally,
in August 2011 the Company authorized the initiation of stage 2 work pursuant to a contract with Lipocine Inc. with respect to
a research and development project for reformulation work on TNX-102 for a fee of $235,000, which work started in the third quarter
of 2011.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DECEMBER 31, 2011 AND 2010&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In September 2011, the Company entered
into two contracts with Pharmanet Canada for contract research work with respect to the development of methods to measure the active
ingredient of TNX-102 in blood and urine. The full cost of the work to be performed is approximately $90,000.&nbsp;&nbsp;Payment
is due in three installments based on the achievement of certain performance milestones. Also, in September 2011, the Company entered
into a contract with Pharmanet Canada for contract research work with respect to the pharmacokinetic study for TNX-102. The full
cost of the work to be performed is $637,231.&nbsp;&nbsp;Payment is due in four installments based on the achievement of certain
performance milestones.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2011, the Company entered into
an agreement with Applied Pharma Research to develop, and perform an exploratory pharmacokinetic study on a new formulation of
the API used in TNX-102 for an approximate cost of $180,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Employment agreements</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In 2010, the Company entered into employment
agreements with the Chief Operating Officer and the Vice President of Marketing which expire in August 2012 and June 2012, respectively.
Under the terms of the employment agreements, the Chief Operating Officer and the Vice President of Marketing shall receive annual
base compensation of $250,000 and $150,000, respectively, which shall be adjusted to $320,000 and $200,000, respectively, or such
other rate as the Board may designate from time to time, upon completion of an initial public offering with net proceeds of at
least $15,000,000. The agreements will be automatically renewed for additional one-year periods (the &quot;Renewal Terms&quot;)
unless either party notifies the other in writing of its intention not to renew within 90&nbsp;days prior to the expiration of
the Initial Term or any Renewal Terms. Upon termination without cause, as defined in the agreements, the executives will continue
to receive compensation for up to nine months if termination is in connection with or following an initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2011, the Company entered into
an employment agreement with the Chief Business Officer which expires in February 2013. Under the terms of the employment agreement,
the Chief Business Officer shall receive annual base compensation of $150,000 which shall increase, with a retroactive adjustment,
upon the completion of an underwritten public offering, as defined, or certain other events. The employment agreement will be automatically
renewed for additional renewal terms unless either party notifies the other in writing of its intention not to renew within 90
days prior to the expiration of the initial term or any renewal terms. Upon termination without cause, as defined in the employment
agreement, the Chief Business Officer will continue to receive compensation for six months, or nine months if termination is in
connection with or following certain events.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2011, the Company terminated existing
employment agreements with the three executive employees referred to in the first two paragraphs above and entered into new employment
agreements which stipulate such employees will receive minimum wage salary ($7.25 per hour) for a 40 hour week until the Company
receives new capital of at least $500,000 through the sale of equity securities. The expiration dates of the new agreements remain
the same as the terminated agreements. In addition, the Chief Business Officer assumed the title of Chief Operating Officer and
the Chief Operating Officer assumed the title of Chief Financial Officer and Chief Administrative Officer and the Vice President
of Marketing assumed the title of Vice President of Strategy. Upon receipt of $500,000 or more in new capital, the employees will
receive a lump sum payment in the amount of $50,000 each for the Chief Operating Officer and Chief Financial Officer and $30,000
for the Vice President of Strategy. Further, base salaries for all three employees will be increased with a retroactive adjustment
upon the completion of an underwritten offering, as defined, or certain other events. All other terms remain the same.&nbsp;&nbsp;In
October 2011, the position of Vice President of Strategy was eliminated and the employment agreement was terminated. In conjunction
with this event, the Company paid $37,500 in December 2011 in exchange for the release from future obligations. In February 2012,
the Company terminated its employment agreement with its Chief Financial Officer and in accordance with the agreement paid such
officer approximately $88,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In July 2011, the Company entered into
agreements with the executive employees to defer payment of the lump sum amounts referred to above until the closing of a private
placement of securities, as defined.&nbsp;&nbsp;In addition, salaries of the Chief Financial Officer and Chief Operating Officer
were adjusted to $175,000 per annum effective August 2011. The salary of the Chief Operating Officer shall increase to $250,000
per annum on the first anniversary of the Share Exchange provided that the Company has raised at least $500,000 in additional equity
securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-variant: small-caps"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DECEMBER 31, 2011 AND 2010&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-variant: small-caps"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-variant: small-caps"><B>NOTE 7 - INCOME TAXES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There is no provision for federal or state
income taxes for the years ended December&nbsp;31, 2011 and 2010 since the Company has established a valuation allowance equal
to the total deferred tax asset related to losses incurred during such periods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Deferred tax assets and liabilities and
related valuation allowance as of December&nbsp;31, 2011 and 2010 are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 98%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">December 31,</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Deferred tax assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left">Organization costs</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">733</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,494</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Research and development credit carryforward</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,188</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,188</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net operating loss carryforwards</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,329,829</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,107,688</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">132,482</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">121,091</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Total deferred tax assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,469,232</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,237,461</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Deferred tax liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Restricted stock compensation(1)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(148,871</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net deferred tax assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,469,232</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,088,590</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Valuation allowance</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,469,232</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,088,590</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Net deferred tax assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.2in; text-indent: -0.2in">(1)&nbsp;&nbsp;Relates
to restricted stock grants for which Internal Revenue Code (&quot;IRC&quot;) Section 83(b) elections were filed in 2010, resulting
in tax deductions in excess of related compensation expense for financial reporting purposes in 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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 not more likely
than not that the deferred tax assets will be realized and, accordingly, has provided a valuation allowance. The increase in the
valuation allowance for the years ended December 31, 2011 and 2010 was $1,380,642 and $783,696, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At December&nbsp;31, 2011, the Company
has available unused net operating loss carryforwards of approximately $5.8 million that expire from 2027 to 2031 for federal tax
purposes and the same amount for New Jersey state tax purposes, which expire from 2014 to 2018. The Company also has approximately
$3 million of net operating loss carryforwards for New York state purposes expiring in 2031. These net operating loss carryforwards
may be subject to annual limitations in their use in accordance with IRC Section 382. Accordingly, the extent to which the net
operating loss carryforwards can be used to offset future taxable income may be limited. At December 31, 2011, the Company has
a research and development credit carryforward of $6,188 for federal tax purposes that expires in 2027.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company's federal and state tax returns
remain open and subject to examination by the tax authorities for the tax years 2008 and 2007, respectively through 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A reconciliation of the effect of applying
the federal statutory rate and the effective income tax rate used to calculate the Company's income tax provision is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DECEMBER 31, 2011 AND 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 98%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">Year Ended<BR> December&nbsp;31,</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left">Statutory federal income tax</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">(34.0</TD><TD STYLE="width: 1%; text-align: left">)%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">(34.0</TD><TD STYLE="width: 1%; text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">State income tax, net of federal tax effect</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5.9</TD><TD STYLE="text-align: left">)%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5.9</TD><TD STYLE="text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Permanent difference</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Increase in valuation allowance</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">39.9</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">34.9</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Income tax provision</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 8 &ndash; STOCK PLAN</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June and August 2010, respectively,
the board of directors and stockholders of Tonix Pharmaceuticals, Inc. approved, and in December 2010 and February 2011, the board
of directors amended, the terms and provisions of the 2010 Stock Plan (&quot;Plan&quot;) whereby the Company reserved 4,564,641
shares of its Common Stock for issuance pursuant to the Plan. The Plan allowed for grants of options to purchase shares of Common
Stock and awards of restricted Common Stock to employees, officers, directors, consultants and advisors of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In 2010, the Company granted shares of
restricted Common Stock under the Plan to employees (&quot;Employee Granted Shares&quot;) as follows: 196,359 shares to the Chief
Operating Officer, 109,088 shares to the Vice President of Clinical Development, 130,906 shares to the Vice President of Marketing
and 196,359 shares to the Chief Medical Officer. Employee Granted Shares vest: 20% on the grant date and 20% on each of the first,
second, third and fourth anniversaries of the grant date. Upon termination of the Chief Medical Officer's employment with Tonix,
157,087 unvested shares held by him were forfeited and he retained 39,272 shares of fully vested Common Stock. Upon termination
of the Vice President of Clinical Development's employment with Tonix, 87,270 unvested shares held by him were forfeited and he
retained 21,818 shares of fully vested Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In 2010, the Company granted 1,288,112
shares of restricted Common Stock under the Plan to consultants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In 2010, the Company granted 556,786 shares
of restricted Common Stock under the Plan to directors and also granted 52,362 shares of restricted Common Stock under the Plan
to members of the Scientific Advisory Board which vest: 25% on the grant date and 25% on each of the first, second and third anniversaries
of the grant date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2011, the Company granted shares
of restricted Common Stock to employees as follows: 196,359 shares to the Chief Business Officer and 130,906 shares to the incoming
President of Krele. The shares vest: 20% on the grant date and 20% on each of the first, second, third and fourth anniversaries
of the grant date. In August 2011, upon resignation of the President of Krele, 104,725 unvested shares were forfeited.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In March and April 2011, the Company granted
19,636 and 21,818 shares of restricted Common Stock, respectively, to newly appointed members of the Scientific Advisory Board
and the Board of Directors which vest: 25% on the grant date and 25% on each of the first, second and third anniversaries of the
grant date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Following is a summary of the status of
the Company's nonvested restricted stock as of December 31, 2011 and the changes during the years 2010 and 2011:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DECEMBER 31, 2011 AND 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Weighted</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Number&nbsp;of</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Average</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Restricted</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Grant-Date</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Nonvested&nbsp;Restricted&nbsp;Stock</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Shares</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair&nbsp;Value</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Nonvested at January 1, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%">Granted</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">2,529,971</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0.23</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Vested</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(587,767</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.23</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Forfeited</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(244,357</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.23</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Nonvested at December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,697,847</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.23</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">368,718</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.23</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Vested prior to Share Exchange</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(564,858</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.23</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Vested pursuant to Share Exchange</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,396,982</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.23</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Forfeited</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(104,725</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.23</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Nonvested at December 31, 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Restricted stock is not considered to be issued until the stock
vests.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognized share-based compensation
expense of $139,063 prior to Share Exchange and remaining expense of $296,588 was recognized on October 7, 2011, the date of Share
Exchange, upon which all nonvested restricted shares vested and the Plan ceased to exist. Stock based compensation expense for
the year ended December 31, 2010 was $139,882.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 9 - RELATED PARTY TRANSACTIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Dr. Seth Lederman and Dr. Donald Landry
are primary founders of the Company and serve on the board of directors. They have entered into various transactions with the Company
through several companies under their control, including L&amp;L Technologies and Lederman &amp; Co as described in Note 6.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: black">D</FONT>uring
2007, the Company issued senior convertible promissory notes (the &quot;Senior Convertible Notes&quot;) pursuant to the Note Purchase
Agreements among the Company and National Holdings Corporation, Lederman &amp; Co., LLC, Eli Lederman PhD and Dr. Seth Lederman,
all but one of whom are direct or indirect stockholders of the Company (collectively referred to herein as the &quot;Noteholders&quot;),
in the amount of $50,000 per Senior Convertible Note, or $200,000 in the aggregate. The Senior Convertible Notes bore interest
at the rate of 8% per annum and were payable together with the interest accrued thereon on the two year anniversary of the Senior
Convertible Notes. The outstanding principal and interest accrued thereon were to be automatically converted into fully paid shares
of capital stock upon the closing of a Qualified Financing of capital stock or securities convertible into preferred stock which
resulted in gross proceeds of at least $2,000,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2009, although a Qualified Financing
had not occurred, the Noteholders agreed to exchange the Senior Convertible Notes for shares of capital stock of the Company at
the rate of one share of capital per $0.13 of the outstanding principal balance of such notes. The accrued interest on the notes
in the amount of $31,633 was forgiven. The excess of the carrying value of the notes including accrued interest over the fair value
of the capital stock for which they were exchanged amounted to $31,633 of which $23,725, representing the excess related to the
Noteholders who are direct or indirect stockholders, has been accounted for as a capital contribution and credited to additional
paid-in capital and the remaining $7,908 was recorded as a gain on extinguishment of debt. Interest expense relating to the Senior
Convertible Notes for the year ended December&nbsp;31, 2009 was $8,044.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In 2007, Lederman &amp; Co. loaned the
Company $10,000. On December&nbsp;19, 2008, the Company issued to Lederman &amp; Co. a demand note in the amount of $280,000, which
included new cash proceeds of $270,000 as well as the amount loaned in 2007, with interest accruing on the total demand note balance
commencing December 19, 2008. On December 7, 2009, the Company borrowed an additional $150,000 from Lederman &amp; Co. and issued
a demand note. The principal balance of the demand notes outstanding as of December&nbsp;31, 2009 was $430,000 with accrued interest
owed at December&nbsp;31, 2009 of $36,387. On March 5, 2010, the Company issued to Dr. Donald Landry a demand note in the amount
of $50,000. The demand notes accrue interest at the rate of 12% per annum.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DECEMBER 31, 2011 AND 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 30, 2010, the demand notes and
all interest accrued thereon were converted into shares of capital stock. Demand notes held by Lederman &amp; Co. totaling $430,000
and accrued interest thereon of $66,629 were converted into 2,166,444 shares of capital stock, at a conversion price of $0.23 per
share of capital stock. The demand note held by Donald Landry totaling $50,000 and accrued interest thereon of $2,449 was converted
into 228,835 shares of capital stock, at a conversion price of $0.23 per share of capital stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On September 9, 2011, the Company sold
$500,000 principal amount of 8% convertible notes (the &ldquo;Notes&rdquo;) to members of the board of directors and their related
parties. The Notes were due one year from the date of issuance, and were exchangeable for a future financing (the &ldquo;New Financing&rdquo;)
at the option of the holders. Interest is payable on either the maturity date or on the date the Notes are exchanged into the New
Financing, or such accrued interest can be converted into the New Financing. On October 7, 2011, the Notes were exchanged into
debentures issued by the Company concurrently with the Share Exchange (see Note 5).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Interest expense on the demand notes for
the years ended December 31, 2010 and 2009 was $32,691 and $35,267, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>NOTE 10 - SUBSEQUENT EVENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company amended and restated its Bylaws
and Articles of Incorporation on February&nbsp;16, 2012 and among other changes, increased the number of authorized shares of common
stock, $0.001 par value to 150,000,000. Additionally, the Company is now authorized to issue 5,000,000 shares of preferred stock,
$0.001 par value with such designations, references and participating, optional or other special rights and qualifications, limitations
or restrictions thereof as shall be determined by the Company&rsquo;s Board of Directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 12, 2012 the Company&rsquo;s
Board of Directors approved the 2012 Incentive Stock Options Plan (the &ldquo;Plan&rdquo;). The Plan provides for the issuance
of options to purchase up to 4,000,000 shares of the Company&rsquo;s common stock to officers, directors, employees and consultants
of the Company. Under the terms of the Plan the Company may issue Incentive Stock Options as defined by the Internal Revenue Code
to employees of the Company only and nonstatutory options. The Board of Directors of the Company determines the exercise price,
vesting and expiration period of the grants under the Plan. However, the exercise price of an Incentive Stock Option should not
be less than 110% of fair value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair value
for a grantee who is not 10% stockholder. 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
Plan should not be more than five years and expiration period not more than ten years. The Company reserved 4,000,000 shares of
its common stock for future issuance under the terms of the Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Subsequent financing</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 20, 2012, the Company issued
an aggregate of 172.118 units (&ldquo;Units&rdquo;) to certain investors (the &ldquo;Purchasers&rdquo;) for aggregate cash proceeds
of $2,377,950 and $1,925,000 in previously issued Convertible Debentures of the Company that were exchanged for Units (the &ldquo;Financing&rdquo;).
On March 1, 2012, the Company issued an aggregate of 92.5926 units to certain investors for aggregate cash proceeds of $2,314,815.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Each Unit had a purchase price of $25,000
per Unit and consisted of twenty five thousand (25,000) shares of the Company&rsquo;s common stock, a Class A Warrant to purchase
twenty five thousand (25,000) shares of Common Stock (the &ldquo;Class A Warrants&rdquo;), and a Class B Warrant to purchase up
to twenty five thousand (25,000) shares of Common Stock (the &ldquo;Class B Warrants&rdquo; and together with the Class A Warrants,
the &ldquo;Warrants&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Class A Warrants have an exercise price
of $1.25 per share of common stock and will be exercisable for a period of five years from the date of issuance. The Class B Warrants
are exercisable automatically on their expiration date by cashless exercise or expire without exercise. In the event that the average
of the Company&rsquo;s daily volume weighted average price is below $0.75 during the 10 trading days after the Announcement Date
(as hereinafter defined) (the &ldquo;Measuring Period&rdquo;), then the holder will be entitled to receive additional shares of
the Company&rsquo;s Common Stock upon the exercise of the Class B Warrants on the expiration date, which is the 12<SUP>th</SUP>
trading day after the Announcement Date. In the event that the Company&rsquo;s average daily volume weighted average price is at
or above $0.75 during the Measuring Period, the Class B Warrants will expire unexercised. The Announcement Date is the earlier
of (1) the date on which the Company announces via press release the results of the pharmacokinetic study of its TNX-102 drug formulation;
or (2) June 1, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Formerly known as Tamandare Explorations
Inc.)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DECEMBER 31, 2011 AND 2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Financing, the Company
paid a placement agent (the &ldquo;Agent&rdquo;) an aggregate cash payment of $466,777, which represented an 8% commission and
a 2% non-accountable expense allowance of the gross proceeds delivered by Purchasers in the Financing. In addition, the Agent earned
warrants to purchase shares of Common Stock equal to 10% of the gross proceeds delivered by Purchasers in the Financing (the &ldquo;Agent
Warrants&rdquo;), which have an exercise price of $1.25 per share of common stock, exercisable for a period of seven years, contain
customary anti-dilution protection and are entitled to piggy-back registration rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the Warrants, no Purchaser
may exercise such Purchaser&rsquo;s Warrant if such exercise would result in the Purchaser beneficially owning in excess of 4.99%
of the Company&rsquo;s then issued and outstanding common stock. A Purchaser may, however, increase or decrease this limitation
(but in no event exceed 9.99% of the number of shares of Common Stock issued and outstanding) by providing the Company with 61
days&rsquo; notice that such holder wishes to increase or decrease this limitation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Financing, the Company
entered into a Registration Rights Agreements with Purchasers.&nbsp;&nbsp;The Company is required to file a registration statement
registering for resale the common stock included in the Units and the common stock underlying the Warrants and the Agent Warrants
to be filed no later than 60 days from the date of termination of the Financing on March 1, 2012 and must be declared effective
no later than 120 days from the date of termination of the Financing (June 29, 2012).&nbsp;&nbsp;The Company is required to maintain
the effectiveness of the registration statement from its effective date unless all securities registered under the registration
statement have been sold or are otherwise able to be sold.&nbsp;&nbsp;If the Company fails to comply with the registration statement
filing or effective date requirements, the Company is required to pay the investors a fee equal to 1.0% of the Purchaser&rsquo;s
investment, for each 30-day period of delay, subject to a maximum payment of 10% to each Purchaser.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company determined the offering price
for the purpose of calculation of number of Warrants or Incentive Share to be issued to Convertible Debenture holders and warrants
to be issued the placement agents of Convertible Debentures to be $1.00 (see Note 5).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Tonix Pharmaceuticals Holding Corp.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><img src="logo.jpg"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Up to 14,543,807 shares of</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Common Stock, par value $0.001 per share</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>__________________ , 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Dealer Prospectus Delivery Obligation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Until [*], 2012, all dealers that effect
transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">You should rely only on the information
contained in this prospectus. We have not authorized anyone to provide you with information different from that which is set forth
in this prospectus. We are offering to sell shares of our common stock and seeking offers to buy shares of our common stock only
in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the
date of this prospectus, regardless of the time of delivery of this prospectus or any sale of these securities. Our business, financial
condition, results of operation and prospects may have changed after the date of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PART II</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INFORMATION NOT REQUIRED IN PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
sets forth the estimated costs and expenses to be incurred in connection with the issuance and distribution of the securities registered
under this Registration Statement. All amounts are estimates except the Securities and Exchange Commission registration fee. The
total expenses for this offering, borne solely by the registrant, are estimated to be approximately $107,041, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: left">SEC registration fee </TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,041</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Legal fees and expenses </TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">60,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accounting fees and expenses </TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">40,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Miscellaneous expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">Total</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">107,041</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our bylaws, as amended, provide to the
fullest extent permitted by Nevada law, our directors or officers shall not be personally liable to us or our shareholders for
damages for breach of such director's or officer's fiduciary duty. The effect of this provision of our bylaws, as amended, is to
eliminate our right and our shareholders (through shareholders' derivative suits on behalf of our company) to recover damages against
a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches resulting from negligent
or grossly negligent behavior), except under certain situations defined by statute. We believe that the indemnification provisions
in our bylaws, as amended, are necessary to attract and retain qualified persons as directors and officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the past three
years, the registrant has sold the following securities which were not registered under the Securities Act of 1933, as amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We held a first closing
of units in the 2012 private placement on January 20, 2012 and held an additional closing of such units on March 1, 2012. We sold
172.118 units in the first closing and an additional 92.5926 units in the second closing for an aggregate of 264.7106 units. Each
of the units contained 25,000 shares of our common stock, a Class A Warrant to purchase 25,000 shares of our common stock and a
Class B Warrant to purchase 24,500 shares of our common stock for an aggregate of 6,617,765 shares of our common stock, 6,617,765
Class A Warrants to purchase our common stock and 6,485,410 765 Class B Warrants to purchase our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 7, 2011,
we issued 22,666,667 shares of our common stock to the shareholders of Tonix Sub in exchange for 100% of the issued and outstanding
shares of common stock of Tonix Sub. The shares were issued to accredited investors pursuant to Rule 506 of Regulation D or non-U.S.
Persons pursuant to Rule 903 of Regulation S of the Securities Act of 1933, as amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 7, 2011,
we issued 400,000 shares of our common stock to a placement agent in connection with an amendment to a placement agent agreement.
The shares were issued to an accredited investor pursuant to Rule 506 of Regulation D or Section 4(2) of the Securities Act of
1933, as amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Between October and
November 2011, we sold to certain investors (the &ldquo;Purchasers&rdquo;) for aggregate cash proceeds of $1,575,000, secured convertible
debentures (the &ldquo;Debentures&rdquo;) in the principal face amount of $1,575,000 and the exchange of $500,000 in previously
issued notes of Tonix Sub that were converted into Debentures in the principal face amount of $500,000 (the &ldquo;2011 Financing&rdquo;).
The Debentures were sold to accredited investors pursuant to Rule 506 of Regulation D or non-U.S. Persons pursuant to Rule 903
of Regulation S of the Securities Act of 1933, as amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Debentures mature
on the earlier of (i) one year from the date of issuance or (ii) the date of closing of a private placement of equity, equity equivalent,
convertible debt or debt financing in which we receive gross proceeds, in one or more transactions, of at least $3,425,000 (a &ldquo;Subsequent
Financing&rdquo;). The Debentures bear interest at 8% per annum and are convertible at the holder&rsquo;s option into a Subsequent
Financing. In the event that a Subsequent Financing has not occurred within 12 months from the date of issuance of the Debenture,
the holder has the option to convert the Debenture into a number of shares of our common stock equal to 1% of our shares of common
stock on a fully diluted basis for every $125,000 of Debentures (the &ldquo;Conversion Shares&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, upon conversion
or repayment of the Debenture, the holder is entitled to receive, at the holder&rsquo;s option, either (i) a warrant (the &ldquo;Warrant&rdquo;)
to purchase such number of shares of common stock equal to the principal amount of the Debenture divided by the offering price
in a Subsequent Financing (the &ldquo;Warrant Shares&rdquo;) or (ii) shares of our common stock equal to 33% of the principal amount
of the Debenture divided by the offering price in a Subsequent Financing (the &ldquo;Incentive Shares&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with
the 2011 Financing, placement agents earned warrants to purchase shares of our common stock equal to 3% or 9% of the gross proceeds
delivered by Purchasers introduced by such placement agents in the 2011 Financing divided by the purchase price per share in the
Subsequent Financing (collectively, the &ldquo;2011 Agent Warrants&rdquo;). In the event that the Subsequent Financing has not
occurred within 12 months from the date of issuance of the Debentures, the placement agents will receive, in lieu of the 2011 Agent
Warrants, shares of common stock equal to 3% or 9% of the number of shares of our common stock such Purchasers introduced by such
placement agent in the 2011 Financing are entitled to receive upon conversion of their Debentures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following exhibits
are included as part of this Form S-1. References to &ldquo;the Company&rdquo; in this Exhibit List mean Tonix Pharmaceuticals
Holding Corp., a Nevada corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%; text-align: justify">2.01</TD>
    <TD STYLE="width: 88%; text-align: justify">Share Exchange Agreement, dated as of October 7, 2011 by and among Tamandare Explorations Inc., David J. Moss, Tonix Pharmaceuticals, Inc. and the shareholders of Tonix Pharmaceuticals, Inc. filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">3.01</TD>
    <TD STYLE="text-align: justify">Articles of Incorporation, filed as an exhibit to the Registration Statement on Form S-1, filed with the Securities and Exchange Commission (the &ldquo;Commission&rdquo;) on April 9, 2008 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">3.02</TD>
    <TD STYLE="text-align: justify">Articles of Merger between Tamandare Explorations Inc. and Tonix Pharmaceuticals Holding Corp., effective October 11, 2011, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 17, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">3.03</TD>
    <TD STYLE="text-align: justify">Amended and Restated Bylaws, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on February 23, 2012 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">5.01</TD>
    <TD STYLE="text-align: justify">Opinion of Sichenzia Ross Friedman Ference LLP.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.01</TD>
    <TD STYLE="text-align: justify">Feasibility and Option Agreement, dated as of June 20, 2007, by and between Krele Pharmaceuticals, Inc. (now, Tonix Pharmaceuticals, Inc.) and Lipocine, Inc., filed as an exhibit to the amended Current Report on Form 8-K/A, filed with the Commission on April 3, 2012 and incorporated herein by reference. &dagger;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.02</TD>
    <TD STYLE="text-align: justify">Consulting Agreement, dated as of June 4, 2010, by and between Krele Pharmaceuticals, Inc. (now, Tonix Pharmaceuticals, Inc.) and Lederman &amp; Co., LLC, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.03</TD>
    <TD STYLE="text-align: justify">Technology Transfer and Assignment Agreement, dated as of June 4, 2010, by and between Krele Pharmaceuticals, Inc. (now, Tonix Pharmaceuticals, Inc.) and Lederman &amp; Co., LLC, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.04</TD>
    <TD STYLE="text-align: justify">Lease Agreement, dated as of September 28, 2010, by and between 509 Madison Avenue Associates, L.P. and Tonix Pharmaceuticals, Inc., filed as an exhibit to the amended Current Report on Form 8-K/A, filed with the Commission on February 3, 2012 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.05</TD>
    <TD STYLE="text-align: justify">Amendment to Feasibility and Option Agreement, dated as of October 4, 2010, by and between Tonix Pharmaceuticals, Inc. and Lipocine, Inc., filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference. &dagger;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.06</TD>
    <TD STYLE="text-align: justify">Engagement Agreement, dated as of October 6, 2010, by and between Tonix Pharmaceuticals, Inc. and Frost and Sullivan, filed as an exhibit to the amended Current Report on Form 8-K/A, filed with the Commission on April 3, 2012 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.07</TD>
    <TD STYLE="text-align: justify">Amendment to Consulting Agreement, dated as of December 9, 2010, by and between Tonix Pharmaceuticals, Inc. and Lederman &amp; Co., LLC, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.08</TD>
    <TD STYLE="text-align: justify">Employment Agreement, dated as of April 1, 2011, by and between Tonix Pharmaceuticals, Inc. and Rhonda Rosen, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 88%; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.09</TD>
    <TD STYLE="text-align: justify">Employment Agreement, dated as of April 1, 2011, by and between Tonix Pharmaceuticals, Inc. and Benjamin A. Selzer, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;&nbsp;10.10</TD>
    <TD STYLE="text-align: justify">Employment Agreement, dated as of April 1, 2011, by and between Tonix Pharmaceuticals, Inc. and Susan Oliver (now, Susan Kerridge), filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.11</TD>
    <TD STYLE="text-align: justify">API Supply and Development Agreement, dated as of April 7, 2011, by and between Tonix Pharmaceuticals, Inc. and JFC Technologies, Inc., filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.12</TD>
    <TD STYLE="text-align: justify">Consulting Agreement, dated as of June 2, 2011, by and between Tonix Pharmaceuticals, Inc. and Pharmanet Canada, Inc., filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.13</TD>
    <TD STYLE="text-align: justify">Amendment to Employment Agreement, dated as of July 27, 2011, by and between Tonix Pharmaceuticals, Inc. and Rhonda Rosen, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.14</TD>
    <TD STYLE="text-align: justify">Amendment to Employment Agreement, dated as of July 27, 2011, by and between Tonix Pharmaceuticals, Inc. and Benjamin A. Selzer, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.15</TD>
    <TD STYLE="text-align: justify">Amendment to Employment Agreement, dated as of July 27, 2011, by and between Tonix Pharmaceuticals, Inc. and Susan Oliver (now, Susan Kerridge), filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.16</TD>
    <TD STYLE="text-align: justify">Financial Public Relations Agreement, dated as of August 1, 2011, by and between Tonix Pharmaceuticals, Inc. and Porter, LeVay &amp; Rose, Inc., filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.17</TD>
    <TD STYLE="text-align: justify">Form of 8% Secured Convertible Debenture, issued October 7, 2011, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.18</TD>
    <TD STYLE="text-align: justify">Form of Subscription Agreement, dated October 7, 2011, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.19</TD>
    <TD STYLE="text-align: justify">Form of Pledge and Security Agreement, dated as of October 7, 2011, by and among Tamandare Explorations Inc., Tonix Pharmaceuticals, Inc., Krele LLC and the investors, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.20</TD>
    <TD STYLE="text-align: justify">Form of Subsidiary Guaranty, dated as of October 7, 2011, by and among Tonix Pharmaceuticals, Inc., Krele LLC and Sandor Capital Master Fund L.P., on behalf of the investors, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.21</TD>
    <TD STYLE="text-align: justify">Form of Subscription Agreement, dated January 20, 2012, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on January 23, 2012 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.22</TD>
    <TD STYLE="text-align: justify">Form of Class A Warrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on January 23, 2012 and incorporated herein by reference.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%; text-align: justify">10.23</TD>
    <TD STYLE="width: 88%; text-align: justify">Form of Class B Warrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on January 23, 2012 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.24</TD>
    <TD STYLE="text-align: justify">Form of Registration Rights Agreement, dated January 20, 2012, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on January 23, 2012 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.25</TD>
    <TD STYLE="text-align: justify">Amendment to Consulting Agreement, dated as of March 30, 2012 but effective as of July 27, 2011, by and between Tonix Pharmaceuticals, Inc. and Lederman &amp; Co., LLC, filed as an exhibit to the Annual Report on Form 10-K filed with the Commission on March 30, 2012 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.26</TD>
    <TD STYLE="text-align: justify">Employment Agreement, between Tonix Pharmaceuticals Holding Corp. and Leland Gershell, dated April 1, 2012, filed as an exhibit to the Current Report on Form 8-K filed with the Commission on April 5, 2012 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">10.27</TD>
    <TD STYLE="text-align: justify">Employment Agreement, between Tonix Pharmaceuticals Holding Corp. and Benjamin Selzer, dated April 2, 2012, filed as an exhibit to the Current Report on Form 8-K filed with the Commission on April 5, 2012 and incorporated herein by reference. , filed as an exhibit to the Current Report on Form 8-K filed with the Commission on April 5, 2012 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">21.01</TD>
    <TD STYLE="text-align: justify">List of Subsidiaries, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">23.01</TD>
    <TD STYLE="text-align: justify">Consent of EisnerAmper LLP</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">24.01</TD>
    <TD STYLE="text-align: justify">Power of Attorney (included on signature page to the registration statement).</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">99.01</TD>
    <TD STYLE="text-align: justify">Frost &amp; Sullivan Fibromyalgia Market Study, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">99.02</TD>
    <TD STYLE="text-align: justify">Lipocine Cyclobenzaprine Study Results, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&dagger;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Confidential
treatment granted for certain confidential portions of this exhibit pursuant to Rule 24b-2 under the Exchange Act. In accordance
with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Commission.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>ITEM 17. UNDERTAKINGS.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The undersigned registrant hereby undertakes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; text-align: justify">(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;);</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; text-align: justify">(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering
price set forth in the &quot;Calculation of Registration Fee&quot; table in the effective registration statement, and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; text-align: justify">(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the
securities, the undersigned undertakes that in a primary offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are
offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller
to the purchaser and will be considered to offer or sell such securities to such purchaser:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; text-align: justify">(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any preliminary prospectus or prospectus
of the undersigned registrant relating to the offering required to be filed <FONT STYLE="color: black">pursuant to<FONT STYLE="text-underline-style: none">
Rule 424</FONT></FONT>;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; text-align: justify">(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; text-align: justify">(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; text-align: justify">(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying
on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document immediately prior to such date of first use.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 23pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 23pt">Pursuant to the requirements
of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that the registrant
meets all of the requirements for filing on Form S-1 and has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on this 26th day of April, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2"><B>TONIX PHARMACEUTICALS HOLDING CORP.</B> &nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 45%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 51%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Date:&nbsp;&nbsp;April 26, 2012</TD>
    <TD>By:</TD>
    <TD STYLE="border-bottom: black 1pt solid"><I>&nbsp;</I> /s/ SETH LEDERMAN</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Seth Lederman</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Chief Executive Officer (Principal Executive<BR> Officer)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Date:&nbsp;&nbsp;April 26, 2012</TD>
    <TD>By: <I>&nbsp;</I></TD>
    <TD STYLE="border-bottom: black 1pt solid">/s/ LELAND GERSHELL</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Leland Gershell</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Chief Financial Officer (Principal Accounting<BR> Officer)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>POWER OF ATTORNEY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>KNOW ALL PERSONS BY THESE PRESENTS:</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">That the undersigned
officers and directors of Tonix Pharmaceuticals Holding Corp., a Nevada corporation, do hereby constitute and appoint Seth Lederman
and Leland Gershell and each of them his or her true and lawful attorney-in-fact and agent with full power and authority to do
any and all acts and things and to execute any and all instruments which said attorney and agent, determine may be necessary or
advisable or required to enable said corporation to comply with the Securities Act of 1933, as amended, and any rules or regulations
or requirements of the Securities and Exchange Commission in connection with this Registration Statement. Without limiting the
generality of the foregoing power and authority, the powers granted include the power and authority to sign the names of the undersigned
officers and directors in the capacities indicated below to this Registration Statement, and to any and all instruments or documents
filed as part of or in conjunction with this Registration Statement or amendments or supplements thereof, including post-effective
amendments, to this Registration Statement or any registration statement relating to this offering to be effective upon filing
pursuant to Rule&nbsp;462(b) under the Securities Act of 1933, and each of the undersigned hereby ratifies and confirms that said
attorney and agent, shall do or cause to be done by virtue thereof. This Power of Attorney may be signed in several counterparts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">IN WITNESS WHEREOF,
each of the undersigned has executed this Power of Attorney. In accordance with the requirements of the Securities Act of 1933,
as amended, this registration statement was signed by the following persons in the capacities and on the dates stated:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR>
    <TD STYLE="width: 28%; vertical-align: top; border-bottom: black 1.5pt solid; text-align: justify">Signature</TD>
    <TD STYLE="width: 6%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 42%; vertical-align: top; border-bottom: black 1.5pt solid; text-align: justify">Title</TD>
    <TD STYLE="width: 6%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 18%; vertical-align: top; border-bottom: black 1.5pt solid; text-align: justify">Date</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; vertical-align: top; font-style: italic; text-align: justify">/s/ SETH LEDERMAN</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">Chief Executive Officer (Principal Executive Officer)&nbsp;and Director</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">April 26, 2012</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">Seth Lederman</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; vertical-align: top; text-align: justify">&nbsp;<I>/s/ LELAND GERSHELL</I></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">April 26, 2012</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">Leland Gershell</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; vertical-align: top; font-style: italic; text-align: justify">/s/ STUART DAVIDSON</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">Director</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">April 26, 2012</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">Stuart Davidson</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; vertical-align: top; font-style: italic; text-align: justify">/s/ PATRICK GRACE</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">Director</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">April 26, 2012</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">Patrick Grace</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; vertical-align: top; font-style: italic; text-align: justify">/s/ DONALD W. LANDRY</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">Director</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">April 26, 2012</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">Donald W. Landry</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; vertical-align: top; font-style: italic; text-align: justify">/s/ ERNEST MARIO</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">Director</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">April 26, 2012</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">Ernest Mario</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; vertical-align: top; font-style: italic; text-align: justify">/s/ CHARLES MATHER IV</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">Director</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">April 26, 2012</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">Charles Mather IV</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 1pt solid; vertical-align: top; font-style: italic; text-align: justify">/s/ JOHN RHODES</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">Director</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">April 26, 2012</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">John Rhodes</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
</TABLE>


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[{"type": "S-1", "sequence": "1", "filename": "v310591_s1.htm", "description": "REGISTRATION STATEMENT", "secsgml_size_bytes": 1238195}]
{"company-data": {"conformed-name": "Tonix Pharmaceuticals Holding Corp.", "cik": "0001430306", "assigned-sic": "1000", "irs-number": "261434750", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-180964", "film-number": "12782797"}, "business-address": {"street1": "509 MADISON AVE. - SUITE 306", "city": "NEW YORK", "state": "NY", "zip": "10022", "phone": "1-800-849-7894"}, "mail-address": {"street1": "509 MADISON AVE. - SUITE 306", "city": "NEW YORK", "state": "NY", "zip": "10022"}, "former-company": {"former-conformed-name": "TAMANDARE EXPLORATIONS INC.", "date-changed": "20080320"}}
As filed with the Securities and Exchange
Commission on April 26, 2012
Registration No. 333-
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
____________________________
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________________
TONIX PHARMACEUTICALS HOLDING CORP.
(Name of registrant in its charter)
Nevada
1000
26-1434750
(State or other Jurisdiction
(Primary Standard Industrial
of Incorporation or
Classification Code
(I.R.S. Employer
Organization)
Number)
Identification No.)
509 Madison Avenue, Suite 306
New York, New York
(212) 980-9155
(Address and telephone number of principal
executive offices and principal place of business)
Seth Lederman, Chief Executive Officer
Tonix Pharmaceuticals Holding Corp.
509 Madison Avenue, Suite 306
New York, New York
(212) 980-9155
(Name, address and telephone number
of agent for service)
Copies to:
Marc A. Ross, Esq.
James M. Turner, Esq.
Sichenzia Ross Friedman Ference LLP
61 Broadway, 32nd Flr.
New York, New York 10006
(212) 930-9700
(212) 930-9725 (fax)
APPROXIMATE DATE OF PROPOSED SALE TO
THE PUBLIC:
From time to time after this Registration
Statement becomes effective.
If any securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment plans, check the following box:
x
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering. ________
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. _________
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. _________
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.  See definitions
of "large accelerated filer," "accelerated filed," and "smaller reporting company" in Rule
12b-2 of the Exchange Act. (Check one):
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
x
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
Title of Each Class Of
Securities To Be Registered
Amount To
Be
Registered (1)
Proposed
Maximum
Offering Price
Per Security (2)
Proposed
Maximum
Aggregate
Offering Price
Amount Of
Registration
Fee
Common Stock, $.001 par value
7,178,515
$
1.20
$
8,614,218.00
$
987.19
Common Stock, $.001 par value issuable upon exercise of warrants exercisable at $1.00 per share
305,750
$
1.20
$
366,900.00
$
42.05
Common Stock, $.001 par value issuable upon exercise of warrants exercisable at $1.25 per share
7,059,542
$
1.25
$
8,824,427.50
$
1,011.28
Total
14,543,807
$
17,805,545.50
$
2,040.52
(1)
Includes shares of our common stock, par value $0.001 per share, which may be offered pursuant to this registration statement, which shares are issuable upon exercise of warrants held by the selling stockholders. In addition to the shares set forth in the table, the amount to be registered includes an indeterminate number of shares issuable upon exercise of the warrants, as such number may be adjusted as a result of stock splits, stock dividends and similar transactions in accordance with Rule 416. The number of shares of common stock registered hereunder represents a good faith estimate by us of the number of shares of common stock issuable upon exercise of the warrants. For purposes of estimating the number of shares of common stock to be included in this registration statement, we calculated a good faith estimate of the number of shares of our common stock that we believe will be issuable upon exercise of the warrants to account for market fluctuations, and antidilution and price protection adjustments, respectively. Should the conversion ratio result in our having insufficient shares, we will not rely upon Rule 416, but will file a new registration statement to cover the resale of such additional shares should that become necessary.  In addition, should a decrease in the exercise price as a result of an issuance or sale of shares below the then current market price, result in our having insufficient shares, we will not rely upon Rule 416, but will file a new registration statement to cover the resale of such additional shares should that become necessary.
(2)
Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(c) and Rule 457(g) under the Securities Act of 1933, using the average of the high and low price as reported on the Over-the-Counter Bulletin Board on April 24, 2012, which was $1.20 per share.
The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
The information in this
prospectus is not complete and may be changed. The selling stockholders may not sell these securities under this prospectus
until the registration statement of which it is a part and filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.
SUBJECT TO COMPLETION,
DATED APRIL 26, 2012
PROSPECTUS
Up to 14,543,807 Shares of Common Stock
This prospectus relates
to the offering by the selling stockholders of Tonix Pharmaceuticals Holding Corp. of up to 14,543,807 shares of common stock,
par value $0.001 per share. All of the shares of common stock offered by this prospectus are being sold by the selling stockholders.
These shares consist of (i) 585,750 shares and warrants to purchase 275,000 shares issued to investors in our 2011 Financing, (ii)
warrants to purchase 30,750 shares issued to placement agents in connection with the 2011 Financing, (iii) 6,592,765 shares and
warrants to purchase 6,592,765 shares were issued to investors in our 2012 Financing, (ii) warrants to purchase 466,777 shares
issued to a placement agent in connection with the 2012 Financing.
The selling stockholders
have advised us that they will sell the shares of common stock from time to time in the open market, on the OTC Bulletin Board,
in privately negotiated transactions or a combination of these methods, at market prices prevailing at the time of sale or at prices
related to the prevailing market prices or at negotiated prices.
The selling stockholders
may sell the common shares to or through underwriters, brokers or dealers or directly to purchasers. Underwriters, brokers or dealers
may receive discounts, commissions or concessions from the selling stockholders, purchasers in connection with sales of the common
shares, or both. Additional information relating to the distribution of the common shares by the selling stockholders can be found
in this prospectus under the heading "Plan of Distribution." If underwriters or dealers are involved in the sale of
any securities offered by this prospectus, their names, and any applicable purchase price, fee, commission or discount arrangement
between or among them, will be set forth, or will be calculable from the information set forth, in a supplement to this prospectus.
We will pay the expenses of registering these shares.
We will not receive
any proceeds from the sale of common stock by the selling stockholders. We will receive proceeds from the selling stockholders
from any exercise of their warrants on a cash basis.
We are a reporting
company pursuant to Section 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, and our common stock is traded on
the OTC Bulletin Board under the symbol "TNXP". On April 25, 2012, the closing price of our common stock was $1.20
per share.
Investing in our
common stock involves a high degree of risk. Before making any investment in our common stock, you should read and carefully
consider the risks described in this prospectus under "
Risk Factors
" beginning
on page 8 of this prospectus.
You should rely
only on the information contained in this prospectus or any prospectus supplement or amendment thereto. We have not authorized
anyone to provide you with different information.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
This prospectus is dated
, 2012
TABLE OF CONTENTS
Page
Special Note Regarding Forward-Looking Statements
1
About this Prospectus
1
Prospectus Summary
2
Risk Factors
8
Use of Proceeds
27
Market For Common Stock and Related Stockholder Matters
28
Management's Discussion and Analysis of Financial Condition and Results of Operations
29
Business
37
Description of Property
59
Legal Proceedings
59
Management
60
Executive Compensation
64
Certain Relationships and Related Transactions
66
Security Ownership of Certain Beneficial Owners and Management
67
Description of Securities
69
Indemnification for Securities Act Liabilities
70
Plan of Distribution
71
Selling Stockholders
73
Legal Matters
80
Experts
80
Additional Information
80
Index to Financial Statements
81
You should rely
only on the information contained in this prospectus. We have not, and the underwriter has not, authorized anyone to provide you
with information that is different. If anyone provides you with different or inconsistent information, you should not rely on it.
We are offering to sell, and are seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time
of delivery of this prospectus or of any sale of the common stock. Our business, financial conditions, results of operations and
prospects may have changed since that date.
i
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus contains
"forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or Securities
Act, and Section 21E of the Securities Exchange Act of 1934, or Exchange Act. Forward-looking statements reflect the current
view about future events. When used in this prospectus, the words "anticipate," "believe," "estimate,"
"expect," "future," "intend," "plan," or the negative of these terms and similar
expressions, as they relate to us or our management, identify forward-looking statements. Such statements, include, but are not
limited to, statements contained in this prospectus relating to our business strategy, our future operating results and liquidity
and capital resources outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business,
the economy and other future conditions. Because forward–looking statements relate to the future, they are subject to inherent
uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from
those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assurance
of future performance. We caution you therefore against relying on any of these forward-looking statements. Important factors that
could cause actual results to differ materially from those in the forward-looking statements include, without limitation, a continued
decline in general economic conditions nationally and internationally; decreased demand for our products and services; market acceptance
of our products and services; our ability to protect our intellectual property rights; the impact of any infringement actions or
other litigation brought against us; competition from other providers and products; our ability to develop and commercialize new
and improved products and services; our ability to raise capital to fund continuing operations; changes in government regulation;
our ability to complete customer transactions and capital raising transactions; and other factors (including the risks contained
in the section of this prospectus entitled "Risk Factors") relating to our industry, our operations and results of
operations and any businesses that may be acquired by us. Should one or more of these risks or uncertainties materialize, or should
the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated,
expected, intended or planned.
Factors or events that
could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We
cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including
the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements
to actual results.
ABOUT THIS PROSPECTUS
You should rely only
on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell and seeking offers to buy shares of our common stock,
including shares they acquire upon exercise of their warrants, only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery
of this prospectus or of any sale of our common stock. The prospectus will be updated and updated prospectuses made available for
delivery to the extent required by the federal securities laws.
No person is authorized
in connection with this prospectus to give any information or to make any representations about us, the selling stockholders, the
securities or any matter discussed in this prospectus, other than the information and representations contained in this prospectus.
If any other information or representation is given or made, such information or representation may not be relied upon as having
been authorized by us or any selling stockholder. This prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy the securities in any circumstances under which the offer or solicitation is unlawful. Neither the delivery of this
prospectus nor any distribution of securities in accordance with this prospectus shall, under any circumstances, imply that there
has been no change in our affairs since the date of this prospectus. The prospectus will be updated and updated prospectuses made
available for delivery to the extent required by the federal securities laws.
1
PROSPECTUS SUMMARY
This summary highlights information
contained throughout this prospectus and is qualified in its entirety to the more detailed information and financial statements
included elsewhere in this prospectus. This summary does not contain all of the information that should be considered before investing
in our common stock. Investors should read the entire prospectus carefully, including the more detailed information regarding
our business, the risks of purchasing our common stock discussed in this prospectus under "Risk Factors" beginning
on page 4 of this prospectus and our financial statements and the accompanying notes beginning on page F-1 of this prospectus.
Unless otherwise indicated or unless the
context requires otherwise, this prospectus includes the accounts of Tonix Pharmaceuticals Holding Corp. ("Tonix")
and its wholly-owned subsidiaries, as follows, collectively referred to as "we", "us" or the "Company":
Tonix Pharmaceuticals, Inc., a Delaware corporation ("Tonix Sub") and Krele LLC, a Delaware limited liability company
("Krele"). Tonix Sub is a wholly-owned subsidiary of Tonix and Krele is a wholly-owned subsidiary of Tonix Sub.
Our Company
Corporate Structure
We were incorporated
on November 16, 2007 under the laws of the State of Nevada as Tamandare Explorations Inc. From inception through October 2011,
we were involved in the acquisition, exploration and development of natural resource properties in the State of Nevada. On October
7, 2011 ("Closing Date" and the closing of the share exchange transaction, the "Closing"), we executed
and consummated a share exchange agreement by and among Tonix Sub and the stockholders of 100% of the equity securities of Tonix
Sub, including, the holders of 5,207,500 shares of common stock, 1,500,000 shares of Series A Preferred Stock and 2,275,527 shares
of Series B Preferred Stock (the "Tonix Shareholders"), on the one hand, and us and David Moss ("Moss"),
our then sole officer and director and majority shareholder, on the other hand (the "Share Exchange Agreement" and
the transaction, the "Share Exchange").
In the Share Exchange,
the Tonix Shareholders exchanged their shares of Tonix Sub for newly issued shares of our common stock ("Common Stock").
As a result, upon completion of the Share Exchange, Tonix Sub became our wholly-owned subsidiary.
Upon completion of
the Share Exchange, the Tonix Shareholders received an aggregate of 22,666,667 shares of our Common Stock. Moss returned 1,500,000
shares of Common Stock to us, which were retired, and our existing stockholders retained 4,000,000 shares of Common Stock. The
22,666,667 shares issued to the Tonix Shareholders constituted approximately 85% of our 26,666,667 issued and outstanding shares
of Common Stock post-Closing.
As a result of the
Share Exchange, we acquired 100% of the capital stock of Tonix Sub and consequently, control of the business and operations of
Tonix Sub and Krele. From and after the Closing Date of the Share Exchange, our primary operations consist of the business and
operations of Tonix Sub and Krele.
On October 11, 2011,
we changed our name to Tonix Pharmaceuticals Holding Corp. to reflect our new business.
Corporate Background
In 1996, Seth Lederman,
MD, and Donald Landry, MD, PhD, formed L&L Technologies, LLC, ("L&L"), to develop medications for central nervous
system ("CNS") conditions. Dr. Lederman is our Chairman and Chief Executive Officer and Dr. Landry is a Director. L&L
was a founder of Janus Pharmaceuticals, Inc., later renamed Vela Pharmaceuticals, Inc., ("Vela"), which developed various
therapeutics, including a very low dose, or VLD, version of cyclobenzaprine, under an agreement with L&L. Vela decided to focus
its resources on other programs and transferred the rights in VLD cyclobenzaprine and certain other technologies to L&L in
March 2006.
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Tonix Sub formed in
June 2007 as Krele Pharmaceuticals, Inc. by L&L and Krele Pharmaceuticals, LLC (now known as Plumbline LLC) ("Plumbline").
Dr. Lederman is managing partner of Plumbline. Plumbline possessed rights to certain technology for the treatment of alcohol dependence
and abuse. In connection with founding Tonix Sub, L&L and Plumbline entered into an intellectual property transfer and assignment
agreement with Tonix Sub for the purpose of assigning patents and transferring intellectual property and know-how in exchange for
shares of common stock of Tonix Sub. As a result of economic conditions related to the financial crisis of 2007 and 2008, Tonix
Sub was not successful in raising money to fund its programs until 2009. As a result, Tonix Sub was unable to advance the development
programs and had little activity except for prosecuting and maintaining patents and maintaining contracts.
In 2009, Tonix Sub
contracted with the Toronto Psychiatric Research Foundation to analyze the sleep data from the 2001 Phase 2a study of 36 patients
with fibromyalgia syndrome, or FM (the "Moldofsky Study"), who were treated with bedtime VLD cyclobenzaprine or placebo.
The Moldofsky Study was conducted in Canada by the Toronto Psychiatric Research Foundation, and Tonix Sub obtained the data from
this study from L&L. In addition, in 2009, Tonix Sub contracted with Caliper Life Sciences (formerly, NovaScreen Bioscience
Corp.) ("Caliper") to analyze the interactions of cyclobenzaprine with certain receptors. In June 2010, Tonix Sub entered
into consulting agreements with L&L and Lederman & Co, LLC ("Lederman & Co") and also acquired certain
rights to develop isometheptene mucate as a treatment for certain types of headaches from Lederman & Co., which we are developing
as TNX-201. Dr. Lederman is managing partner of Lederman & Co. Between June 2010 and October 2011, Tonix Sub was active in
recruiting new officers and directors and started dosing normal healthy volunteers for the pharmacokinetic trial for TNX-102.
Lederman & Co predominantly
provides us with clinical development expertise. L&L predominantly provides us with scientific development expertise. Relative
to traditional pharmaceutical development companies, we can be considered a virtual company, since we contract with third-party
vendors to provide many functions that are core to traditional pharmaceutical companies. For example, we have contracted with PharmaNet
Canada, Inc., or PharmaNet Canada, to develop methods for analyzing cyclobenzaprine in the blood and to conduct a human clinical
study to evaluate the performance of our formulation technology. Lederman & Co is responsible for overseeing the scientific
and technical aspects of PharmaNet's contract work product.
In July 2010, Tonix
Sub changed its name to Tonix Pharmaceuticals, Inc. In August 2010, Tonix Sub formed Krele.
Business Overview
We are a specialty
pharmaceutical company focused on developing new pharmaceutical products for CNS conditions that may be safer and more effective
than currently available treatments. We use ongoing advances in science and medicine to search for potential therapeutic solutions
among already existing prescription pharmaceutical agents that have been successfully used in patients for other conditions. We
create new dose formulations for these agents with the intent to developing products that are optimized for the new therapeutic
uses or indications that we target. Our projects are in the development phase, and we currently do not market any products.
The process of taking
a new drug formulation from concept through testing to approval for a new indication by the U.S. Food and Drug Administration ("FDA")
is a time-consuming, costly and high-risk process. Once a drug formulation has been tested in laboratories, we need to conduct
clinical trials of the product candidate to test its uptake into the blood stream, elimination, effectiveness and safety. Neither
laboratory nor animal studies predict the properties of drugs in humans, so designing new formulations can result in a large number
of unpredictable outcomes. The first set of clinical trials, which are sometimes referred to as Phase 1 studies, are performed
by administering new drug formulations to a limited number of healthy human volunteers and are designed to test the initial concept
of the drug formulation and to determine the correct dosage to be tested subsequently on patients affected with the target disorder.
The initial Phase 1 studies can take up to a year to complete, however, since we reformulate versions of approved drugs for new
uses, we may need to devote less time to Phase I studies since our testing is informed by significant prior human research that
we believe allows us to reduce the possible outcomes. The next step in the process is to conduct a larger study in which the new
drug formulation is administered to human patients affected with the targeted disorder, which can be referred to as a first pivotal
study, a Phase 2b study or a Phase 3 study. The first pivotal study for a condition like FM typically takes a year to complete
and then several more months to interpret the data. If the first pivotal study proves the drug is effective and safe, then a second
pivotal study is conducted, which can also be referred to as a Phase 3 study. The second pivotal study for a condition like FM
would typically take 18 months to complete. After the second pivotal study is completed, and if the results are deemed a success,
we would then submit an application to the FDA seeking approval of the new drug product. This application is called a New Drug
Application, or NDA. We believe it would take approximately three months to file the FDA application and another 14 months for
FDA approval. The drug could be marketed shortly after FDA approval. Therefore, it typically takes more than five years to bring
a new formulation of a drug to market for a new indication, and any delays in the process, such as lack of capital necessary to
run clinical trials, unexpected results, adverse effects, or difficulty in recruiting willing subjects for trials, would result
in additional time before a drug could be available for sale.
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Our lead product candidate,
TNX-102, is a new optimized dosage form of cyclobenzaprine. TNX-102 is being developed for the management of FM. FM is a CNS condition
that is characterized by diffuse musculoskeletal pain, increased pain sensitivity, fatigue and disturbed sleep. Cyclobenzaprine
is the active pharmaceutical ingredient of two FDA approved and widely prescribed muscle relaxant products: Flexeril®, an immediate-release
form, marketed by the McNeil Specialty Pharmaceuticals division of Johnson & Johnson, and Amrix®, a controlled release
form marketed by Cephalon. Generic copies of Flexeril (cyclobenzaprine in the immediate-release form) are available and many patients
receive a generic when their physician prescribes Flexeril. Likewise, generic copies of Amrix are also available. According to
a study conducted by Frost & Sullivan on our behalf relating to the FM market in the United States ("Frost and Sullivan"),
the immediate-release dose form of cyclobenzaprine is widely used off-label to treat FM. We are working to optimize the dose and
formulation of TNX-102 to treat FM safely and effectively. We plan to subject TNX-102 to the strict testing required for FDA approval,
which we believe will take at least four years and significant clinical studies. We have conducted an initial study of TNX-102
and a comparative pharmacokinetic and bioavailability study. If TNX-102 is ultimately approved by the FDA for the management of
FM, we believe it will be adopted by physicians and reimbursed by managed care companies.
Our other leading product
candidate, TNX-105, which we are also developing, is a new dose form of cyclobenzaprine to treat symptoms of post-traumatic stress
disorder, or PTSD. PTSD is a psychiatric disorder that begins in the aftermath of traumatic experiences. Sleep disturbances, including
nightmares and insomnia, are core features of PTSD and are included in two of the three main symptom clusters. Patients with PTSD
may have any single or combination of symptoms that include re-experiencing, emotional numbing and avoidance, and hyperarousal
reactions that persist for more than one month after the traumatic event. PTSD shares several features with FM, and some patients
are believed to suffer from both PTSD and FM.
Cyclobenzaprine is
the active pharmaceutical ingredient in each of our lead product candidates. We are utilizing drug delivery technology to produce
new formulations. In addition to cyclobenzaprine, each formulation of TNX-102 and TNX-105 will contain inactive ingredients, called
excipients that are well-characterized and have been FDA approved previously in other products. As a result, we anticipate seeking
FDA marketing approval of our lead product candidates, TNX-102 and TNX-105, through the NDA process under Section 505(b)(2) of
the U.S. Federal Food, Drug and Cosmetic Act, or the FFDCA, which we also refer to as Section 505(b)(2). This process permits the
FDA to make some safety and effectiveness determinations through review of materials in the public domain or in already approved
NDAs of products containing cyclobenzaprine. This approach would spare us some of the burden of generating all of this data for
ourselves and may allow our lead product candidates to progress through a shorter development pathway than is typical for pharmaceutical
products based on novel active ingredients. We have not filed an NDA for either of our lead product candidates.
We also have a pipeline
of several other product candidates that we are constantly evaluating. For example, we are developing TNX-201, which is a treatment
for certain types of headaches and TNX-301, which is a potential treatment for alcohol dependence and addiction. For commercial
reasons, we normally do not disclose the identities of the active ingredients or targeted indications of products in our pipeline
until a U.S. patent has been allowed. Consistent with our mission, these product candidates are, or likely will be, reformulations
of active ingredients that have been used by patients in other FDA-approved products. We anticipate that some of our other pipeline
products will be submitted to the FDA for approval under Section 505(b)(2). In other cases, we expect that the products will be
formulated to match earlier predicate products closely enough to rely, in part, on their regulatory review and status. There may
be instances where the predicate product is a medicine that was reviewed for safety and effectiveness by the National Academy of
Sciences under the Drug Evaluation and Safety Initiative, or DESI, and would be considered by the FDA to be an "unapproved
product." For DESI products, it is our intent also to develop NDA versions by modernizing the chemistry, manufacturing and
controls and to perform new clinical studies to support an NDA filing under Section 505(b)(2).
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Because of our size
and being in the development stage, we do not currently devote a significant amount of time or resources towards our other pipeline
candidates. We anticipate that sometime in 2012 we will begin developing formulations for TNX-201 and possibly TNX-301, but do
not expect to start clinical trials until 2013 at the earliest.
Krele's mission
is to commercialize products that are generic versions of predicate NDA products or existing marketed products that it may acquire
from other pharmaceutical companies. We expect that Tonix Sub's relationship to Krele will be similar to that of several
other pharmaceutical companies and their subsidiaries that market generic versions of the parent's branded products at different
periods in their product life-cycle. We anticipate that when one of our branded products loses patent protection, Krele may market
generic versions of it. In such instances, Krele's product would be an "authorized generic" and would rely on
our NDA. Krele may also develop or acquire generic products approved under Abbreviated New Drug Applications ("ANDAs").
For ANDAs, the predicate product is a medicine approved by the U.S. Food and Drug Administration (the "FDA") under
an NDA. Tonix Sub may market branded versions of such products that rely on Krele's ANDAs which would be referred to as branded
generics. We do not currently market any products and have only begun the process of obtaining state licenses, which are legally
required before a company can manufacture, distribute and market prescription medications. Krele has been issued a state license
in New York.
The Offering
Common stock offered by the selling stockholders
Up to 14,534,807 shares of common stock, including the
        following:
-	   
         7,178,575         shares of common stock,
-	  
         up         to 305,750 shares of common stock issuable upon the exercise of common stock purchase warrants at an exercise
        price of $1.00 per         share (includes a good faith estimate of the shares underlying warrants to account for
        antidilution protection adjustments); and
-	   
        up         to 7,059,542 shares of common stock issuable upon the exercise of common stock purchase warrants at an exercise
        price of $1.25         per share (includes a good faith estimate of the shares underlying warrants to account for
        antidilution protection adjustments).
Common stock to be outstanding after the offering
Up to 41,643,724 shares.
Use of proceeds
We will not receive any proceeds from the sale of the common stock. However, we will receive the exercise price of any common stock we sell to the selling stockholder upon exercise of the warrants. All but 30,750 of the warrants entitle the holder to exercise their warrants on a cashless basis under certain conditions. In the event that any selling stockholder exercises their warrants on a cashless basis, then we will not receive any proceeds from the exercise of those warrants. We expect to use the proceeds received from the exercise of the warrants, if any, for general working capital purposes.
OTCBB symbol
TNXP
5
The above information
regarding common stock to be outstanding after the offering is based on
34,278,432
shares of
common stock outstanding as of April 25, 2012 and includes the 7,365,292 shares of common stock issuable upon the exercise of all
warrants outstanding as of April 25, 2012 registered pursuant to the registration statement that this prospectus is part of.
The following is a
summary of the transactions relating to the securities being registered hereunder.
2011 Private Placement
Between October and
November, 2011 we consummated a private placement financing (the "2011 Financing") pursuant to which we sold $2,075,000
principal amount of Debentures for aggregate cash proceeds of $1,575,000 and the exchange of $500,000 in previously issued Notes
of Tonix Sub that were converted into Debentures in the principal face amount of $500,000.
The Debentures matured
on the earlier of (i) the one year anniversary of the date of issuance or (ii) the date of closing of a private placement of equity,
equity equivalent, convertible debt or debt financing in which we receive gross proceeds, in one or more transactions, of at least
$3,875,000 (a "Subsequent Financing"). The Debentures bore interest at 8% per annum and were convertible at the holder's
option into a Subsequent Financing. In the event that a Subsequent Financing did not occur within 12 months from the date of issuance
of the Debenture, the holder had the option to convert the Debenture into the Conversion Shares. In addition, upon conversion or
repayment of the Debenture, the holders were entitled to receive, at the holder's option, either (i) a warrant (the "Conversion
Warrant") to purchase such number of shares of common stock equal to the principal amount of the Debenture divided by the
offering price in a Subsequent Financing (the "Warrant Shares") or (ii) shares of our common stock equal to 33% of
the principal amount of the Debenture divided by the offering price in a Subsequent Financing (the "Incentive Shares").
The private placement that closed in January 2012 met the requirements of a Subsequent Financing, therefore, the holders of the
Debentures elected to receive 275,000 Conversion Warrants and 594,000 Incentive Shares. The Conversion Warrants have three year
term and $1.00 exercise price.
In connection with
the 2011 Financing, we made cash payments to WFG Investments and Seagate of $40,000 and $14,000, respectively, as commissions and
attorney fees of $20,000. In addition, WFG Investments and Seagate earned an aggregate of 30,750 placement agent warrants (the
"2011 Agent Warrants"), which have terms similar to the Conversion Warrants.
The Incentive Shares
and shares underlying the Conversion Warrants and 2011 Agent Warrants are registered pursuant to this prospectus.
2012 Private Placement
Between January and
March, 2012, we consummated a private placement financing transaction (the "2012 Financing") pursuant to which we issued
an aggregate of 264.7106 units ("Units") to certain investors for aggregate cash proceeds of $4,692,765 and the exchange
of $1,925,000 in previously issued Debentures that were converted into Units. The 2012 Financing satisfied the requirements for
the Subsequent Financing discussed above.
Each Unit had a purchase
price of $25,000 per Unit and consisted of twenty five thousand (25,000) shares of our Common Stock, a Class A Warrant to purchase
twenty five thousand (25,000) shares of common stock (the "Class A Warrants"), and a Class B Warrant to purchase up
to twenty five thousand (25,000) shares of common stock (the "Class B Warrants" and together with the Class A Warrants,
the "Warrants").
The Class A Warrants
have an exercise price of $1.25 per share of Common Stock and will be exercisable for a period of five years from the date of issuance.
The Class B Warrants expired unexercised effective April 24, 2012.
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In connection with
the Financing, we paid Dawson James Securities, Inc., a FINRA registered broker-dealer ("Dawson James") a cash payment
of $466,777, which represented an 8% commission and a 2% non-accountable expense allowance of the gross proceeds delivered by investors
in the 2012 Financing. In addition, Dawson James earned warrants to purchase 466,777 shares of Common Stock (the "2012 Agent
Warrants"), which have an exercise price of $1.25 per share of common stock, will be exercisable for a period of seven years,
contain customary anti-dilution protection and are entitled to piggy-back registration rights.
The shares included
in the Units and shares underlying the Class A Warrants and 2012 Agent Warrants are registered pursuant to this prospectus.
Plan of Distribution
This offering is not
being underwritten. The selling stockholders will sell their shares of our common stock at prevailing market prices or privately
negotiated prices. The selling stockholders themselves directly, or through their agents, or through their brokers or dealers,
may sell their shares from time to time, in (i) privately negotiated transactions, (ii) in one or more transactions,
including block transactions in accordance with the applicable rules of the OTC Bulletin Board or (iii) otherwise in accordance
with the section of this prospectus entitled "Plan of Distribution." To the extent required, the specific shares
to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any
agent, broker or dealer and any applicable commission or discounts with respect to a particular offer will be described in an accompanying
prospectus supplement. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144
may be sold under Rule 144 rather than pursuant to this prospectus.
For additional information
on the methods of sale, you should refer to the section of this prospectus entitled "Plan of Distribution," beginning
on page 71.
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RISK FACTORS
This investment has
a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below and the other
information in this prospectus. If any of the following risks actually occur, our business, operating results and financial condition
could be harmed and the value of our stock could go down. This means you could lose all or a part of your investment.
RISKS RELATED TO OUR BUSINESS
We have a history of operating losses
and expect to incur losses for the foreseeable future. We may never generate revenues or, if we are able to generate revenues,
achieve profitability.
We are focused on product
development, and we have not generated any revenues to date. We have incurred losses in each year of our operations, and we expect
to continue to incur operating losses for the foreseeable future. These operating losses have adversely affected and are likely
to continue to adversely affect our working capital, total assets and shareholders' equity.
The Company and its
prospects should be examined in light of the risks and difficulties frequently encountered by new and early stage companies in
new and rapidly evolving markets. These risks include, among other things, the speed at which we can scale up operations, our complete
dependence upon development of products that currently have no market acceptance, our ability to establish and expand our brand
name, our ability to expand our operations to meet the commercial demand of our clients, our development of and reliance on strategic
and customer relationships and our ability to minimize fraud and other security risks.
The process of developing
our products requires significant clinical, development and laboratory testing and clinical trials. In addition, commercialization
of our product candidates will require that we obtain necessary regulatory approvals and establish sales, marketing and manufacturing
capabilities, either through internal hiring or through contractual relationships with others. We expect to incur substantial losses
for the foreseeable future as a result of anticipated increases in our research and development costs, including costs associated
with conducting preclinical testing and clinical trials, and regulatory compliance activities.
Our ability to generate
revenues and achieve profitability will depend on numerous factors, including success in:
·
developing and testing product candidates;
·
receiving regulatory approvals;
·
commercializing our products; and
·
establishing a favorable competitive position.
Many of these factors
will depend on circumstances beyond our control. We cannot assure you that we will ever have a product approved by the FDA, that
we will bring any product to market or, if we are successful in doing so, that we will ever become profitable.
We expect to incur
substantial additional operating expenses over the next several years as our research, development, pre-clinical testing, and clinical
trial activities increase. The amount of future losses and when, if ever, we will achieve profitability are uncertain. We have
no products that have generated any commercial revenue, do not expect to generate revenues from the commercial sale of products
in the near future, and might never generate revenues from the sale of products. Our ability to generate revenue and achieve profitability
will depend on, among other things, successful completion of the development of our product candidates; obtaining necessary regulatory
approvals from the FDA; establishing manufacturing, sales, and marketing arrangements with third parties; and raising sufficient
funds to finance our activities. We might not succeed at any of these undertakings. If we are unsuccessful at some or all of these
undertakings, our business, prospects, and results of operations may be materially adversely affected.
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We received a report from our independent
registered public accounting firm with an explanatory paragraph for the year ended December 31, 2011 with respect to our ability
to continue as a going concern.  The existence of such a report may adversely affect our stock price and our ability
to raise capital.  There is no assurance that we will not receive a similar report for our year ended December 31, 2012.
In their report dated
March 30, 2012, our independent registered public accounting firm expressed substantial doubt about our ability to continue as
a going concern as we have incurred losses since inception of development stage, have a negative cash flow from operations and
have working capital and stockholders' deficiencies and require additional financing to fund future operations. Our ability
to continue as a going concern is subject to our ability to obtain necessary funding from outside sources, including obtaining
additional funding from the sale of our securities, obtaining loans and grants from various financial institutions where possible.
Our continued net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods
will prove successful.
We have no approved products on the
market and therefore do not expect to generate any revenues from product sales in the foreseeable future, if at all.
To date, we have no
approved product on the market and have generated no product revenues. We have funded our operations primarily from sales of our
securities. We have not received, and do not expect to receive for at least the next several years, if at all, any revenues from
the commercialization of our product candidates. To obtain revenues from sales of our product candidates, we must succeed, either
alone or with third parties, in developing, obtaining regulatory approval for, manufacturing and marketing drugs with commercial
potential. We may never succeed in these activities, and we may not generate sufficient revenues to continue our business operations
or achieve profitability.
We are largely dependent on the success
of our lead product candidate, TNX-102, and we cannot be certain that this product candidate will receive regulatory approval or
be successfully commercialized.
We currently have no
products for sale, and we cannot guarantee that we will ever have any drug products approved for sale. We and our product candidates
are subject to extensive regulation by the FDA and comparable regulatory authorities in other countries governing, among other
things, research, testing, clinical trials, manufacturing, labeling, promotion, selling, adverse event reporting and recordkeeping.
We are not permitted to market any of our product candidates in the United States until we receive approval of an NDA for a product
candidate from the FDA or the equivalent approval from a foreign regulatory authority. Obtaining FDA approval is a lengthy, expensive
and uncertain process. We currently have one lead product candidate, TNX-102 for the treatment of FM, and the success of our business
currently depends on its successful development, approval and commercialization. Any projected sales or future revenue predictions
are predicated upon FDA approval and market acceptance of TNX-102. If projected sales do not materialize for any reason, it would
have a material adverse effect on our business and our ability to continue operations.
TNX-102 has not completed
the clinical development process; therefore, we have not yet submitted an NDA or foreign equivalent or received marketing approval
for this product candidate anywhere in the world. The clinical development program for TNX-102 may not lead to commercial products
for a number of reasons, including if we fail to obtain necessary approvals from the FDA or foreign regulatory authorities because
our clinical trials fail to demonstrate to their satisfaction that this product candidate is safe and effective. We may also fail
to obtain the necessary approvals if we have inadequate financial or other resources to advance our product candidates through
the clinical trial process. Any failure or delay in completing clinical trials or obtaining regulatory approval for TNX-102 in
a timely manner would have a material adverse impact on our business and our stock price.
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We need additional capital. If additional
capital is not available or is available at unattractive terms, we may be forced to delay, reduce the scope of or eliminate our
research and development programs, reduce our commercialization efforts or curtail our operations.
In order to develop
and bring our product candidates to market, we must commit substantial resources to costly and time-consuming research, preclinical
and clinical trials and marketing activities. We anticipate that our existing cash and cash equivalents will enable us to maintain
our current operations for at least the next nine months. We anticipate that we will need an additional $1 million to continue
our operations for the next 12 months. We anticipate using our cash and cash equivalents to fund further research and development
with respect to our lead product candidates. We may, however, need to raise additional funding sooner if our business or operations
change in a manner that consumes available resources more rapidly than we anticipate. Our requirements for additional capital will
depend on many factors, including:
·
successful commercialization of our product candidates;
·
the time and costs involved in obtaining regulatory approval for our product candidates;
·
costs associated with protecting our intellectual property rights;
·
development of marketing and sales capabilities;
·
payments received under future collaborative agreements, if any; and
·
market acceptance of our products.
To the extent we raise
additional capital through the sale of equity securities, the issuance of those securities could result in dilution to our shareholders.
In addition, if we obtain debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of principal
and interest on such indebtedness, thus limiting funds available for our business activities. If adequate funds are not available,
we may be required to delay, reduce the scope of or eliminate our research and development programs, reduce our commercialization
efforts or curtail our operations. In addition, we may be required to obtain funds through arrangements with collaborative partners
or others that may require us to relinquish rights to technologies, product candidates or products that we would otherwise seek
to develop or commercialize ourselves or license rights to technologies, product candidates or products on terms that are less
favorable to us than might otherwise be available.
We will require substantial
additional funds to support our research and development activities, and the anticipated costs of preclinical studies and clinical
trials, regulatory approvals and eventual commercialization. Such additional sources of financing may not be available on favorable
terms, if at all. If we do not succeed in raising additional funds on acceptable terms, we may be unable to initiate clinical trials
or obtain approval of any product candidates from the FDA and other regulatory authorities. In addition, we could be forced to
discontinue product development, forego sales and marketing efforts and forego attractive business opportunities. Any additional
sources of financing will likely involve the issuance of our equity securities, which will have a dilutive effect on our stockholders.
There is no assurance
that we will be successful in raising the additional funds needed to fund our business plan. If we are not able to raise sufficient
capital in the near future, our continued operations will be in jeopardy and we may be forced to cease operations and sell or otherwise
transfer all or substantially all of our remaining assets.
We face intense competition in the
markets targeted by our lead product candidates. Many of our competitors have substantially greater resources than we do, and we
expect that all of our product candidates under development will face intense competition from existing or future drugs.
We expect that all
of our product candidates under development, if approved, will face intense competition from existing and future drugs marketed
by large companies. These competitors may successfully market products that compete with our products, successfully identify drug
candidates or develop products earlier than we do, or develop products that are more effective, have fewer side effects or cost
less than our products.
Additionally, if a
competitor receives FDA approval before we do for a drug that is similar to one of our product candidates, FDA approval for our
product candidate may be precluded or delayed due to periods of non-patent exclusivity and/or the listing with the FDA by the competitor
of patents covering its newly-approved drug product. Periods of non-patent exclusivity for new versions of existing drugs such
as our current product candidates can extend up to three and one-half years. See "Business—Government Regulation."
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These competitive factors
could require us to conduct substantial new research and development activities to establish new product targets, which would be
costly and time consuming. These activities would adversely affect our ability to commercialize products and achieve revenue and
profits.
Competition and technological change
may make our product candidates and technologies less attractive or obsolete.
We compete with established
pharmaceutical and biotechnology companies that are pursuing other forms of treatment for the same indications we are pursuing
and that have greater financial and other resources. Other companies may succeed in developing products earlier than us, obtaining
FDA approval for products more rapidly, or developing products that are more effective than our product candidates. Research and
development by others may render our technology or product candidates obsolete or noncompetitive, or result in treatments or cures
superior to any therapy we develop. We face competition from companies that internally develop competing technology or acquire
competing technology from universities and other research institutions. As these companies develop their technologies, they may
develop competitive positions that may prevent, make futile, or limit our product commercialization efforts, which would result
in a decrease in the revenue we would be able to derive from the sale of any products.
There can be no assurance
that any of our product candidates will be accepted by the marketplace as readily as these or other competing treatments. Furthermore,
if our competitors' products are approved before ours, it could be more difficult for us to obtain approval from the FDA. Even
if our products are successfully developed and approved for use by all governing regulatory bodies, there can be no assurance that
physicians and patients will accept our product(s) as a treatment of choice.
Furthermore, the pharmaceutical
research industry is diverse, complex, and rapidly changing. By its nature, the business risks associated therewith are numerous
and significant. The effects of competition, intellectual property disputes, market acceptance, and FDA regulations preclude us
from forecasting revenues or income with certainty or even confidence.
If we fail to protect our intellectual
property rights, our ability to pursue the development of our technologies and products would be negatively affected.
Our success will depend
in part on our ability to obtain patents and maintain adequate protection of our technologies and products. If we do not adequately
protect our intellectual property, competitors may be able to use our technologies to produce and market drugs in direct competition
with us and erode our competitive advantage. Some foreign countries lack rules and methods for defending intellectual property
rights and do not protect proprietary rights to the same extent as the United States. Many companies have had difficulty protecting
their proprietary rights in these foreign countries. We may not be able to prevent misappropriation of our proprietary rights.
We have received, and
are currently seeking, patent protection for numerous compounds and methods of treating diseases. However, the patent process is
subject to numerous risks and uncertainties, and there can be no assurance that we will be successful in protecting our products
by obtaining and defending patents. These risks and uncertainties include the following: patents that may be issued or licensed
may be challenged, invalidated, or circumvented, or otherwise may not provide any competitive advantage; our competitors, many
of which have substantially greater resources than us and many of which have made significant investments in competing technologies,
may seek, or may already have obtained, patents that will limit, interfere with, or eliminate our ability to make, use, and sell
our potential products either in the United States or in international markets; there may be significant pressure on the United
States government and other international governmental bodies to limit the scope of patent protection both inside and outside the
United States for treatments that prove successful as a matter of public policy regarding worldwide health concerns; countries
other than the United States may have less restrictive patent laws than those upheld by United States courts, allowing foreign
competitors the ability to exploit these laws to create, develop, and market competing products.
11
Moreover, any patents
issued to us may not provide us with meaningful protection, or others may challenge, circumvent or narrow our patents. Third parties
may also independently develop products similar to our products, duplicate our unpatented products or design around any patents
on products we develop. Additionally, extensive time is required for development, testing and regulatory review of a potential
product. While extensions of patent term due to regulatory delays may be available, it is possible that, before any of our product
candidates can be commercialized, any related patent, even with an extension, may expire or remain in force for only a short period
following commercialization, thereby reducing any advantages of the patent.
In addition, the United
States Patent and Trademark Office (the "PTO") and patent offices in other jurisdictions have often required that patent
applications concerning pharmaceutical and/or biotechnology-related inventions be limited or narrowed substantially to cover only
the specific innovations exemplified in the patent application, thereby limiting the scope of protection against competitive challenges.
Thus, even if we or our licensors are able to obtain patents, the patents may be substantially narrower than anticipated.
Our success depends
on our patents, patent applications that may be licensed exclusively to us and other patents to which we may obtain assignment
or licenses. We may not be aware, however, of all patents, published applications or published literature that may affect our business
either by blocking our ability to commercialize our product candidates, by preventing the patentability of our product candidates
to us or our licensors, or by covering the same or similar technologies that may invalidate our patents, limit the scope of our
future patent claims or adversely affect our ability to market our product candidates.
In addition to patents,
we rely on a combination of trade secrets, confidentiality, nondisclosure and other contractual provisions, and security measures
to protect our confidential and proprietary information. These measures may not adequately protect our trade secrets or other proprietary
information. If they do not adequately protect our rights, third parties could use our technology, and we could lose any competitive
advantage we may have. In addition, others may independently develop similar proprietary information or techniques or otherwise
gain access to our trade secrets, which could impair any competitive advantage we may have.
Patent protection and
other intellectual property protection is crucial to the success of our business and prospects, and there is a substantial risk
that such protections will prove inadequate.
We may be involved in lawsuits to
protect or enforce our patents, which could be expensive and time consuming.
The pharmaceutical
industry has been characterized by extensive litigation regarding patents and other intellectual property rights, and companies
have employed intellectual property litigation to gain a competitive advantage. We may become subject to infringement claims or
litigation arising out of patents and pending applications of our competitors, or additional interference proceedings declared
by the PTO to determine the priority of inventions. The defense and prosecution of intellectual property suits, PTO proceedings,
and related legal and administrative proceedings are costly and time-consuming to pursue, and their outcome is uncertain. Litigation
may be necessary to enforce our issued patents, to protect our trade secrets and know-how, or to determine the enforceability,
scope, and validity of the proprietary rights of others. An adverse determination in litigation or interference proceedings to
which we may become a party could subject us to significant liabilities, require us to obtain licenses from third parties, or restrict
or prevent us from selling our products in certain markets. Although patent and intellectual property disputes might be settled
through licensing or similar arrangements, the costs associated with such arrangements may be substantial and could include our
paying large fixed payments and ongoing royalties. Furthermore, the necessary licenses may not be available on satisfactory terms
or at all.
Competitors may infringe
our patents, and we may file infringement claims to counter infringement or unauthorized use. This can be expensive, particularly
for a company of our size, and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of
ours is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds
that our patents do not cover its technology. An adverse determination of any litigation or defense proceedings could put one or
more of our patents at risk of being invalidated or interpreted narrowly.
12
Also, a third party
may assert that our patents are invalid and/or unenforceable. There are no unresolved communications, allegations, complaints or
threats of litigation related to the possibility that our patents are invalid or unenforceable. Any litigation or claims against
us, whether or not merited, may result in substantial costs, place a significant strain on our financial resources, divert the
attention of management and harm our reputation. An adverse decision in litigation could result in inadequate protection for our
product candidates and/or reduce the value of any license agreements we have with third parties.
Interference proceedings
brought before the U.S. Patent and Trademark Office may be necessary to determine priority of invention with respect to our patents
or patent applications. During an interference proceeding, it may be determined that we do not have priority of invention for one
or more aspects in our patents or patent applications and could result in the invalidation in part or whole of a patent or could
put a patent application at risk of not issuing. Even if successful, an interference proceeding may result in substantial costs
and distraction to our management.
Furthermore, because
of the substantial amount of discovery required in connection with intellectual property litigation or interference proceedings,
there is a risk that some of our confidential information could be compromised by disclosure. In addition, there could be public
announcements of the results of hearings, motions or other interim proceedings or developments. If investors perceive these results
to be negative, the price of our common stock could be adversely affected.
If we infringe the rights of third
parties we could be prevented from selling products, forced to pay damages, and defend against litigation.
If our products, methods,
processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and we may
have to: obtain licenses, which may not be available on commercially reasonable terms, if at all; abandon an infringing product
candidate; redesign our products or processes to avoid infringement; stop using the subject matter claimed in the patents held
by others; pay damages; and/or defend litigation or administrative proceedings which may be costly whether we win or lose, and
which could result in a substantial diversion of our financial and management resources.
If preclinical testing or clinical
trials for our product candidates are unsuccessful or delayed, we will be unable to meet our anticipated development and commercialization
timelines.
We rely and expect
to continue to rely on third parties, including clinical research organizations and outside consultants, to conduct, supervise
or monitor some or all aspects of preclinical testing or clinical trials involving our product candidates. We have less control
over the timing and other aspects of these preclinical testing or clinical trials than if we performed the monitoring and supervision
entirely on our own. Third parties may not perform their responsibilities for our preclinical testing or clinical trials on our
anticipated schedule or, for clinical trials, consistent with a clinical trial protocol. Delays in preclinical and clinical testing
could significantly increase our product development costs and delay product commercialization. In addition, many of the factors
that may cause, or lead to, a delay in the clinical trials may also ultimately lead to denial of regulatory approval of a product
candidate.
The commencement of
clinical trials can be delayed for a variety of reasons, including delays in:
·
demonstrating sufficient safety and efficacy to obtain regulatory approval to commence a clinical trial;
·
reaching agreement on acceptable terms with prospective contract research organizations and trial sites;
·
manufacturing sufficient quantities of a product candidate; and
·
obtaining institutional review board approval to conduct a clinical trial at a prospective site.
Once a clinical trial
has begun, it may be delayed, suspended or terminated by us or the FDA or other regulatory authorities due to a number of factors,
including:
13
·
ongoing discussions with the FDA or other regulatory authorities regarding the scope or design of our clinical trials;
·
failure to conduct clinical trials in accordance with regulatory requirements;
·
lower than anticipated recruitment or retention rate of patients in clinical trials;
·
inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;
·
lack of adequate funding to continue clinical trials;
·
negative results of clinical trials; or
·
side-effects of cyclobenzaprine.
If clinical trials
are unsuccessful, and we are not able to obtain regulatory approvals for our product candidates under development, we will not
be able to commercialize these products, and therefore may not be able to generate sufficient revenues to support our business.
If we are unable to file for approval
under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act or if we are required to generate additional data related to
safety and efficacy in order to obtain approval under Section 505(b)(2), we may be unable to meet our anticipated development and
commercialization timelines.
Our current plans for
filing NDAs for our product candidates include efforts to minimize the data we will be required to generate in order to obtain
marketing approval for our product candidates and therefore possibly obtain a shortened review period for the applications. While
we met with the FDA in August 2011 to discuss initial plans for the future development of TNX-102, we have not yet come to full
agreement with the FDA as to the nature or extent of any studies we may be required to conduct in order to achieve approval for
any of our product candidates. The timeline for filing and review of our NDAs is based on our plan to submit those NDAs under Section
505(b)(2) of the Federal Food, Drug and Cosmetic Act, wherein we will rely in part on data in the public domain or elsewhere. We
have not yet filed an NDA under Section 505(b)(2) for any of our lead product candidates. Depending on the data that may be required
by the FDA for approval, some of the data may be related to products already approved by the FDA. If the data relied upon is related
to products already approved by the FDA and covered by third-party patents we would be required to certify that we do not infringe
the listed patents or that such patents are invalid or unenforceable. As a result of the certification, the third-party would have
45 days from notification of our certification to initiate an action against us. In the event that an action is brought in response
to such a certification, the approval of our NDA could be subject to a stay of up to 30 months or more while we defend against
such a suit. Approval of our product candidates under Section 505(b)(2) may therefore be delayed until patent exclusivity expires
or until we successfully challenge the applicability of those patents to our product candidates. Alternatively, we may elect to
generate sufficient additional clinical data so that we no longer rely on data which triggers a potential stay of the approval
of our product candidates. Even if no exclusivity periods apply to our applications under Section 505(b)(2), the FDA has broad
discretion to require us to generate additional data on the safety and efficacy of our product candidates to supplement third-party
data on which we may be permitted to rely. In either event, we could be required, before obtaining marketing approval for any of
our product candidates, to conduct substantial new research and development activities beyond those we currently plan to engage
in order to obtain approval of our product candidates. Such additional new research and development activities would be costly
and time consuming.
We may not be able
to obtain shortened review of our applications, and the FDA may not agree that our products qualify for marketing approval. If
we are required to generate additional data to support approval, we may be unable to meet our anticipated development and commercialization
timelines, may be unable to generate the additional data at a reasonable cost, or at all, and may be unable to obtain marketing
approval of our product candidates.
14
Our executive officers and other
key personnel are critical to our business, and our future success depends on our ability to retain them.
Our success depends
to a significant extent upon the continued services of Dr. Seth Lederman, our President and Chief Executive Officer. Dr. Lederman
has overseen Tonix Sub since inception and provides leadership for our growth and operations strategy as well as being an inventor
on many of our patents. Loss of the services of Dr. Lederman would have a material adverse effect on our growth, revenues, and
prospective business. We have key-man insurance on the life of Dr. Lederman. We are also highly dependent on the other principal
members of our management and scientific team. We are not aware of any present intention of any of our key personnel to leave our
company or to retire. However, we have no employment agreement with Dr. Lederman and while we have employment agreements with certain
of our employees, all of our employees may terminate their employment at any time. The loss of any of our key personnel, or the
inability to attract and retain qualified personnel, may significantly delay or prevent the achievement of our research, development
or business objectives and could materially adversely affect our business, financial condition and results of operations.
Any employment agreement
we enter into will not ensure the retention of the employee who is a party to the agreement. In addition, we have only limited
ability to prevent former employees from competing with us. Furthermore, our future success will also depend in part on the continued
service of our key scientific and management personnel and our ability to identify, hire, and retain additional personnel. We experience
intense competition for qualified personnel and may be unable to attract and retain the personnel necessary for the development
of our business. Moreover, our work force is located in the "Pharmaceutical Corridor" that spans New York, New Jersey
and Pennsylvania, where competition for personnel with the scientific and technical skills that we seek is extremely high and is
likely to remain high. Because of this competition, our compensation costs may increase significantly.
If we are unable to hire additional
qualified personnel, our ability to grow our business may be harmed.
Over time we will need
to hire additional qualified personnel with expertise in clinical testing, clinical research and testing, government regulation,
formulation and manufacturing, financial matters and sales and marketing. We compete for qualified individuals with numerous biopharmaceutical
companies, universities and other research institutions. Competition for such individuals is intense, and we cannot be certain
that our search for such personnel will be successful. Attracting and retaining qualified personnel will be critical to our success.
We rely on third parties to manufacture
the compounds used in our trials, and we intend to rely on them for the manufacture of any approved products for commercial sale.
If these third parties do not manufacture our product candidates in sufficient quantities and at an acceptable cost, clinical development
and commercialization of our product candidates could be delayed, prevented or impaired.
We have no manufacturing
facilities, and we have no experience in the clinical or commercial-scale manufacture of drugs or in designing drug manufacturing
processes. We intend to rely on third parties to manufacture some or all of our product candidates in clinical trials and our products
that reach commercialization. Completion of our clinical trials and commercialization of our product candidates requires manufacturing
of a sufficient supply of our product candidates. We are currently in discussions with outside sources to manufacture our development
compounds. If, for any reason, we become unable to rely on our current sources for the manufacture of our product candidates, either
for clinical trials or, at some future date, for commercial quantities, then we would need to identify and contract with additional
or replacement third-party manufacturers to manufacture compounds for pre-clinical, clinical, and commercial purposes. We may not
be successful in identifying such additional or replacement third-party manufacturers, or in negotiating acceptable terms with
any that we do identify.
We believe that there
are a variety of manufacturers that we may be able to retain to produce these products. However, once we retain a manufacturing
source, if our manufacturers do not perform in a satisfactory manner, we may not be able to develop or commercialize potential
products as planned. Certain specialized manufacturers are expected to provide us with modified and unmodified pharmaceutical compounds,
including finished products, for use in our preclinical and clinical studies. Some of these materials are available from only one
supplier or vendor. Any interruption in or termination of service by such sole source suppliers could result in a delay or interruption
in manufacturing until we locate an alternative source of supply. Any delay or interruption in manufacturing operations (or failure
to locate a suitable replacement for such suppliers) could materially adversely affect our business, prospects, or results of operations.
We do not have any short-term or long-term manufacturing agreements with any of these manufacturers. If we fail to contract for
manufacturing on acceptable terms or if third-party manufacturers do not perform as we expect, our development programs could be
materially adversely affected. This may result in delays in filing for and receiving FDA approval for one or more of our products.
Any such delays could cause our prospects to suffer significantly.
15
Failure by our third-party manufacturers
to comply with the regulatory guidelines set forth by the FDA with respect to our product candidates could delay or prevent the
completion of clinical trials, the approval of any product candidates or the commercialization of our products.
Such third-party manufacturers
must be inspected by FDA for cGMP compliance before they can produce commercial product. We may be in competition with other companies
for access to these manufacturers' facilities and may be subject to delays in manufacture if the manufacturers give other clients
higher priority than they give to us. If we are unable to secure and maintain third-party manufacturing capacity, the development
and sales of our products and our financial performance may be materially affected.
Manufacturers are obligated
to operate in accordance with FDA-mandated requirements. A failure of any of our third-party manufacturers to establish and follow
cGMP requirements and to document their adherence to such practices may lead to significant delays in the availability of material
for clinical trials, may delay or prevent filing or approval of marketing applications for our products, and may cause delays or
interruptions in the availability of our products for commercial distribution following FDA approval. This could result in higher
costs to us or deprive us of potential product revenues.
Complying with cGMP
and non-U.S. regulatory requirements will require that we expend time, money, and effort in production, recordkeeping, and quality
control to assure that the product meets applicable specifications and other requirements. We, or our contracted manufacturing
facility, must also pass a pre-approval inspection prior to FDA approval. Failure to pass a pre-approval inspection may significantly
delay FDA approval of our products. If we fail to comply with these requirements, we would be subject to possible regulatory action
and may be limited in the jurisdictions in which we are permitted to sell our products. As a result, our business, financial condition,
and results of operations may be materially harmed.
Drug manufacturers
are subject to ongoing periodic unannounced inspections by the FDA, the DEA and corresponding state and foreign agencies to ensure
strict compliance with cGMP requirements and other requirements under Federal drug laws, other government regulations and corresponding
foreign standards. If we or our third-party manufacturers fail to comply with applicable regulations, sanctions could be imposed
on us, including fines, injunctions, civil penalties, failure by the government to grant marketing approval of drugs, delays, suspension
or withdrawal of approvals, seizures or recalls of product, operating restrictions and criminal prosecutions.
Corporate and academic collaborators
may take actions to delay, prevent, or undermine the success of our products.
Our operating and financial
strategy for the development, clinical testing, manufacture, and commercialization of drug candidates is heavily dependent on our
entering into collaborations with corporations, academic institutions, licensors, licensees, and other parties. Our current strategy
assumes that we will successfully establish these collaborations, or similar relationships; however, there can be no assurance
that we will be successful establishing such collaborations. Some of our existing collaborations are, and future collaborations
may be, terminable at the sole discretion of the collaborator. Replacement collaborators might not be available on attractive terms,
or at all. The activities of any collaborator will not be within our control and may not be within our power to influence. There
can be no assurance that any collaborator will perform its obligations to our satisfaction or at all, that we will derive any revenue
or profits from such collaborations, or that any collaborator will not compete with us. If any collaboration is not pursued, we
may require substantially greater capital to undertake development and marketing of our proposed products and may not be able to
develop and market such products effectively, if at all. In addition, a lack of development and marketing collaborations may lead
to significant delays in introducing proposed products into certain markets and/or reduced sales of proposed products in such markets.
16
Data provided by collaborators and
others upon which we rely that has not been independently verified could turn out to be false, misleading, or incomplete.
We rely on third-party
vendors, scientists, and collaborators to provide us with significant data and other information related to our projects, clinical
trials, and our business. If such third parties provide inaccurate, misleading, or incomplete data, our business, prospects, and
results of operations could be materially adversely affected.
Our product candidates are novel
and still in development
.
We are a pharmaceutical
company focused on the development of drug product candidates, all of which are still in development. Our drug development methods
may not lead to commercially viable drugs for any of several reasons. For example, we may fail to identify appropriate targets
or compounds, our drug candidates may fail to be safe and effective in clinical trials, or we may have inadequate financial or
other resources to pursue development efforts for our drug candidates. Our drug candidates will require significant additional
development, clinical trials, regulatory clearances and additional investment by us or our collaborators before they can be commercialized.
Successful development of our products
is uncertain
.
Our development of
current and future product candidates is subject to the risks of failure and delay inherent in the development of new pharmaceutical
products, including: delays in product development, clinical testing, or manufacturing; unplanned expenditures in product development,
clinical testing, or manufacturing; failure to receive regulatory approvals; emergence of superior or equivalent products; inability
to manufacture on its own, or through any others, product candidates on a commercial scale; and failure to achieve market acceptance.
Because of these risks,
our research and development efforts may not result in any commercially viable products. If a significant portion of these development
efforts are not successfully completed, required regulatory approvals are not obtained or any approved products are not commercially
successfully, our business, financial condition, and results of operations may be materially harmed.
Clinical trials required for our
product candidates are expensive and time-consuming, and their outcome is uncertain
.
In order to obtain
FDA approval to market a new drug product, we must demonstrate proof of safety and effectiveness in humans. To meet these requirements,
we must conduct "adequate and well controlled" clinical trials. Conducting clinical trials is a lengthy, time-consuming,
and expensive process. The length of time may vary substantially according to the type, complexity, novelty, and intended use of
the product candidate, and often can be several years or more per trial. Delays associated with products for which we are directly
conducting clinical trials may cause us to incur additional operating expenses. The commencement and rate of completion of clinical
trials may be delayed by many factors, including, for example: inability to manufacture sufficient quantities of qualified materials
under the FDA's Current Good Manufacturing Practices requirements, commonly known as cGMP, for use in clinical trials; slower than
expected rates of patient recruitment; failure to recruit a sufficient number of patients; modification of clinical trial protocols;
changes in regulatory requirements for clinical trials; the lack of effectiveness during clinical trials; the emergence of unforeseen
safety issues; delays, suspension, or termination of the clinical trials due to the institutional review board responsible for
overseeing the study at a particular study site; and government or regulatory delays or "clinical holds" requiring
suspension or termination of the trials.
The results from early
clinical trials are not necessarily predictive of results obtained in later clinical trials. Accordingly, even if we obtain positive
results from early clinical trials, we may not achieve the same success in future clinical trials. Clinical trials may not demonstrate
statistically significant safety and effectiveness to obtain the requisite regulatory approvals for product candidates.
17
Our clinical trials
may be conducted in patients with CNS conditions, and in some cases, our product is expected to be used in combination with approved
therapies that themselves have significant adverse event profiles. During the course of treatment, these patients could suffer
adverse medical events or die for reasons that may or may not be related to our products. We cannot ensure that safety issues will
not arise with respect to our products in clinical development.
The failure of clinical
trials to demonstrate safety and effectiveness for the desired indications could harm the development of that product candidate
and other product candidates. This failure could cause us to abandon a product candidate and could delay development of other product
candidates. Any delay in, or termination of, our clinical trials would delay the filing of our NDAs with the FDA and, ultimately,
our ability to commercialize our product candidates and generate product revenues. Any change in, or termination of, our clinical
trials could materially harm our business, financial condition, and results of operation.
We are subject to extensive and costly
government regulation.
Product candidates
employing our technology are subject to extensive and rigorous domestic government regulation including regulation by the FDA,
the Centers for Medicare and Medicaid Services, other divisions of the United States Department of Health and Human Services, the
United States Department of Justice, state and local governments, and their respective foreign equivalents. The FDA regulates the
research, development, preclinical and clinical testing, manufacture, safety, effectiveness, record-keeping, reporting, labeling,
storage, approval, advertising, promotion, sale, distribution, import, and export of biopharmaceutical products. The FDA regulates
small molecule chemical entities as drugs, subject to a New Drug Application, or NDA, under the Federal Food, Drug, and Cosmetic
Act. If products employing our technologies are marketed abroad, they will also be subject to extensive regulation by foreign governments,
whether or not they have obtained FDA approval for a given product and its uses. Such foreign regulation may be equally or more
demanding than corresponding United States regulation.
Government regulation
substantially increases the cost and risk of researching, developing, manufacturing, and selling our products. The regulatory review
and approval process, which includes preclinical testing and clinical trials of each product candidate, is lengthy, expensive,
and uncertain. We or our collaborators must obtain and maintain regulatory authorization to conduct clinical trials. We or our
collaborators must obtain regulatory approval for each product we intend to market, and the manufacturing facilities used for the
products must be inspected and meet legal requirements. Securing regulatory approval requires the submission of extensive preclinical
and clinical data and other supporting information for each proposed therapeutic indication in order to establish the product's
safety and efficacy, and in the case of biologics also potency and purity, for each intended use. The development and approval
process takes many years, requires substantial resources, and may never lead to the approval of a product.
Even if we are able
to obtain regulatory approval for a particular product, the approval may limit the indicated medical uses for the product, may
otherwise limit our ability to promote, sell, and distribute the product, may require that we conduct costly post-marketing surveillance,
and/or may require that we conduct ongoing post-marketing studies. Material changes to an approved product, such as, for example,
manufacturing changes or revised labeling, may require further regulatory review and approval. Once obtained, any approvals may
be withdrawn, including, for example, if there is a later discovery of previously unknown problems with the product, such as a
previously unknown safety issue.
If we, our collaborators,
or our contract manufacturers fail to comply with applicable regulatory requirements at any stage during the regulatory process,
such noncompliance could result in, among other things delays in the approval of applications or supplements to approved applications;
refusal of a regulatory authority, including the FDA, to review pending market approval applications or supplements to approved
applications; warning letters; fines; import and/or export restrictions; product recalls or seizures; injunctions; total or partial
suspension of production; civil penalties; withdrawals of previously approved marketing applications or licenses; recommendations
by the FDA or other regulatory authorities against governmental contracts; and/or criminal prosecutions.
18
We do not have, and may never obtain,
the regulatory approvals we need to market our product candidates.
Following completion
of clinical trials, the results are evaluated and, depending on the outcome, submitted to the FDA in the form of an NDA in order
to obtain FDA approval of the product and authorization to commence commercial marketing. In responding to an NDA, the FDA may
require additional testing or information, may require that the product labeling be modified, may impose post-approval study or
reporting requirements or other restrictions on product distribution, or may deny the application. The FDA has established performance
goals for review of NDAs - six months for priority applications and ten months for standard applications. However, the FDA is not
required to complete its review within these time periods. The timing of final FDA review and action varies greatly, but can take
years in some case and may involve the input of an FDA advisory committee of outside experts. Product sales in the United States
may commence only when an NDA is approved.
To date, we have not
applied for or received the regulatory approvals required for the commercial sale of any of our products in the United States or
in any foreign jurisdiction. None of our product candidates has been determined to be safe and effective, and we have not submitted
an NDA to the FDA or an equivalent application to any foreign regulatory authorities for any of our product candidates.
It is possible that
none of our product candidates will be approved for marketing. Failure to obtain regulatory approvals, or delays in obtaining regulatory
approvals, may adversely affect the successful commercialization of any drugs or biologics that we or our partners develop, may
impose additional costs on us or our collaborators, may diminish any competitive advantages that we or our partners may attain,
and/or may adversely affect our receipt of revenues or royalties.
Even if approved, our products will
be subject to extensive post-approval regulation.
Once a product is approved,
numerous post-approval requirements apply. Among other things, the holder of an approved NDA is subject to periodic and other FDA
monitoring and reporting obligations, including obligations to monitor and report adverse events and instances of the failure of
a product to meet the specifications in the NDA. Application holders must submit new or supplemental applications and obtain FDA
approval for certain changes to the approved product, product labeling, or manufacturing process. Application holders must also
submit advertising and other promotional material to the FDA and report on ongoing clinical trials.
Depending on the circumstances,
failure to meet these post-approval requirements can result in criminal prosecution, fines, injunctions, recall or seizure of products,
total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, or refusal to allow us to enter
into supply contracts, including government contracts. In addition, even if we comply with FDA and other requirements, new information
regarding the safety or effectiveness of a product could lead the FDA to modify or withdraw product approval.
Even if we obtain regulatory approval
to market our product candidates, our product candidates may not be accepted by the market.
Even if the FDA approves
one or more of our product candidates, physicians and patients may not accept it or use it. Even if physicians and patients would
like to use our products, our products may not gain market acceptance among healthcare payors such as managed care formularies,
insurance companies or government programs such as Medicare or Medicaid. Acceptance and use of our products will depend upon a
number of factors including: perceptions by members of the health care community, including physicians, about the safety and effectiveness
of our drug or device product; cost-effectiveness of our product relative to competing products; availability of reimbursement
for our product from government or other healthcare payers; and effectiveness of marketing and distribution efforts by us and our
licensees and distributors, if any.
The degree of market
acceptance of any pharmaceutical product that we develop will depend on a number of factors, including:
·
cost-effectiveness;
·
the safety and effectiveness of our products, including any significant potential side effects (including drowsiness and dry mouth), as compared to alternative products or treatment methods;
19
·
the timing of market entry as compared to competitive products;
·
flat or declining use of off-label muscle-relaxant products for fibromyalgia prior to the launch of TNX-102;
·
the rate of adoption of our products by doctors and nurses;
·
product labeling or product insert required by the FDA for each of our products;
·
reimbursement policies of government and third-party payors;
·
effectiveness of our sales, marketing and distribution capabilities and the effectiveness of such capabilities of our collaborative partners, if any; and
·
unfavorable publicity concerning our products or any similar products.
Our product candidates,
if successfully developed, will compete with a number of products manufactured and marketed by major pharmaceutical companies,
biotechnology companies and manufacturers of generic drugs. Our products may also compete with new products currently under development
by others. Physicians, patients, third-party payors and the medical community may not accept and utilize any of our product candidates.
If our products do not achieve market acceptance, we will not be able to generate significant revenues or become profitable.
Because we expect sales
of our current product candidates, if approved, to generate substantially all of our product revenues for the foreseeable future,
the failure of these products to find market acceptance would harm our business and could require us to seek additional financing.
If we fail to establish marketing,
sales and distribution capabilities, or fail to enter into arrangements with third parties, we will not be able to create a market
for our product candidates.
Our strategy with our
lead product candidates is to control, directly or through contracted third parties, all or most aspects of the product development
process, including marketing, sales and distribution. Currently, we do not have any sales, marketing or distribution capabilities.
In order to generate sales of any product candidates that receive regulatory approval, we must either acquire or develop an internal
marketing and sales force with technical expertise and with supporting distribution capabilities or make arrangements with third
parties to perform these services for us. The acquisition or development of a sales and distribution infrastructure would require
substantial resources, which may divert the attention of our management and key personnel and defer our product development efforts.
To the extent that we enter into marketing and sales arrangements with other companies, our revenues will depend on the efforts
of others. These efforts may not be successful. If we fail to develop sales, marketing and distribution channels, or enter into
arrangements with third parties, we will experience delays in product sales and incur increased costs.
Sales of pharmaceutical
products largely depend on the reimbursement of patients' medical expenses by government health care programs and private health
insurers. Without the financial support of the government or third-party payors, the market for our products will be limited. These
third-party payors are increasingly challenging the price and examining the cost effectiveness of medical products and services.
Recent proposals to change the health care system in the United States have included measures that would limit or eliminate payments
for medical products and services or subject the pricing of medical treatment products to government control. Significant uncertainty
exists as to the reimbursement status of newly approved health care products. Third-party payors may not reimburse sales of our
products or enable our collaborators to sell them at profitable prices.
Our business strategy
might involve out-licensing product candidates to or collaborating with larger firms with experience in marketing and selling pharmaceutical
products. There can be no assurance that we will be able to successfully establish marketing, sales, or distribution relationships;
that such relationships, if established, will be successful; or that we will be successful in gaining market acceptance for our
products. To the extent that we enter into any marketing, sales, or distribution arrangements with third parties, our product revenues
will be lower than if we marketed and sold our products directly, and any revenues we receive will depend upon the efforts of such
third-parties. If we are unable to establish such third-party sales and marketing relationships, or choose not to do so, we will
have to establish and rely on our own in-house capabilities.
20
We, as a company, have
no experience in marketing or selling pharmaceutical products and currently have no sales, marketing, or distribution infrastructure.
To market any of our products directly, we would need to develop a marketing, sales, and distribution force that both has technical
expertise and the ability to support a distribution capability. The establishment of a marketing, sales, and distribution capability
would significantly increase our costs, possibly requiring substantial additional capital. In addition, there is intense competition
for proficient sales and marketing personnel, and we may not be able to attract individuals who have the qualifications necessary
to market, sell, and distribute our products. There can be no assurance that we will be able to establish internal marketing, sales,
or distribution capabilities. If we are unable to, or choose not to establish these capabilities, or if the capabilities we establish
are not sufficient to meet our needs, we will be required to establish collaborative marketing, sales, or distribution relationships
with third parties.
In the event that we are successful
in bringing any products to market, our revenues may be adversely affected if we fail to obtain acceptable prices or adequate reimbursement
for our products from third-party payors.
Our ability to commercialize
pharmaceutical products successfully may depend in part on the availability of reimbursement for our products from:
·
government and health administration authorities;
·
private health insurers; and
·
other third party payors, including Medicare.
We cannot predict the
availability of reimbursement for newly-approved health care products. Third-party payors, including Medicare, are challenging
the prices charged for medical products and services. Government and other third-party payors increasingly are limiting both coverage
and the level of reimbursement for new drugs. Third-party insurance coverage may not be available to patients for any of our products.
The continuing efforts
of government and third-party payors to contain or reduce the costs of health care may limit our commercial opportunity. If government
and other third-party payors do not provide adequate coverage and reimbursement for any prescription product we bring to market,
doctors may not prescribe them or patients may ask to have their physicians prescribe competing drugs with more favorable reimbursement.
In some foreign markets, pricing and profitability of prescription pharmaceuticals are subject to government control. In the United
States, we expect that there will continue to be federal and state proposals for similar controls. In addition, we expect that
increasing emphasis on managed care in the United States will continue to put pressure on the pricing of pharmaceutical products.
Cost control initiatives could decrease the price that we receive for any products in the future. Further, cost control initiatives
could impair our ability to commercialize our products and our ability to earn revenues from this commercialization.
We face the risk of product liability
claims and may not be able to obtain insurance.
Our business exposes
us to the risk of product liability claims that are inherent in the development of drugs. If the use of one or more of our or our
collaborators' drugs harms people, we may be subject to costly and damaging product liability claims brought against us by clinical
trial participants, consumers, health care providers, pharmaceutical companies or others selling our products. Our inability to
obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could
prevent or inhibit the commercialization of pharmaceutical products we develop, alone or with collaborators. We currently do not
carry clinical trial insurance or product liability insurance. We intend to obtain such insurance in the future. We cannot predict
all of the possible harms or side effects that may result and, therefore, the amount of insurance coverage we hold now or in the
future may not be adequate to cover all liabilities we might incur. We intend to expand our insurance coverage to include the sale
of commercial products if we obtain marketing approval for our drug candidates in development, but we may be unable to obtain commercially
reasonable product liability insurance for any products approved for marketing. If we are unable to obtain insurance at an acceptable
cost or otherwise protect against potential product liability claims, we will be exposed to significant liabilities, which may
materially and adversely affect our business and financial position. If we are sued for any injury allegedly caused by our or our
collaborators' products, our liability could exceed our total assets and our ability to pay the liability. A product liability
claim or series of claims brought against us would decrease our cash and could cause our stock price to fall.
21
We use hazardous chemicals in our
business. Potential claims relating to improper handling, storage or disposal of these chemicals could affect us and be time consuming
and costly.
Our research and development
processes and/or those of our third party contractors may involve the controlled use of hazardous materials and chemicals. These
hazardous chemicals are reagents and solvents typically found in a chemistry laboratory. Our operations also produce hazardous
waste products. Federal, state and local laws and regulations govern the use, manufacture, storage, handling and disposal of hazardous
materials. While we attempt to comply with all environmental laws and regulations, including those relating to the outsourcing
of the disposal of all hazardous chemicals and waste products, we cannot eliminate the risk of contamination from or discharge
of hazardous materials and any resultant injury. In the event of such an accident, we could be held liable for any resulting damages
and any liability could materially adversely affect our business, financial condition and results of operations.
Compliance with environmental
laws and regulations may be expensive. Current or future environmental regulations may impair our research, development or production
efforts. We might have to pay civil damages in the event of an improper or unauthorized release of, or exposure of individuals
to, hazardous materials. We are not insured against these environmental risks.
If we enter into collaborations
with third parties, they might also work with hazardous materials in connection with our collaborations. We may agree to indemnify
our collaborators in some circumstances against damages and other liabilities arising out of development activities or products
produced in connection with these collaborations.
In addition, the federal,
state and local laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous or radioactive
materials and waste products may require us to incur substantial compliance costs that could materially adversely affect our business,
financial condition and results of operations.
If we retain collaborative partners
and our partners do not satisfy their obligations, we will be unable to develop our partnered product candidates.
In the event we enter
into any collaborative agreements, we may not have day-to-day control over the activities of our collaborative partners with respect
to any of these product candidates. Any collaborative partner may not fulfill its obligations under these agreements. If a collaborative
partner fails to fulfill its obligations under an agreement with us, we may be unable to assume the development of the products
covered by that agreement or enter into alternative arrangements with a third party. In addition, we may encounter delays in the
commercialization of the product candidate that is the subject of the agreement. Accordingly, our ability to receive any revenue
from the product candidates covered by these agreements will be dependent on the efforts of our collaborative partner. We could
also become involved in disputes with a collaborative partner, which could lead to delays in or termination of our development
and commercialization programs and time-consuming and expensive litigation or arbitration. In addition, any such dispute could
diminish our collaborators' commitment to us and reduce the resources they devote to developing and commercializing our products.
Conflicts or disputes with our collaborators, and competition from them, could harm our relationships with our other collaborators,
restrict our ability to enter future collaboration agreements and delay the research, development or commercialization of our product
candidates. If any collaborative partner terminates or breaches its agreement, or otherwise fails to complete its obligations in
a timely manner, our chances of successfully developing or commercializing these product candidates would be materially and adversely
affected. We may not be able to enter into collaborative agreements with partners on terms favorable to us, or at all. Our inability
to enter into collaborative arrangements with collaborative partners, or our failure to maintain such arrangements, would limit
the number of product candidates that we could develop and ultimately, decrease our sources of any future revenues.
22
RISKS RELATED TO OUR STOCK
There has been a limited trading
market for our Common Stock and almost no market activity to date.
Currently, our Common
Stock is available for quotation on the Over-the-Counter Bulletin Board under the symbol "TNXP." However, prior to
February 2012, there was no trading activity in our Common Stock and only a few trades have occurred to date. It is anticipated
that there will be a limited trading market for the Common Stock on the Over-the-Counter Bulletin Board. The lack of an active
market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable.
The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability
to raise capital by selling shares of capital stock and may impair our ability to acquire other companies or technologies by using
Common Stock as consideration.
You may have difficulty trading and
obtaining quotations for our Common Stock.
Our Common Stock may
not be actively traded, and the bid and asked prices for our Common Stock on the Over-the-Counter Bulletin Board may fluctuate
widely. As a result, investors may find it difficult to dispose of, or to obtain accurate quotations of the price of, our securities.
This severely limits the liquidity of the Common Stock, and would likely reduce the market price of our Common Stock and hamper
our ability to raise additional capital.
The market price for our Common Stock may be volatile,
and your investment in our common stock could decline in value.
The stock market in
general has experienced extreme price and volume fluctuations. The market prices of the securities of biotechnology and specialty
pharmaceutical companies, particularly companies like ours without product revenues and earnings, have been highly volatile and
may continue to be highly volatile in the future. This volatility has often been unrelated to the operating performance of particular
companies. The following factors, in addition to other risk factors described in this section, may have a significant impact on
the market price of our common stock:
·
announcements of technological innovations or new products by us or our competitors;
·
announcement of FDA approval or disapproval of our products or other product-related actions;
·
developments involving our discovery efforts and clinical trials;
·
developments or disputes concerning patents or proprietary rights, including announcements of infringement, interference or other litigation against us or our potential licensees;
·
developments involving our efforts to commercialize our products, including developments impacting the timing of commercialization;
·
announcements concerning our competitors, or the biotechnology, pharmaceutical or drug delivery industry in general;
·
public concerns as to the safety or efficacy of our products or our competitors' products;
·
changes in government regulation of the pharmaceutical or medical industry;
·
changes in the reimbursement policies of third party insurance companies or government agencies;
·
actual or anticipated fluctuations in our operating results;
·
changes in financial estimates or recommendations by securities analysts;
·
developments involving corporate collaborators, if any;
·
changes in accounting principles; and
·
the loss of any of our key scientific or management personnel.
In the past, securities
class action litigation has often been brought against companies that experience volatility in the market price of their securities.
Whether or not meritorious, litigation brought against us could result in substantial costs and a diversion of management's
attention and resources, which could adversely affect our business, operating results and financial condition.
23
Investor relations activities, nominal
"float" and supply and demand factors may affect the price of our stock.
The Company expects
to utilize various techniques such as non-deal road shows and investor relations campaigns in order to create investor awareness
for the Company.  These campaigns may include personal, video and telephone conferences with investors and prospective
investors in which our business practices are described.  The Company may provide compensation to investor relations
firms and pay for newsletters, websites, mailings and email campaigns that are produced by third-parties based upon publicly-available
information concerning the Company.  The Company will not be responsible for the content of analyst reports and other
writings and communications by investor relations firms not authored by the Company or from publicly available information.  The
Company does not intend to review or approve the content of such analysts' reports or other materials based upon analysts'
own research or methods.  Investor relations firms should generally disclose when they are compensated for their efforts,
but whether such disclosure is made or complete is not under our control.   In addition, investors in the Company may
be willing, from time to time, to encourage investor awareness through similar activities.  Investor awareness activities
may also be suspended or discontinued which may impact the trading market our common stock.
The SEC and FINRA enforce
various statutes and regulations intended to prevent manipulative or deceptive devices in connection with the purchase or sale
of any security and carefully scrutinize trading patterns and company news and other communications for false or misleading information,
particularly in cases where the hallmarks of "pump and dump" activities may exist, such as rapid share price increases
or decreases.  We, and our shareholders may be subjected to enhanced regulatory scrutiny due to the small number of holders
who initially will own the registered shares of our common stock publicly available for resale, and the limited trading markets
in which such shares may be offered or sold which have often been associated with improper activities concerning penny-stocks,
such as the OTC Bulletin Board or the OTCQB Marketplace (Pink OTC) or pink sheets.  Until such time as our restricted
shares are registered or available for resale under Rule 144, there will continue to be a small percentage of shares held by a
small number of investors, many of whom acquired such shares in privately negotiated purchase and sale transactions, that will
constitute the entire available trading market.  The Supreme Court has stated that manipulative action is a term of art
connoting intentional or willful conduct designed to deceive or defraud investors by controlling or artificially affecting the
price of securities.  Often times, manipulation is associated by regulators with forces that upset the supply and demand
factors that would normally determine trading prices.  Since a small percentage of the outstanding common stock of the
Company will initially be available for trading, held by a small number of individuals or entities, the supply of our common stock
for sale will be extremely limited for an indeterminate amount of time, which could result in higher bids, asks or sales prices
than would otherwise exist.  Securities regulators have often cited thinly-traded markets, small numbers of holders,
and awareness campaigns as components of their claims of price manipulation and other violations of law when combined with manipulative
trading, such as wash sales, matched orders or other manipulative trading timed to coincide with false or touting press releases.  There
can be no assurance that the Company's or third-parties' activities, or the small number of potential sellers or small
percentage of stock in the "float," or determinations by purchasers or holders as to when or under what circumstances
or at what prices they may be willing to buy or sell stock will not artificially impact (or would be claimed by regulators to have
affected) the normal supply and demand factors that determine the price of the stock.
We do not anticipate paying dividends
on our common stock.
We have never declared
or paid cash dividends on our common stock and do not expect to do so in the foreseeable future. The declaration of dividends is
subject to the discretion of our board of directors and will depend on various factors, including our operating results, financial
condition, future prospects and any other factors deemed relevant by our board of directors. You should not rely on an investment
in our company if you require dividend income from your investment in our company. The success of your investment will likely depend
entirely upon any future appreciation of the market price of our common stock, which is uncertain and unpredictable. There is no
guarantee that our common stock will appreciate in value.
24
We expect that our quarterly results
of operations will fluctuate, and this fluctuation could cause our stock price to decline.
Our quarterly operating
results are likely to fluctuate in the future. These fluctuations could cause our stock price to decline. The nature of our business
involves variable factors, such as the timing of the research, development and regulatory pathways of our product candidates, which
could cause our operating results to fluctuate.
Due to the possibility
of fluctuations in our revenues and expenses, we believe that quarter-to-quarter comparisons of our operating results are not a
good indication of our future performance.
If we or our existing shareholders
sell a substantial number of shares of our common stock in the public market, our stock price may decline.
If we or our existing
shareholders sell a large number of shares of our common stock, or the public market perceives that we or our existing shareholders
might sell shares of common stock, particularly with respect to our affiliates, directors, executive officers or other insiders,
the market price of our common stock could decline significantly.
In the future, we may
issue additional shares to our employees, directors or consultants, in connection with corporate alliances or acquisitions, or
to raise capital. Due to these factors, sales of a substantial number of shares of our common stock in the public market could
occur at any time.
Our officers, directors and principal
shareholders own a controlling interest in our voting stock and Investors will not have any voice in our management.
Our officers, directors
and principal shareholders, in the aggregate, beneficially own or control the votes of approximately 60.7% of our outstanding Common
Stock. As a result, these stockholders, acting together, will have the ability to control substantially all matters submitted to
our stockholders for approval, including:
·
election of our board of directors;
·
removal of any of our directors;
·
amendment of our certificate of incorporation or bylaws; and
·
adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination
involving us.
As a result of their
ownership and positions, our directors, executive officers and principal shareholders collectively are able to influence all matters
requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition,
sales of significant amounts of shares held by our directors, executive officers or principal shareholders, or the prospect of
these sales, could adversely affect the market price of our Common Stock. Management's stock ownership may discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price
or prevent our stockholders from realizing a premium over our stock price.
25
Our common stock is not currently
traded at high volume, and you may be unable to sell at or near ask prices or at all if you need to sell or liquidate a substantial
number of shares at one time.
Our common stock is
currently traded, but with very low, if any, volume, based on quotations on the "Over-the-Counter Bulletin Board",
meaning that the number of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively
small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which
is still relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that
generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and
would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time
as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in
our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity
that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a
broader or more active public trading market for our common stock will develop or be sustained, or that trading levels will be
sustained.
Shareholders should
be aware that, according to Commission Release No. 34-29093, the market for "penny stocks" has suffered in recent years
from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales
and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers;
and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware
of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate
the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical
limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns
or practices could increase the future volatility of our share price.
Efforts to comply with recently enacted
changes in securities laws and regulations will increase our costs and require additional management resources, and we still may
fail to comply.
As directed by Section
404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring public companies to include a report of management on their
internal controls over financial reporting in their annual reports on Form 10-K. In addition, in the event we are no longer a smaller
reporting company, the independent registered public accounting firm auditing our financial statements would be required to attest
to the effectiveness of our internal controls over financial reporting. Such attestation requirement by our independent registered
public accounting firm would not be applicable to us until the report for the year ended December 31, 2012 at the earliest, if
at all. If we are unable to conclude that we have effective internal controls over financial reporting or if our independent registered
public accounting firm is required to, but is unable to provide us with a report as to the effectiveness of our internal controls
over financial reporting, investors could lose confidence in the reliability of our financial statements, which could result in
a decrease in the value of our securities.
Our common stock is subject to the
"penny stock" rules of the SEC and the trading market in our securities is limited, which makes transactions in our
stock cumbersome and may reduce the value of an investment in our stock.
The Securities and
Exchange Commission ("SEC") has adopted Rule 15g-9 which establishes the definition of a "penny stock,"
for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise
price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt,
the rules require:
·
that a broker or dealer approve a person's account for transactions in penny stocks; and
·
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity
of the penny stock to be purchased.
In order to approve a person's
account for transactions in penny stocks, the broker or dealer must:
·
obtain financial information and investment experience objectives of the person; and
·
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient
knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
26
The broker or dealer
must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny
stock market, which, in highlight form:
·
sets forth the basis on which the broker or dealer made the suitability determination; and
·
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers
may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more
difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
Disclosure also has
to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions
payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies
available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing
recent price information for the penny stock held in the account and information on the limited market in penny stocks.
FINRA sales practice requirements
may also limit a shareholder's ability to buy and sell our stock.
In addition to the
"penny stock" rules described above, FINRA has adopted rules that require that in recommending an investment to a customer,
a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending
speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and other information. Under interpretations of
these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at
least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our
common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
USE OF PROCEEDS
We will not receive
any proceeds from the sale of common stock offered by the selling stockholders under this prospectus. However, we will receive
up to $9,130,178 in the aggregate from the selling stockholders if they exercise in full, on a cash basis, the warrants to purchase
7,365,292 shares of common stock issued to the selling stockholders that are being offered by the selling stockholders under this
prospectus. All but 30,750 of the warrants entitle the holder to exercise their warrants on a cashless basis under certain conditions.
In the event that any selling stockholder exercises their warrants on a cashless basis, then we will not receive any proceeds from
the exercise of those warrants. We would use such proceeds from the exercise of the warrants for working capital and other corporate
purposes.
The warrant holders
may exercise their warrants at any time until their expiration, as further described under "Description of Capital Stock."
Because the warrant holders may exercise the warrants in their own discretion, if at all, we cannot plan on specific uses of proceeds
beyond application of proceeds to general corporate purposes. We have agreed to bear the expenses (other than any underwriting
discounts or commissions or agent's commissions) in connection with the registration of the common stock being offered hereby
by the selling stockholders.
27
MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Our common stock is
currently traded on the Over-the-Counter Bulletin Board under the symbol "TNXP." Prior to October 19, 2011, our common
stock was quoted on the Over-the-Counter Bulletin Board under the symbol "TAEI." Prior to February 2012, no public
trades occurred in our common stock. For the periods indicated, the following table sets forth the high and low sale prices of
our common stock as reported by NASDAQ.
Fiscal Year 2012
High
Low
First Quarter
$
2.06
$
2.00
Second Quarter (1)
$
2.00
$
0.99
(1)
As of April 25, 2012.
Holders
As of April 25, 2012,
we had approximately 178 holders of our common stock. The number of record holders was determined from the records of our transfer
agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers,
and registered clearing agencies. The transfer agent of our common stock is vStock Transfer, LLC, 77 Spruce Street, Suite 201,
Cedarhurst, NY 11516.
Dividends
We have not declared
or paid any cash dividends on our common stock and we do not anticipate paying any cash dividends to stockholders in the foreseeable
future. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent
upon our financial condition, results of operations, capital requirements, and such other factors as the Board of Directors deem
relevant.
28
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Some of the information
in this Form S-1 contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements
by forward-looking words such as "may," "will," "expect," "anticipate," "believe,"
"estimate" and "continue," or similar words. You should read statements that contain these words carefully
because they:
•
discuss our future expectations;
•
contain projections of our future results of operations or of our financial condition; and
•
state other "forward-looking" information.
We believe it is important
to communicate our expectations. However, there may be events in the future that we are not able to accurately predict or over
which we have no control. Our actual results and the timing of certain events could differ materially from those anticipated in
these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors," "Business"
and elsewhere in this prospectus. See "Risk Factors."
Business Overview
We are a specialty
pharmaceutical company focusing on developing new pharmaceuticals products that are safer and more effective than widely prescribed
CNS drugs in large and growing markets. The ongoing advances in science and medicine provide a number of opportunities to apply
known active pharmaceutical ingredients to new uses. We use the unfolding understanding of disease and medicine when we search
for potential therapeutic solutions among prescription pharmaceutical agents that have been used safely in patients for other conditions.
We seek to create new dose and formulation options and that are tailored to the new therapeutic uses for these agents.
Many CNS drugs have
been identified by physicians who prescribe drugs for some purpose, but observe unexpected improvements in their patients'
CNS conditions. One of our goals is to establish formal clinical study programs to determine if such anecdotal observations are,
in fact, reflections of the compound's ability to treat the CNS condition. While some new applications can use the commercially
available form of the drug, in other cases reformulating the active ingredient may improve the active ingredient's safety
or effectiveness in treating the condition. If the formal development programs are proven successful in the clinical tests, we
will seek marketing approval from the FDA.
We are currently devoting
our efforts to the development of two lead product candidates. Our two most advanced programs are new dose formulations of cyclobenzaprine,
which is the active pharmaceutical ingredient of two widely prescribed muscle relaxant products. Due to the well-characterized
history of the main active ingredient, we believe our lead products, referred to herein as TNX-102 and TNX-105, have the potential
to progress through a shorter development pathway than is typical for drug products based on novel active ingredients. We expect
TNX-102 could be approved by FDA after two efficacy studies and a safety exposure study that together would expose the minimum
number of FM patients that satisfy FDA's standards, whereas drug products based on novel active ingredients need exposure
to significantly more study subjects.
We also have a pipeline
of other product candidates. For commercial reasons, we do not disclose the identities of the active ingredients or targeted indications
in our pipeline until a U.S. patent has been allowed or issued. Consistent with our mission, these product candidates are or likely
will be reformulations of active ingredients that have been used in humans in other products and which are designed for new CNS
therapeutic indications.
In other cases, the
products will be formulated to match earlier ("predicate") products closely enough to be considered generic copies
or similar enough to other medications to rely (in part) on their regulatory review and approval. The predicate product may be
approved by the FDA under an NDA or may have been reviewed for safety and effectiveness by the National Academy of Sciences under
the DESI, in which case they would be considered by FDA to be "unapproved products". For DESI products, it is our intent
to develop NDA versions by modernizing the chemistry, manufacturing and controls and to perform new clinical studies to support
an NDA filing.
29
In August 2010, we
formed Krele to commercialize products that are generic versions of predicate NDA products. We anticipate that when our branded
products lose patent protection, Krele may market authorized generic versions of them. Krele also may develop or acquire generic
products approved under ANDAs and we may market branded versions (branded generics) of such products.
On October 7, 2011,
we executed and consummated the Share Exchange Agreement with Tonix Sub. Pursuant to the Share Exchange, each share of Tonix Sub's
common stock was exchanged for 0.9 shares of our common stock, and each share of Tonix Sub's Series A and B preferred stock
was exchanged for 4.8 shares of our common stock. Upon completion of the Share Exchange, the Tonix Sub shareholders, including
holders of 1,396,982 restricted shares, which were subject to accelerated vesting, received in exchange for all of their shares,
an aggregate of 22,666,667 shares of our common stock and our existing stockholders retained 4,000,000 shares of common stock.
The 22,666,667 shares issued to the Tonix Sub shareholders constituted approximately 85% of our 26,666,667 shares of common stock
issued and outstanding after the Share Exchange. Upon completion of the Share Exchange, Tonix Sub became our wholly-owned subsidiary.
For accounting purposes, the acquisition has been treated as a recapitalization of Tonix Sub, accompanied by the issuance of our
common stock for the outstanding common stock of Toxic Sub which was recorded at a nominal value. The historical financial statements
are those of Tonix Sub. The accompanying financial statements give retroactive effect to the recapitalization as if it had occurred
on June 7, 2007 (inception date). Also, professional services expenses were allocated to research and development and general and
administrative expenses in the 2010 and cumulative from inception through December 31, 2011 statement of operations to be consistent
with the current period's presentation.
Current Operating Trends
Our current research
and development efforts are focused on developing our lead products, TNX-102 and TNX-105. Our research and development expenses
consist of manufacturing studies and the cost of drug ingredients used in such studies, fees paid to providers for conducting various
clinical studies as well as for the analysis of the results of such studies and for other medical research addressing the potential
efficacy of our drugs. We believe that significant investment in product development is a competitive necessity, and we plan to
continue these investments in order to be in a position to realize the potential of our product candidates and proprietary technologies.
We plan to start the
next phase of clinical trials for our product candidates TNX-102 and TNX-105 over the next 12 months, subject to raising necessary
funds. Clinical trials can be very expensive. If these and additional necessary clinical trials are successful, we plan to prepare
and submit applications to the FDA for marketing approval for our drug candidates. This process entails significant costs. As a
result of these and other factors, we expect our research and development expenses to increase significantly over the next 12 to
24 months.
We expect that a larger
percentage of our research and development expenses in the future will be incurred in support of our current and future preclinical
and clinical development programs rather than technology development. These expenditures are subject to numerous uncertainties
relating to timing and cost to completion. We test compounds in numerous preclinical studies for safety, toxicology and efficacy.
At the appropriate time, subject to the approval of regulatory authorities, we expect to conduct early-stage clinical trials for
each drug candidate. We anticipate funding these trials ourselves, and possibly with the assistance of federal grants. As we obtain
results from trials, we may elect to discontinue or delay clinical trials for certain products in order to focus our resources
on more promising products. Completion of clinical trials may take several years, and the length of time generally varies substantially
according to the type, complexity, novelty and intended use of a product candidate.
The commencement and
completion of clinical trials for our products may be delayed by many factors, including lack of efficacy during clinical trials,
unforeseen safety issues, slower than expected patient recruitment, or government delays. In addition, we may encounter regulatory
delays or rejections as a result of many factors, including results that do not support the intended safety or efficacy of our
product candidates, perceived defects in the design of clinical trials and changes in regulatory policy during the period of product
development. As a result of these risks and uncertainties, we are unable to accurately estimate the specific timing and costs of
our clinical development programs or the timing of material cash inflows, if any, from our product candidates. Our business, financial
condition and results of operations may be materially adversely affected by any delays in, or termination of, our clinical trials
or a determination by the FDA that the results of our trials are inadequate to justify regulatory approval, insofar as cash in-flows
from the relevant drug or program would be delayed or would not occur.
30
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.
Fiscal year Ended December 31, 2011
Compared to Fiscal year Ended December 31, 2010
Revenues and
Cost of Goods Sold
. We had no revenues or cost of goods sold during the fiscal years ended December 31, 2011 and 2010.
Research and
Development Expenses
.
Research and development expenses for the fiscal year ended December 31, 2011 were $1,158,167, an
increase of $573,869, or 98.2%, from $584,298 for the fiscal year ended December 31, 2010. In 2011, we incurred $342,398 and $318,616
in clinical cost and activities, respectively, as compared to $0 in 2010 for both.
General and Administrative
Expenses
.
General and administrative expenses for the fiscal year ended December 31, 2011 were $2,220,361, an increase
of $875,971, or 65%, from $1,344,390 incurred in the fiscal year ended December 31, 2010. This increase is primarily due to payroll
related expenses and professional services.
Payroll related expenses
increased to $731,284 in the current year from $413,954 for the fiscal year ended December 31, 2010, an increase of $317,330, or
77%. Payroll related expenses include both cash and non-cash compensation associated with the vesting of restricted stock grants.
The increase in payroll related costs was a result of a full year of payments to our members of the core management team who joined
in June through August of 2010, along with the acceleration of vesting in conjunction with our reverse merger in 2011 of restricted
stock previously issued to our employees.
Professional services
for the fiscal year ended December 31, 2011 totaled $1,121,547, an increase of $440,642, or 65%, over the $680,905 recognized for
the fiscal year ended December 31, 2010. Of professional services, legal fees totaled $373,075 for the fiscal year ended December
31, 2011, an increase of $15,657, or 4.4%, from $357,418 incurred for the fiscal year ended December 31, 2010. Consulting fees
totaled $299,144 for the fiscal year ended December 31, 2011, an increase of $139,903 or 87.9%, from $159,241 for the fiscal year
ended December 31, 2010. The increase was primarily a result of $189,691 in regulatory costs in the fiscal year ended December
31, 2011 compared to $0 in 2010, offset by a reduction in public relations expenses of $45,513. Accounting fees incurred in fiscal
2011 amounted to $243,003, an increase of $145,400, or 149%, from $97,603 incurred in fiscal 2010. The increase included costs
associated with the audit of Tonix Sub's financial statements for the year ended December 31, 2010, review of our interim
financial statements and filings with the SEC related to our recent reverse merger, completed in October 2011.
Travel, meals and entertainment
costs for fiscal 2011 were $69,268, an increase of $34,548, or 100%, from $34,720 incurred in fiscal 2010. Travel, meals and entertainment
costs include travel related to medical and life sciences conferences. Rent for fiscal 2011 totaled $128,228, an increase of $85,657,
or 201%, from $42,571 incurred in fiscal 2010, due primarily to the opening of new office space in New York. Depreciation expense
in fiscal 2011 totaled $9,300, an increase of $5,446, or 141%, over the expense of $3,854 incurred in fiscal 2010, as a result
of the purchase of new office computers.
Interest Expense
.
Interest expense for the fiscal year ended December 31, 2011 totaled $91,585, an increase of $55,803, or 156%, from $35,782 incurred
during the fiscal year ended December 31, 2010. In 2011, our interest costs were comprised primarily of amortization of deferred
financing costs in conjunction with the issuance of our secured convertible debentures in October 2011. We incurred an aggregate
of $249,543 in deferred financing costs, of which we amortized $53,377 as interest expense for the fiscal year ended December 31,
2011. In addition, we incurred interest expense related to $500,000 of notes payable and our secured convertible debentures.
31
Net Loss
.
As a result of the foregoing, net loss for the year ended December 31, 2011 was $3,470,113, compared to a net loss of $1,964,470
for the year ended December 31, 2010.
Liquidity and Capital Resources
As of December 31,
2011, we had a working capital deficit of $781,723. For the year ended December 31, 2011, we used $2,637,538 of cash in operating
activities. Cash provided by financing activities totaled $2,613,000 from the sale of shares of capital stock of $612,000, issuance
of notes payable of $500,000 and net proceeds of $1,501,000 from issuance of secured convertible debentures. In the comparable
2010 period, $1,342,000 was raised through the sale of shares of capital stock and $50,000 through the issuance of demand notes,
which were converted into shares of capital stock in July 2010. At December 31, 2011, we had cash of $41,123 compared to $65,359
at December 31, 2010. Our cash is held in bank deposit accounts. At December 31, 2011, we had $2,075,000 of secured convertible
debentures outstanding.
Cash used in operations
for the years ended December 31, 2011 and 2010 was $2,637,538, and $1,233,341, respectively, which represent cash outlays for research
and development and general and administrative expenses in such years. Increase in cash outlays principally resulted from clinical
cost and activities, regulatory cost, payroll and rent.
Cash generated by investing
activities for the year ended December 31, 2011 was $302, compared to a usage of $94,366 in 2010. In 2011, we received a return
of a security deposit from space vacated in New Jersey and in 2010 we placed $60,000 in a restricted cash account as collateral
for the lease on the New York office. In 2011 and 2010, we purchased office furniture and computer equipment of $2,764 and $34,279,
respectively.
In their report dated
March 30, 2012, our independent registered public accounting firm stated that our financial statements for the year ended December
31, 2011 were prepared assuming that we would continue as a going concern. Our ability to continue as a going concern is an issue
raised due to our net losses and negative cash flows from operations since inception and our expectation that these conditions
will continue for the foreseeable future. In addition, we have both working capital and stockholders' deficiencies at December 31,
2011 and require additional financing to fund future operations. Further, we do not have any commercial products available for
sale and have not generated revenues and there is no assurance that if approval of our products is received that we will be able
to generate cash flow to fund operations. In addition, there can be no assurance that our research and development will be successfully
completed or that any product will be approved or commercially viable. Our ability to continue as a going concern is subject to
our ability to obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities,
obtaining loans from various financial institutions or being awarded grants from government agencies, where possible. Our continued
net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove
successful.
We expect to incur
losses from operations for the foreseeable future. We expect to incur increasing research and development expenses, including expenses
related to additional clinical trials. We expect that our general and administrative expenses will increase in the future as we
expand our business development, add infrastructure and incur additional costs related to being a public company, including incremental
audit fees, investor relations programs and increased professional services.
Our future capital
requirements will depend on a number of factors, including the progress of our research and development of product candidates,
the timing and outcome of regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending and
enforcing patent claims and other intellectual property rights, the status of competitive products, the availability of financing
and our success in developing markets for our product candidates. We believe our existing cash, together with the net proceeds
of the 2012 Financing, will be sufficient to fund our operating expenses and capital equipment requirements for the next six months.
32
We presently do not
have any available credit, bank financing or other external sources of liquidity. Due to our history and historical operating losses,
our operations have not been a source of liquidity. We will need to obtain additional capital in order to expand operations and
become profitable. 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, stockholders 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.
Notes Payable
On September 9, 2011,
Tonix Sub sold $500,000 principal amount of convertible notes (the "Notes") to nine accredited investors. The Notes
were due one year from the date of issuance, bear interest at the rate of 8% per annum and were automatically converted into Debentures
in the 2011 Financing.
2011 Private Placement
Between October and
November, 2011 we consummated the 2011 Financing pursuant to which we sold $2,075,000 principal amount of Debentures for aggregate
cash proceeds of $1,575,000 and the exchange of $500,000 in previously issued Notes of Tonix Sub that were converted into Debentures
in the principal face amount of $500,000.
The Debentures mature
on the earlier of (i) the one year anniversary of the date of issuance or (ii) the date of a Subsequent Financing. The Debentures
bear interest at 8% per annum and are convertible at the holder's option into a Subsequent Financing. In the event that a
Subsequent Financing has not occurred within 12 months from the date of issuance of the Debenture, the holder has the option to
convert the Debenture into the Conversion Shares. In addition, upon conversion or repayment of the Debenture, the holders were
entitled to receive, at the holder's option, either (i) the Conversion Warrant or (ii) the Incentive Shares. The private
placement that closed in January 2012 met the requirements of a Subsequent Financing, therefore, the holders of the Debentures
elected to receive 275,000 Conversion Warrants and 594,000 Incentive Shares. The Conversion Warrants have three year term and $1.00
exercise price.
In connection with
the 2011 Financing, we made cash payments to WFG Investments and Seagate of $40,000 and $14,000, respectively, as commissions and
attorney fees of $20,000. In addition, WFG Investments and Seagate earned an aggregate of 30,750 2011 Agent Warrants, which have
terms similar to the Conversion Warrants.
2012 Private Placement
Between January and
March, 2012, we consummated the 2012 Financing pursuant to which we issued an aggregate of 264.7106 Units to certain investors
for aggregate cash proceeds of $4,692,765 and the exchange of $1,925,000 in previously issued Debentures that were converted into
Units. The 2012 Financing satisfied the requirements for the Subsequent Financing discussed above.
Each Unit had a purchase
price of $25,000 per Unit and consisted of twenty five thousand (25,000) shares of our Common Stock, 25,000 Class A Warrants and
25,000 Class B Warrants.
33
The Class A Warrants
have an exercise price of $1.25 per share of Common Stock and will be exercisable for a period of five years from the date of issuance.
The Class B Warrants were not exercisable by the Purchasers and would be exercised automatically on their expiration date by cashless
exercise or expire without exercise. In the event that the average of our daily volume weighted average price was below $0.75 during
the Measuring Period, then the holder was entitled to receive additional shares of our Common Stock upon the exercise of the Class
B Warrants on the expiration date, which was the 12th trading day after the Announcement Date. In the event that our average daily
volume weighted average price was at or above $0.75 during the Measuring Period, the Class B Warrants would expire unexercised.
The Announcement Date was the earlier of (1) the date on which we announced via press release the results of the pharmacokinetic
study of our TNX-102 drug formulation; or (2) June 1, 2012.
The number of shares
issuable upon the cashless exercise of the Class B Warrant was equal to the quotient obtained by dividing [(A-B) [((C-A) *D)/ A]]
by (A), where:
(A) =      the
average of the Company's daily volume weighted average price during the Measuring Period;
(B) =      $0.01,
which is the exercise price of the Class B Warrant;
(C) =      $1.00,
which is the purchase price of the Class B Warrant; and
(D) =      the
number of shares of common stock purchased by the Class B Warrant holder.
However, for purposes
of this calculation, in no event was the average of our daily volume weighted average price to be less than $0.50. For example,
in the event that an investor purchased one Unit and the average of our daily volume weighted average price was $0.50, then the
Class B Warrant would have been exercised and the holder would have received 24,500 shares of Common Stock. We issued the press
release with the results of the pharmacokinetic study of our TNX-102 drug formulation on April 5, 2012 and effective April 24,
2012, the Class B Warrants expired unexercised.
In connection with
the Financing, we paid Dawson James a cash payment of $466,777, which represented an 8% commission and a 2% non-accountable expense
allowance of the gross proceeds delivered by investors in the 2012 Financing. In addition, Dawson James earned 466,777 2012 Agent
Warrants.
Other
In August 2011, we
authorized the initiation of formulation work and manufacturing of TNX-102 for clinical trials pursuant to a contract with Lipocine
with respect to a research and development project for reformulation work on our leading products for a fee of $235,000, with work
started in the third quarter of 2011. In July 2011, we entered into a contract with a contract research organization in July 2011
to investigate the feasibility of developing a new, proprietary formulation of cyclobenzaprine at a cost of $58,080. In September
2011, we entered into a contract with Pharmanet Canada for contract research work with respect to the pharmacokinetic study for
TNX-102. The full cost of the work to be performed is $637,231. Payment is due in four installments based on the achievement of
certain performance milestones. In October 2011, we entered into an agreement with another contract research organization to develop,
and perform an exploratory pharmacokinetic study on, a new formulation of cyclobenzaprine for an approximate cost of $180,000.
In December 2011, we entered into an agreement with a public relations firm to provide news media placement and political intelligence
from January 2012 through June 2012 for a total cost of $60,000.
Transactions with Related Parties
Dr. Seth Lederman,
our Chief Executive Officer and Chairman of the Board, and Dr. Donald Landry, one of our directors, are the primary founders of
Tonix Sub. We have entered into various transactions with several companies under their control, including L&L Technologies,
Plumbline, Targent Pharmaceuticals, LLC and Lederman & Co. In 2010, we entered into two-year consulting agreements with L&L
Technologies for scientific and medical consulting services, and Lederman & Co. for clinical development, strategic, management
and operational consulting services. In consideration for its services, L&L Technologies receives $96,000 per annum. The consulting
agreement renews automatically for subsequent terms of one year at $96,000 per annum. Lederman & Co. received $250,000 per
annum for its services, until August 1, 2011, when it received $127,000 per annum until such time as we closed on the 2012 Financing.
We first closed on the 2012 Financing in January 2012, and effective February 1, 2012, Lederman & Co. receives $250,000 per
annum for its services. The consulting agreement renews automatically for subsequent terms of one year at $250,000 per annum. Additionally,
on September 9, 2011, L&L Technologies, Targent Pharmaceuticals, LLC and Lederman & Co. purchased $265,000 principal amount
of convertible Notes. Such notes were converted into Debentures on October 7, 2011 and in January 2012 such Debentures were converted
into the 2012 Financing.
34
Stock Compensation
In 2010, Tonix Sub's
board of directors and stockholders approved the terms and provisions of the 2010 Stock Plan ("2010 Plan") whereby it
reserved 4,564,641 shares of its common stock for issuance pursuant to the 2010 Plan. The 2010 Plan allowed for grants of options
to purchase shares of common stock and awards of restricted common stock to employees, officers, directors, consultants and advisors
of Tonix Sub. Tonix Sub has granted under the 2010 Plan 2,898,689 shares of restricted stock, 349,082 of which were forfeited and
the remaining 2,549,607 shares vested prior to or on October 7, 2011, the date of Share Exchange after which the 2010 Plan ceased
to exist. Our stock based compensation expenses amounted to $ 435,651 in 2011 and $139,882 in 2010.
In February 2012, we
approved the 2012 Incentive Stock Options Plan ("2012 Plan"). The 2012 Plan provides for the issuance of options to
purchase up to 4,000,000 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 stockholder that owns 10% or more of our common stock). The fair market value of the common stock determined based on quoted
market price or in absence of such quoted market price, by the Board of Directors in a good faith. Additionally, the vesting period
of the grants under the 2012 Plan should not be more than five years and expiration period not more than ten years. We reserved
4,000,000 shares of our common stock for future issuance under the terms of the 2012 Plan.
Lease Commitments
In September 2010,
we entered into a five-year lease for office space in New York City, with monthly payments escalating from approximately $10,000
in first year to approximately $11,000 in fifth year. The Company received a rent credit of $9,420 in each of the months of November
2010, December 2010 and January 2011. We issued a letter of credit in the amount of approximately $60,000 for the benefit of the
landlord which is collateralized by a money market account. Our future minimum lease payments under the operating lease are as
follows:
Year Ending December 31,
2012
124,370
2013
127,889
2014
131,513
2015
100,719
484,491
Critical Accounting Policies and Estimates
Our discussion and
analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these
financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses.
We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on assumptions
that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
We believe the following
critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial
statements.
35
Research and Development
.
Tonix outsources its research and development efforts and expenses related costs as incurred, including the cost of manufacturing
product for testing, licensing fees and costs associated with planning and conducting clinical trials. The value ascribed to patents
and other intellectual property acquired was expensed as research and development costs, as it related to particular research and
development projects and had no alternative future uses.
Stock Based Compensation
.
All stock-based payments to employees and to nonemployee directors for their services as directors consisted of grants of restricted
stock, 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. Because shares of our common stock have not been publicly traded prior to October 7, 2011, we have valued
our stock by considering events that have occurred since the date of grants, transactions involving the sale of our common stock
to independent third parties and the results of a third party valuation of the projected discounted cash flows of the Company.
Income Taxes
.
Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit
carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting
amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income
tax assets if it is not more likely than not that these deferred income tax assets will be realized. The Company recognizes a tax
benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial
statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized
upon ultimate settlement.
Recent Accounting Pronouncements
There were various
updates recently issued, most of which represented technical corrections to the accounting literature or application to specific
industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations
or cash flows.
36
BUSINESS
Corporate Structure
We were incorporated
on November 16, 2007 under the laws of the State of Nevada as Tamandare Explorations Inc. From inception through October 2011,
we were involved in the acquisition, exploration and development of natural resource properties in the State of Nevada. On October
7, 2011 ("Closing Date" and the closing of the share exchange transaction, the "Closing"), we executed
and consummated a share exchange agreement by and among Tonix Sub and the stockholders of 100% of the equity securities of Tonix
Sub, including, the holders of 5,207,500 shares of common stock, 1,500,000 shares of Series A Preferred Stock and 2,275,527 shares
of Series B Preferred Stock (the "Tonix Shareholders"), on the one hand, and us and David Moss ("Moss"),
our then sole officer and director and majority shareholder, on the other hand (the "Share Exchange Agreement" and
the transaction, the "Share Exchange").
In the Share Exchange,
the Tonix Shareholders exchanged their shares of Tonix Sub for newly issued shares of our common stock ("Common Stock").
As a result, upon completion of the Share Exchange, Tonix Sub became our wholly-owned subsidiary.
Upon completion of
the Share Exchange, the Tonix Shareholders received an aggregate of 22,666,667 shares of our Common Stock. Moss returned 1,500,000
shares of Common Stock to us, which were retired, and our existing stockholders retained 4,000,000 shares of Common Stock. The
22,666,667 shares issued to the Tonix Shareholders constituted approximately 85% of our 26,666,667 issued and outstanding shares
of Common Stock post-Closing.
As a result of the
Share Exchange, we acquired 100% of the capital stock of Tonix Sub and consequently, control of the business and operations of
Tonix Sub and Krele. From and after the Closing Date of the Share Exchange, our primary operations consist of the business and
operations of Tonix Sub and Krele.
On October 11, 2011,
we changed our name to Tonix Pharmaceuticals Holding Corp. to reflect our new business.
Corporate Background
In 1996, Seth Lederman,
MD, and Donald Landry, MD, PhD, formed L&L Technologies, LLC, ("L&L"), to develop medications for central nervous
system ("CNS") conditions. Dr. Lederman is our Chairman and Chief Executive Officer and Dr. Landry is a Director. L&L
was a founder of Janus Pharmaceuticals, Inc., later renamed Vela Pharmaceuticals, Inc., ("Vela"), which developed various
therapeutics, including a very low dose, or VLD, version of cyclobenzaprine, under an agreement with L&L. Vela decided to focus
its resources on other programs and transferred the rights in VLD cyclobenzaprine and certain other technologies to L&L in
March 2006.
Tonix Sub formed in
June 2007 as Krele Pharmaceuticals, Inc. by L&L and Krele Pharmaceuticals, LLC (now known as Plumbline LLC) ("Plumbline").
Dr. Lederman is managing partner of Plumbline. Plumbline possessed rights to certain technology for the treatment of alcohol dependence
and abuse. In connection with founding Tonix Sub, L&L and Plumbline entered into an intellectual property transfer and assignment
agreement with Tonix Sub for the purpose of assigning patents and transferring intellectual property and know-how in exchange for
shares of common stock of Tonix Sub. As a result of economic conditions related to the financial crisis of 2007 and 2008, Tonix
Sub was not successful in raising money to fund its programs until 2009. As a result, Tonix Sub was unable to advance the development
programs and had little activity except for prosecuting and maintaining patents and maintaining contracts.
37
In 2009, Tonix Sub
contracted with the Toronto Psychiatric Research Foundation to analyze the sleep data from the 2001 Phase 2a study of 36 patients
with fibromyalgia syndrome, or FM (the "Moldofsky Study"), who were treated with bedtime VLD cyclobenzaprine or placebo.
The Moldofsky Study was conducted in Canada by the Toronto Psychiatric Research Foundation, and Tonix Sub obtained the data from
this study from L&L. In addition, in 2009, Tonix Sub contracted with Caliper Life Sciences (formerly, NovaScreen Bioscience
Corp.) ("Caliper") to analyze the interactions of cyclobenzaprine with certain receptors. In June 2010, Tonix Sub entered
into consulting agreements with L&L and Lederman & Co, LLC ("Lederman & Co") and also acquired certain
rights to develop isometheptene mucate as a treatment for certain types of headaches from Lederman & Co., which we are developing
as TNX-201. Dr. Lederman is managing partner of Lederman & Co. Between June 2010 and October 2011, Tonix Sub was active in
recruiting new officers and directors and started dosing normal healthy volunteers for the pharmacokinetic trial for TNX-102.
Lederman & Co predominantly
provides us with clinical development expertise. L&L predominantly provides us with scientific development expertise. Relative
to traditional pharmaceutical development companies, we can be considered a virtual company, since we contract with third-party
vendors to provide many functions that are core to traditional pharmaceutical companies. For example, we have contracted with PharmaNet
Canada, Inc., or PharmaNet Canada, to develop methods for analyzing cyclobenzaprine in the blood and to conduct a human clinical
study to evaluate the performance of our formulation technology. Lederman & Co is responsible for overseeing the scientific
and technical aspects of PharmaNet's contract work product.
In July 2010, Tonix
Sub changed its name to Tonix Pharmaceuticals, Inc. In August 2010, Tonix Sub formed Krele.
Business Overview
We are a specialty
pharmaceutical company focused on developing new pharmaceutical products for CNS conditions that may be safer and more effective
than currently available treatments. We use ongoing advances in science and medicine to search for potential therapeutic solutions
among already existing prescription pharmaceutical agents that have been successfully used in patients for other conditions. We
create new dose formulations for these agents with the intent to developing products that are optimized for the new therapeutic
uses or indications that we target. Our projects are in the development phase, and we currently do not market any products.
The process of taking
a new drug formulation from concept through testing to approval for a new indication by the U.S. Food and Drug Administration ("FDA")
is a time-consuming, costly and high-risk process. Once a drug formulation has been tested in laboratories, we need to conduct
clinical trials of the product candidate to test its uptake into the blood stream, elimination, effectiveness and safety. Neither
laboratory nor animal studies predict the properties of drugs in humans, so designing new formulations can result in a large number
of unpredictable outcomes. The first set of clinical trials, which are sometimes referred to as Phase 1 studies, are performed
by administering new drug formulations to a limited number of healthy human volunteers and are designed to test the initial concept
of the drug formulation and to determine the correct dosage to be tested subsequently on patients affected with the target disorder.
The initial Phase 1 studies can take up to a year to complete, however, since we reformulate versions of approved drugs for new
uses, we may need to devote less time to Phase I studies since our testing is informed by significant prior human research that
we believe allows us to reduce the possible outcomes. The next step in the process is to conduct a larger study in which the new
drug formulation is administered to human patients affected with the targeted disorder, which can be referred to as a first pivotal
study, a Phase 2b study or a Phase 3 study. The first pivotal study for a condition like FM typically takes a year to complete
and then several more months to interpret the data. If the first pivotal study proves the drug is effective and safe, then a second
pivotal study is conducted, which can also be referred to as a Phase 3 study. The second pivotal study for a condition like FM
would typically take 18 months to complete. After the second pivotal study is completed, and if the results are deemed a success,
we would then submit an application to the FDA seeking approval of the new drug product. This application is called a New Drug
Application, or NDA. We believe it would take approximately three months to file the FDA application and another 14 months for
FDA approval. The drug could be marketed shortly after FDA approval. Therefore, it typically takes more than five years to bring
a new formulation of a drug to market for a new indication, and any delays in the process, such as lack of capital necessary to
run clinical trials, unexpected results, adverse effects, or difficulty in recruiting willing subjects for trials, would result
in additional time before a drug could be available for sale.
38
Our lead product candidate,
TNX-102, is a new optimized dosage form of cyclobenzaprine. TNX-102 is being developed for the management of FM. FM is a CNS condition
that is characterized by diffuse musculoskeletal pain, increased pain sensitivity, fatigue and disturbed sleep. Cyclobenzaprine
is the active pharmaceutical ingredient of two FDA approved and widely prescribed muscle relaxant products: Flexeril®, an immediate-release
form, marketed by the McNeil Specialty Pharmaceuticals division of Johnson & Johnson, and Amrix®, a controlled release
form marketed by Cephalon. Generic copies of Flexeril (cyclobenzaprine in the immediate-release form) are available and many patients
receive a generic when their physician prescribes Flexeril. Likewise, generic copies of Amrix are also available. According to
a study conducted by Frost & Sullivan on our behalf relating to the FM market in the United States ("Frost and Sullivan"),
the immediate-release dose form of cyclobenzaprine is widely used off-label to treat FM. We are working to optimize the dose and
formulation of TNX-102 to treat FM safely and effectively. We plan to subject TNX-102 to the strict testing required for FDA approval,
which we believe will take at least four years and significant clinical studies. We have conducted an initial study of TNX-102
and a comparative pharmacokinetic and bioavailability study. If TNX-102 is ultimately approved by the FDA for the management of
FM, we believe it will be adopted by physicians and reimbursed by managed care companies.
Our other leading product
candidate, TNX-105, which we are also developing, is a new dose form of cyclobenzaprine to treat symptoms of post-traumatic stress
disorder, or PTSD. PTSD is a psychiatric disorder that begins in the aftermath of traumatic experiences. Sleep disturbances, including
nightmares and insomnia, are core features of PTSD and are included in two of the three main symptom clusters. Patients with PTSD
may have any single or combination of symptoms that include re-experiencing, emotional numbing and avoidance, and hyperarousal
reactions that persist for more than one month after the traumatic event. PTSD shares several features with FM, and some patients
are believed to suffer from both PTSD and FM.
Cyclobenzaprine is
the active pharmaceutical ingredient in each of our lead product candidates. We are utilizing drug delivery technology to produce
new formulations. In addition to cyclobenzaprine, each formulation of TNX-102 and TNX-105 will contain inactive ingredients, called
excipients that are well-characterized and have been FDA approved previously in other products. As a result, we anticipate seeking
FDA marketing approval of our lead product candidates, TNX-102 and TNX-105, through the NDA process under Section 505(b)(2) of
the U.S. Federal Food, Drug and Cosmetic Act, or the FFDCA, which we also refer to as Section 505(b)(2). This process permits the
FDA to make some safety and effectiveness determinations through review of materials in the public domain or in already approved
NDAs of products containing cyclobenzaprine. This approach would spare us some of the burden of generating all of this data for
ourselves and may allow our lead product candidates to progress through a shorter development pathway than is typical for pharmaceutical
products based on novel active ingredients. We have not filed an NDA for either of our lead product candidates.
We also have a pipeline
of several other product candidates that we are constantly evaluating. For example, we are developing TNX-201, which is a treatment
for certain types of headaches and TNX-301, which is a potential treatment for alcohol dependence and addiction. For commercial
reasons, we normally do not disclose the identities of the active ingredients or targeted indications of products in our pipeline
until a U.S. patent has been allowed. Consistent with our mission, these product candidates are, or likely will be, reformulations
of active ingredients that have been used by patients in other FDA-approved products. We anticipate that some of our other pipeline
products will be submitted to the FDA for approval under Section 505(b)(2). In other cases, we expect that the products will be
formulated to match earlier predicate products closely enough to rely, in part, on their regulatory review and status. There may
be instances where the predicate product is a medicine that was reviewed for safety and effectiveness by the National Academy of
Sciences under the Drug Evaluation and Safety Initiative, or DESI, and would be considered by the FDA to be an "unapproved
product." For DESI products, it is our intent also to develop NDA versions by modernizing the chemistry, manufacturing and
controls and to perform new clinical studies to support an NDA filing under Section 505(b)(2).
Because of our size
and being in the development stage, we do not currently devote a significant amount of time or resources towards our other pipeline
candidates. We anticipate that sometime in 2012 we will begin developing formulations for TNX-201 and possibly TNX-301, but do
not expect to start clinical trials until 2013 at the earliest.
39
Krele's mission
is to commercialize products that are generic versions of predicate NDA products or existing marketed products that it may acquire
from other pharmaceutical companies. We expect that Tonix Sub's relationship to Krele will be similar to that of several
other pharmaceutical companies and their subsidiaries that market generic versions of the parent's branded products at different
periods in their product life-cycle. We anticipate that when one of our branded products loses patent protection, Krele may market
generic versions of it. In such instances, Krele's product would be an "authorized generic" and would rely on
our NDA. Krele may also develop or acquire generic products approved under Abbreviated New Drug Applications ("ANDAs").
For ANDAs, the predicate product is a medicine approved by the U.S. Food and Drug Administration (the "FDA") under
an NDA. Tonix Sub may market branded versions of such products that rely on Krele's ANDAs which would be referred to as branded
generics. We do not currently market any products and have only begun the process of obtaining state licenses, which are legally
required before a company can manufacture, distribute and market prescription medications. Krele has been issued a state license
in New York.
Our Strategy
Our objective is to
develop and commercialize our product candidates to treat CNS conditions, including FM and PTSD. The principal components of our
strategy to achieve this objective are to:
·
pursue development and regulatory approval pathways by reformulating versions of approved drugs for new uses and by using the
Section 505(b)(2) pathway for FDA approval;
·
adopt a two-pronged patent strategy by seeking methods of use patents for the active ingredients in our products and by seeking
protection for the formulation technology employed in our products;
·
provide clear value propositions to third-party payers, such as managed care companies or government programs like Medicare,
to merit reimbursement for our product candidates; and
·
enter into collaborations with other pharmaceutical companies with respect to, among others, our FM and PTSD product candidates
and other products that will benefit from development or marketing resources beyond those in our Company.
Pursue development
and regulatory approval pathways
. We believe our lead product candidates may be approvable under pathways that are potentially
shorter than those typically available for drug products based on novel active ingredients. By focusing on developing new formulations
of approved drugs for new uses, we believe that we will be able to use the Section 505(b)(2) pathway for FDA approval. This pathway
can reduce the time and expense required for our development programs by allowing our use of previously-generated safety and efficacy
information regarding the active pharmaceutical ingredients in our lead product candidates to support the filing and approval of
our NDA application. Doing so may help reduce the size and scope of our preclinical and clinical trials. The FDA has strict requirements
on the marketing of drugs, and FDA approves each drug for specific uses which are called the label indications. The use of a drug
product for the treatment of a condition other than one of its approved label indications is called off-label use. The development
of an existing FDA-approved drug for the treatment of a condition other than one of its approved label indications is considered
a "new use". For companies involved in the ethical development and marketing of prescription drugs in the US, FDA approval
of a new use or new label indication is the only legal basis of marketing claims. Off-label use is not recognized by the FDA or
FDA-regulated companies as a new use.
Adopt a two-pronged
patent strategy.
We are pursuing a two-pronged patent strategy by seeking intellectual property protection for our methods
of use for certain known active pharmaceutical ingredients and by seeking patents to protect the formulation technologies we employ.
With respect to the methods of use patents, we believe the therapeutic uses we target are new uses for these active ingredients
and we have been issued patents directed to certain aspects of our new uses. We are seeking additional patents to cover other new
uses. For example, the invention of bedtime VLD cyclobenzaprine as a treatment for FM was novel and unexpected when our patents
were filed in 2000. With respect to formulation patents, we believe our products will be protected by patents that describe inventions
of technology for making new formulations and possibly also by patents that describe the invention of products that achieve novel
and useful blood levels at certain times after administration.
40
Provide clear value
propositions to third-party payors to merit reimbursement for our product candidates
. We are designing our clinical development
programs to demonstrate compelling competitive advantages to patients and prescribers and also to demonstrate value propositions
to third-party payors. We believe TNX-102 might help in the management of FM by reducing pain and other symptoms, such as fatigue.
In addition, we believe that bedtime treatment with TNX-102 will have fewer day time side-effects than off-label bedtime treatment
with immediate release cyclobenzaprine. For FM, we believe an FDA-approved product would capture some of the off-label use of generic
cyclobenzaprine. Because FDA approvals are based on objective data, we believe that third-party payors will provide reimbursement
for an FDA approved product, even at a premium price relative to other drugs that are used off-label, such as immediate-release
cyclobenzaprine, tizanidine, baclofen, carisoprodol or metaxalone. For example, third-party payors reimburse for using FDA approved
Lyrica® and Cymbalta® for fibromyalgia over off-label generic versions of Neurontin® (gabapentin) and generic anti-depressants,
respectively.
Enter into collaborations
to maximize the value of our technology
. We believe certain of our drug development candidates, including TNX-102 and TNX-105,
can be developed and marketed more effectively by companies that already have significant drug development and marketing capabilities.
We will seek to enter into collaborations with pharmaceutical or biotechnology companies for the commercialization of these product
candidates at the times we believe most effective.
Our Lead Product Candidates
Our lead product candidates
are TNX-102, for the treatment of FM and TNX-105 for the treatment of PTSD. Both of these consist of cyclobenzaprine in a mixture
of inactive ingredients that are called "excipients", which we believe will improve the absorption rate of cyclobenzaprine
in ways that will optimize the product for bedtime treatment.
Cyclobenzaprine
Cyclobenzaprine was
first synthesized in 1961 by Merck, and the 10 mg Flexeril immediate-release dose form was FDA approved in 1977 for the relief
of muscle spasm associated with acute, painful musculoskeletal conditions as an adjunct to rest and physical therapy.
Although a number of
clinical studies have addressed the potential use and benefit of cyclobenzaprine in treating symptoms of FM, to our knowledge these
studies have not motivated a sponsor to pursue FDA approval.
Based on cyclobenzaprine's
safety and efficacy for treating muscle spasm, in the 1990s, Merck conducted studies to support an application to market a 5 mg
Flexeril tablet (low dose) for the over-the-counter, or OTC, market, where patients can purchase medicine without a physician's
prescription. Although Merck's studies re-affirmed the safety and demonstrated efficacy of 5 mg Flexeril in several large
trials, the OTC division of the FDA rejected the application for use without a prescription, apparently, we believe, because muscle
spasm was deemed a condition that required a physician to diagnose and supervise treatment.
Merck divested the
Flexeril franchise to Alza Pharmaceuticals, or Alza. Alza subsequently was acquired by Johnson and Johnson and Flexeril is part
of their McNeil Specialty Pharmaceuticals division. Based largely on the Merck studies, McNeil won approval of Flexeril 5 mg tablets
as a prescription medicine to treat muscle spasm. McNeil promoted Flexeril 5 mg tablets for the three year period of market exclusivity
based on The Drug Price Competition and Patent Term Restoration Act of 1984, generally referred to as the Hatch-Waxman Act. Following
this exclusivity period, several generics entered the market and took market share from Flexeril. McNeil continues to manufacture
Flexeril, but we believe McNeil no longer actively promotes it.
Despite the approved
uses of cyclobenzaprine in treating muscle spasm, we believe current marketed formulations of cyclobenzaprine are limited for treating
FM by unpredictable absorption. As described in the Flexeril package insert, the amount of cyclobenzaprine absorbed into the bloodstream
varies between 33-55% of the dose ingested. The variability in absorption may be due to several factors, including effects of the
stomach pH (acidity or base) on the dissolution of the tablets, as well as the context of either an empty stomach or a recent meal.
Food in the stomach and small intestine from a recent meal contributes to variability in absorbing other drugs. The uncertainties
in absorption rates make it challenging for a physician contemplating a bedtime treatment for FM to ensure the intended therapeutic
effect is achieved without risking side effects like next-day drowsiness, which could result if the patient has too much cyclobenzaprine
remaining in the bloodstream the next day.
41
If a product could
deliver a predictable absorption rate of cyclobenzaprine, it would mean patients would be less likely to receive too little drug
to receive a therapeutic effect. Conversely, patients would be less likely to be over-dosed, which might lead to potential side
effects, including next-day drowsiness. An optimal VLD cyclobenzaprine product could have faster absorption, faster clearance and
more predictable effects than the immediate release tablet format. We are testing a number of technologies to optimize the properties
of TNX-102 for FM and TNX-105 for PTSD. One of the technologies we are testing is a novel gelatin capsule (gelcap) that employs
a proprietary mixture of lipids with cyclobenzaprine. The proprietary lipid mixture is designed to increase predictability of absorption
of cyclobenzaprine from the gastrointestinal tract into the bloodstream. This formulation is expected to result in increased dosage
precision. However, the science of formulating drugs is not sufficiently advanced to predict the performance of the new gelcaps
or other formulation technologies in humans. We will only learn the extent of our product's advantageous properties when
we conclude testing of TNX-102 in human subjects and the analysis of the data collected.
TNX-102 in Fibromyalgia Syndrome
TNX-102, our most advanced
product candidate, is a bedtime pill containing VLD cyclobenzaprine (2.4 mg). The development of TNX-102 is supported by the results
of the Moldofsky Study of VLD cyclobenzaprine in FM patients. A version of TNX-102 has been manufactured in small quantities for
use in human clinical trials. Based on our formulation of TNX-102, we are testing whether it will provide more predictable effects
and decreased risk of next-day drowsiness than commercially available immediate-release cyclobenzaprine tablets. We are testing
a variety of technologies for faster and more efficient absorption relative to currently marketed cyclobenzaprine products.
FM is diagnosed by
groups of symptoms that have been defined by committees of the American College of Rheumatology, or ACR, and a committee of experts
from the organization Outcome Measures in Rheumatology. In 2007, Pfizer's Lyrica (pregabalin) became the first medicine approved
by the FDA for the management of FM. In 2008, Eli Lilly's Cymbalta (duloxetine) became the second medicine approved by the
FDA for the management of FM. In 2009, Savella® (milnacipran) was the third medicine approved by the FDA for the management
of FM. Savella is marketed by Forest Laboratories.
Product Development Path
Phase 2a Pilot Data in FM Patients
Our motivation to focus
our efforts on developing TNX-102 for FM stems from the results of a clinical study on 36 patients in 2001, the related rights
to which we acquired from L&L. Specifically, this study was a randomized, double-blind, placebo-controlled, dose-escalating
eight week trial conducted at two study centers. The study subjects met ACR criteria for FM.
Patients received VLD
cyclobenzaprine immediate-release 1 mg capsules or corresponding placebo capsules to ingest after dinner and before bedtime. Initially,
patients took one capsule each evening, but over the course of the study, they were allowed to increase the number of tablets taken
in increments of one capsule per week. The maximum number of capsules allowed was four per evening, which would be a total dose
of 4 mg immediate-release cyclobenzaprine.
Patients treated with
VLD cyclobenzaprine demonstrated significant improvements in pain, fatigue and tenderness at week 8 relative to baseline whereas,
placebo-treated patients did not improve (Figure 1). Although this study excluded patients who met formal criteria for major depressive
disorder or any anxiety disorder, there is a high degree of co-existing symptoms of depression and anxiety associated with FM.
VLD cyclobenzaprine treatment resulted in significant reductions in total Hospital Anxiety and Depression Scale, or HAD, which
measures symptoms of anxiety and depression, and the HAD depression subscale which measures depressive symptoms (Figure 1).
42
This study showed treatment
with VLD cyclobenzaprine:
·
provided benefit in core symptoms of FM, including pain and fatigue;
·
improved mood, by demonstrating a significant decrease in HAD scores; and
·
was well tolerated, with no serious adverse events, or SAEs, or discontinuations due to adverse events, or AEs.
Pharmacokinetic Study
We have conducted a
human clinical study being conducted by a contract research organization, or CRO, under an US Investigational New Drug Application,
or IND, and a Canadian Clinical Trial Application. We received FDA and Health Canada clearance for this study, which was conducted
in Canada. This study was designed to measure the circulating blood levels of cyclobenzaprine after oral administration of TNX-102,
the first candidate gelcap formulation containing low-dose cyclobenzaprine, in a fed or fasting state, and determine how they compare
to the blood levels resulting from oral administration of the currently marketed, immediate-release cyclobenzaprine product in
a fasting state. Studies that measure the blood levels of drugs over time are called "pharmacokinetic studies". This
study enrolled approximately 30 healthy adult volunteers. Each subject received each of the trial doses and conditions in a random
order, in what is called a crossover study design. The crossover design allows the assessment of the variability of drug blood
levels over time in the same people during each phase. We selected PharmaNet Canada to conduct this pharmacokinetic study. The
clinical portion of this study was completed by the end of 2011
We announced the results
of the plasma levels of cyclobenzaprine on April 5, 2012. Both TNX-102 2.4 mg promicellar gelcaps and cyclobenzaprine 5 mg immediate
release tablets ("tablet") were well-tolerated. There were no serious adverse events, which was consistent with our
expectations and the fact that cyclobenzaprine is a widely-used generic treatment for muscle spasm.
43
The new formulation
preserved fundamental properties of the tablet including the rate of absorption and elimination of cyclobenzaprine. Absorption
was measured by the time to peak plasma concentration, or
T
max
, and elimination was
measured by the half-life, or
T
½
. The finding that the
TNX-102 2.4 mg promicellar
gelcap formulation did not change the T
max
, or the
T
½
of cyclobenzaprine delivered by the
5 mg immediate release tablets suggests that the new formulation will maintain
clinical effects of immediate release cyclobenzaprine.
When compared to the
generic cyclobenzaprine 5 mg immediate release tablet administered under fasting conditions, the TNX-102 2.4 mg promicellar gelcap
has a lower extent and rate of absorption, as measured by the "area under the curve" or "AUC" of the time
and concentration data and also by the maximum concentration or C
max
.
The finding demonstrates
that the T
NX-102 2.4 mg promicellar gelcap is clearly differentiated and not bioequivalent to the generic cyclobenzaprine
5 mg immediate release tablet, and suggests that a commercial product based on the new formulation would be protected from substitution
by pharmacists for generic cyclobenzaprine.
The
difference in blood levels supports the idea that the
TNX-102 2.4 mg promicellar gelcap could be the basis for a differentiated
product that could provide the kind of benefit observed with very low dose cyclobenzaprine in the Company's Phase 2a study.
This research was published in
The Journal of Rheumatology
, entitled "Effects of Bedtime Very Low Dose (VLD) Cyclobenzaprine
(CBP) on Symptoms and Sleep Physiology in Patients with Fibromyalgia Syndrome (FM): A Double-blind, Randomized, Placebo-controlled
Study," authored by Dr. Harvey Moldofsky, Dr. Herbert Harris, Terence Kwong, W. Tad Archambault, Ph.D. and Dr. Seth Lederman
and the citation is J Rheumatol. 2011 Dec;38(12):2653-63. PMID: 21885490.
No food effect was
observed in the comparison of TNX-102 2.4 mg promicellar gelcaps between fed and fasting states, indicating this formulation provides
dosing precision. We plan at least one additional pharmacokinetic study before selecting a final commercial formulation that will
be tested for efficacy on FM patients in a pivotal or Phase 2b clinical trial starting in the first quarter of 2013.
The
study results support further development of
TNX-102 as a product that can potentially deliver benefits similar to those
observed in FM patients treated with very low dose cyclobenzaprine in our dose-escalating Phase 2a study.
Prospective Phase 2b Study
We expect to advance
the clinical development of TNX-102 for the management of FM by conducting a larger Phase 2b placebo-controlled study. Utilizing
our proprietary formulation, we will seek to replicate and expand upon the efficacy and safety findings of our Moldofsky Study
by administering the commercial form of TNX-102 or placebo to approximately 300 FM patients for twelve weeks. We expect that our
proposed Phase 2b will be one of the two clinical efficacy trials required for FDA approval.
We expect the outcome
measures for efficacy in this study will be similar to those utilized by drug products currently approved for use in FM. Specific
efficacy outcome measures will include the Brief Pain Inventory, the Patient Global Impression of Change (PGIC) and the Fibromyalgia
Impact Questionnaire (FIQ). Additional outcome measures for this trial will be carefully planned to further our exploration of
treatment effects in important areas such as sleep, fatigue, mood, sexual function and quality of life. We will seek FDA concurrence
on the study design and expect to engage a CRO to conduct this study on our behalf. We expect the study will begin enrollment in
the first quarter of 2013 and will be completed in the first quarter of 2014. We anticipate this study will cost approximately
$15 million, which includes the cost of manufacturing TNX-102 and placebo.
Prospective Multi-dose Pharmacokinetic
Study
Since cyclobenzaprine
will be used chronically in TNX-102, we will study TNX-102 in comparison to immediate-release cyclobenzaprine in multiple day dosing
(once daily). Subjects will ingest TNX-102 or immediate-release cyclobenzaprine for four or more days. Peak and trough blood levels
of cyclobenzaprine will be measured. The results of this study will provide information regarding blood levels of cyclobenzaprine
when taken in a multiple day regimen.
44
Prospective Study Comparing Side-effects
of TNX-102 with Immediate-Release Cyclobenzaprine
We plan to conduct
a small study designed to compare the bedtime use of TNX-102 and immediate-release cyclobenzaprine on next morning drowsiness.
The goal of this study is to determine the potential benefit of TNX-102 compared with immediate-release cyclobenzaprine on next
morning drowsiness.
Prospective Phase 3 Study
If our Phase 2b study
is successful, then we expect to conduct a Phase 3 study in support of product registration. At this time, we plan to conduct one
large scale, randomized, double-blind, placebo-controlled Phase 3 study in which patients with FM will receive TNX-102 or placebo
for six months. It is likely that the outcome measures for efficacy in this study will be similar to those used in the Phase 2b
study. Other outcome measures will be carefully considered to best support desired label claims and optimal marketing message for
product differentiation. We expect that at least 300 FM patients will be enrolled in this trial.
Safety Exposure Study
To study the safety
of our product in chronic use, we expect to conduct an open label study in which approximately 300 FM subjects would receive TNX-102
for up to one year. Together with our other studies, we believe this safety exposure study will support the FDA and international
regulatory requirements to provide data for at least 300 subjects treated with TNX-102 for six months and at least 100 subjects
treated for 1 year.
Regulatory Strategy
The approvals of Lyrica,
Cymbalta and Savella establish a regulatory approval standard for management of FM. However, given the heterogeneity of patients
with this disease, it may not prove to be the only pathway or approval requirement. Prior to meeting with the FDA for an End-of-Phase
2 (EOP2) meeting, we plan to strategically assess the regulatory environment and further evaluate our Phase 2 results in order
to determine the optimal design of phase 3 clinical program. The phase 3 study design will be discussed with the FDA at the EOP2
meeting to receive regulatory acceptance for a differentiated product for the management of FM.
We hope to register
TNX-102 with the FDA through the provisions of Section 505(b)(2). This regulatory pathway may help to accelerate product development
and reduce overall business risk. The 505(b)(2)-based product development plan for TNX-102 is designed to leverage the safety data
that has been generated by other manufacturers for cyclobenzaprine-containing products and accepted by the FDA in support of their
product registration. TNX-102 contains significantly less active cyclobenzaprine than other marketed products. We believe that
the safety data package from these products will provide adequate safety margin to support TNX-102 development.
On August 11, 2011,
we had a pre-IND meeting with the Division of Anesthesia, Analgesia and Addiction Products within the Center for Drug Evaluation
and Research at the FDA to discuss the IND and NDA requirement of TNX-102 for the management of FM. Based on the meeting
outcome, we successfully filed an IND application on October 10, 2011, which received FDA clearance on our IND study on November
10, 2011.  The planned IND study is conducted in Canada under a Canadian Clinical Trial Application filed October
7, 2011, which received "No Objection Letter" on November 7, 2011. We will continue working with the FDA to seek guidance
and agreement on the TNX-102 development program, specifically the necessary data to support the 505(b)(2) NDA regulatory pathway. 
As FDA indicated at the pre-IND meeting, the clinical trials in our development plan, if successful, will provide efficacy
and safety data sufficient to support an NDA filing.
If NDA approval is
granted for TNX-102, in addition to the 3-year marketing exclusivity granted, TNX-102 is expected to be covered under patents that
extend through at least 2021, during which time it should not be subject to generic substitution. We plan to continue to support
the TNX-102 program with new patent applications as we obtain data from the clinical evaluation of our new formulation in healthy
human subjects and FM patients.
45
TNX-105 in Post-traumatic Stress
Disorder
TNX-105, our second
most advanced product candidate, is another pill formulation of cyclobenzaprine to be taken at bedtime for PTSD, a psychiatric
disorder that begins in the aftermath of traumatic experiences. We have not yet conducted any clinical trials on PTSD patients.
Parallels Between FM and PTSD
A number of parallels
have been noted between FM and PTSD. In addition, symptom overlaps may exist between patients diagnosed with FM or PTSD. In a survey
of males with PTSD or major depression (Amital, Fostick et al, Posttraumatic stress disorder, tenderness, and fibromyalgia syndrome:
are they different entities? J. Psychosom Res 2006. 61(5):663-9.2006), 49% of PTSD patients met the ACR criteria for FM compared
to 5% of major depression patients. Conversely, in a different survey of FM patients (Cohen, Neumann et al., Prevalence of post-traumatic
stress disorder in fibromyalgia patients: overlapping syndromes or post-traumatic fibromyalgia syndrome? Semin Arthritis Rheum
2002. 32(1):38-50), 57% of the sample had symptoms associated with PTSD.
Emerging Market Opportunity
The selective serotonin
reuptake inhibitors Paxil® (paroxetine) and Zoloft® (sertraline) are FDA approved for PTSD, but are not satisfactory treatments
for many patients. Other drugs that show promise for the treatment of PTSD, but are not FDA approved, include antidepressants such
as nefazodone, mirtazapine and trazodone; the antihistamine cyproheptadine; certain atypical antipsychotics such as olanzapine
and risperidone; and an adrenergic alpha-1 receptor blocker, prazosin. Prazosin may decrease nightmares and insomnia and has been
associated with improvements in daytime PTSD symptoms, depression, and quality of life.
Our rationale for studying
the effects of cyclobenzaprine in PTSD derives from the following:
·
our clinical studies that very low dose cyclobenzaprine improves FM symptoms, a disorder having significant overlap with PTSD;
and
·
in studies conducted by Caliper, cyclobenzaprine interacts with a receptor on brain cells called the serotonin type 2a receptor.
Based on numerous peer-reviewed scientific publications, we have identified a number of compounds that bind this receptor that
have been shown to have effects in treating PTSD. Therefore, it is our belief that cyclobenzaprine, because it binds to the serotonin
type 2a receptor, will have a therapeutic effect in treating PTSD like other compounds that bind to it.
In 2009, we engaged
Caliper to learn which receptors in the brain bind cyclobenzaprine. Caliper measures the interactions of receptors with active
pharmaceutical ingredients and has built a proprietary database. Arthur Weissman, PhD is Vice President and Chief Scientific Officer
at Caliper and supervised the receptor study. Dr. Weissman holds a M.S. degree in Physiology, a Ph.D. degree in Neuroscience, has
over 25 years of scientific research and has authored (or co-authored) over 20 peer-reviewed scientific publications. The receptor
studies were conducted at Caliper's facilities. Caliper is constantly conducting receptor studies to expand and refine its
database, so the date of each individual receptor-drug analysis is different. Caliper provided us proprietary data from their database,
which showed cyclobenzaprine binds to the serotonin type 2a receptor.
Product Development Path
Prospective Phase 2a and 2b Studies
We anticipate that
the dose for treatment of PTSD symptoms may be higher than that of TNX-102 for FM. We plan to utilize the data obtained from the
pharmacokinetic study of TNX-102 to design a Phase 2a study for TNX-105. We expect that this study will employ the same formulation
technology used for FM, but will be dosed with multiple pills to explore a dose range for efficacy and tolerability in PTSD. The
estimated treatment period will be six to eight weeks in duration.
46
As part of our contemplated
Phase 2a study, we plan to assess the appropriateness of a number of clinical outcomes for use as primary and secondary measures.
The PTSD clinical study measures used for further development work must provide adequate specificity and sensitivity to measure
the potential effects of cyclobenzaprine. In our Phase 2a study, we anticipate that we will study TNX-105 in less than 50 subjects
with combat-related and/or civilian PTSD. We expect to engage a CRO to conduct this study on our behalf.
After exploring the
clinical utility and dose range in a Phase 2a study, we intend to advance the clinical development of TNX-105 for the treatment
of PTSD by conducting a larger randomized, double-blind, placebo-controlled study in Phase 2b. The treatment period is estimated
to be eight to twelve weeks in duration. We will seek to replicate and expand upon the efficacy and safety findings of the Phase
2a study in a larger population of PTSD patients. In our Phase 2b study, we anticipate that we will study the drug in 100 to 150
subjects with combat-related and civilian PTSD. We expect to engage a CRO to conduct this study on our behalf.
Prospective Phase 3 Study
If our Phase 2b study
is successful, we expect to conduct a Phase 3 program in support of an NDA. At this time, our general plan includes two large scale,
randomized, double-blind, placebo-controlled Phase 3 studies, and one open-label extension study. We anticipate that the treatment
duration for the two large studies will be approximately 12-16 weeks in length. The numbers of patients to be evaluated is unknown
at this time. We plan to confer with the FDA concerning the suggested sample sizes in an End-of-Phase 2 program review meeting.
Once completing their participation in one of the two large scale studies, we expect our subjects will have the choice of enrolling
in an available open-label study whereby we can assess the longer-term benefits of TNX-105 therapy in PTSD.
Regulatory Strategy
The approvals by the
FDA of Paxil (paroxetine) and Zoloft (sertraline) for treating PTSD establish a regulatory approval pathway for symptom reduction
in PTSD. We plan to strategically assess the regulatory environment and further evaluate our Phase 2 results to determine the design
of Phase 3 clinical studies. We believe these studies will result in a differentiated product for the treatment of PTSD. We hope
to register TNX-105 with the FDA through the provisions of Section 505(b)(2).
We anticipate meeting
with the Center for Drug Evaluation and Research at the FDA to discuss TNX-105 at the appropriate time in the future and would
review the basis of our Section 505(b)(2) clinical development plan and discuss any other clinical and nonclinical trials necessary
to support an NDA filing. We believe that the clinical trials in our development plan, if successful, will satisfy the requirements
for sufficient evidence of clinical efficacy and safety to support an NDA.
TNX-105 is expected
to be covered under patents that have been submitted to the USPTO. The USPTO has not yet allowed or granted any claims protecting
the use of TNX-105.
Drug Delivery Technology
In June 2007, we entered
into a Feasibility and Option Agreement with Lipocine, Inc. ("Lipocine"), which was amended in October 2010 (the "Feasibility
Agreement"). Pursuant to the Feasibility Agreement, we identified and obtained an exclusive worldwide option on technology
from Lipocine that employs mixtures of different types of lipids to envelop cyclobenzaprine molecules in the small intestine and
facilitate absorption into the bloodstream. We believe this approach has potential for more consistent absorption and decreased
variability in blood levels.
The Feasibility Agreement
provided for two stages of work, stated as Stage I and Stage II. The Stage I work, which was expected to take approximately four
months, involved developing methods and testing compatibility between Lipocine's technology and our drug formulation. The
Stage II work, which was expected to take between five and six months, involved supporting us in our efforts to conduct a clinical
trial study, based on the Stage I work, and is expected to conclude upon the completion of a final report on the results of the
clinical study (the "Final Report"). Upon completion of the Final Report, we have the right, within 30 days after the
Final Report, to exercise an exclusive worldwide license to the Lipocine technology.
47
Under the Feasibility
Agreement, Lipocine completed the Stage I work, which involved studying a number of combinations of lipids for their ability to
form micelles that solubilize the free base of cyclobenzaprine and which might serve as inactive ingredients in a gelatin capsule
formulation. We selected a candidate formulation based on properties that included the dispersion of the active ingredient in simulated
gastric or small-intestinal fluids and the stability of the formulation over time prior to testing. Lipocine was also engaged to
manufacture gelatin capsules of TNX-102 for use in our pharmacokinetic trial.
Both of our cyclobenzaprine-based
product candidates consist of cyclobenzaprine in pills that also contain proprietary ingredients, that are inactive but help the
small intestine absorb cyclobenzaprine. TNX-102 and TNX-105 are formulations of cyclobenzaprine and mixtures of lipids that are
intended as bedtime treatments for FM and PTSD, respectively.
We have concluded a
study of the stability and dissolution of several candidate formulations in simulated gastric and small-intestinal fluids. The
study was conducted in 2007 at Lipocine's facilities. The first element of the study was to screen lipid ingredients for
use in a gelcap. In this study, various lipid ingredients were mixed with cyclobenzaprine to determine solubility and suitability
for formulating cyclobenzaprine in gelatin capsules, or gelcaps. Based on the results of the screening, four formulations of cyclobenzaprine
hydrochloride were prepared and analyzed for how efficiently they released or dispersed cyclobenzaprine into solutions of simulated
gastric and small-intestinal fluid. Each of the four formulations resulted in about 95% or more of cyclobenzaprine in solution.
Three of four formulations rapidly (at 30 minutes) released more than 90% of cyclobenzaprine into an acidic solution that simulates
gastric conditions. The second element of the study evaluated physical stability of the formulations. The four candidate formulations
were filled into capsules and subjected to stability conditions at high temperature and temperature cycling. None of the four formulations
showed signs of phase separation or crystallization of cyclobenzaprine. All four formulations were stable and none showed signs
of reduction in cyclobenzaprine potency compared to the initial time. From these data, we selected two potential formulations for
further study based on solubility level and speed of dissolution in acid.
Results from this study
showed that certain proprietary lipid mixtures interact with cyclobenzaprine to help solubilize it in simulated gastric and small-intestinal
fluids. Based on the study, we selected a candidate formulation for cyclobenzaprine to be dosed at bedtime. We expect TNX-102 and
TNX-105 will employ the same formulation, but TNX-105 will contain a higher dose of cyclobenzaprine. We believe one or more of
our new formulations will result in more predictable cyclobenzaprine absorption than immediate-release cyclobenzaprine tablets
that are commercially available for daytime use to treat muscle spasm. Since we expect our formulations will be more predictably
absorbed, we believe lower doses of cyclobenzaprine in our proprietary formulations with lipids will provide a similar therapeutic
benefit to the immediate-release cyclobenzaprine studied in our published Phase 2a trial.
In August 2011, we
provided notice to Lipocine that we intended to move forward with the Stage II work. The Stage II clinical trial was initiated
during the fourth quarter of 2011 and the clinical phase has been completed. Some of the data has been collected and some data
is still awaiting the development and validation of assays. We are working to analyze the data and write the Final Report, which
is anticipated to be completed by approximately June 2012. After completion of the Final Report, we will have 30 days to decide
whether to exercise the option to license Lipocine's US patent 6,294,192 "Triglyceride-free compositions and methods
for improved delivery of hydrophobic therapeutic agents" and US Patent 6,451,339 "Compositions and methods for improved
delivery of hydrophobic agents". These patents expire on September 24, 2021 and September 16, 2022, respectively.
If we elect to exercise
the option, we will execute a license agreement with Lipocine. If we exercise the option to license these patents, we will be obligated
to pay Lipocine low single-digit percentage royalties based on net sales or mid-teen sublicense fees based on the consideration
that we receive from a licensee. The maximum amount of milestone payments we could be required to pay to Lipocine pursuant to the
Feasibility Agreement is $3,000,000.
48
Market Dynamics
We believe the U.S.
market for products that treat CNS conditions has several characteristics that make it an attractive market for pharmaceuticals,
including that the customer base is driven by physicians who are involved in long-term care of patients with chronic disorders.
Patients with CNS disorders sometimes carry disease burdens that require long-term treatment.
We believe the market
for FDA-approved FM treatments is underserved and that there is a constant need for new treatment options, since many prescription
drugs provide relief only to some of the affected patients or provide relief only for limited periods of time.
Until 2007, there were
no FDA-approved drugs to treat FM. A number of effective medicines have been identified by physicians who observe improvements
in a patient's condition as an unintended consequence of prescribing a particular medicine for another purpose. These anecdotal
observations are sometimes substantiated by exposing additional patients in progressively more systematic studies. As information
about a potential benefit is reported in scientific literature, or shared among physicians, an increasing number of physicians
may prescribe such medicines to their patients. This practice, which is not sanctioned by the FDA, is referred to as "off-label"
prescribing or use. Off-label prescription practices in the U.S. are acceptable under a long-standing principle that grants physicians
the ability to use their professional judgment beyond the FDA recommended uses.
Before 2007, a variety
of drugs, often in combination, were utilized off-label to treat symptoms associated with FM. The following three classes of drugs
were prescribed as the primary treatments for FM: (1) pain killers, also referred to as analgesics, (2) antidepressants and (3)
muscle relaxants.
In 2007, Lyrica (pregabalin)
became the first medicine approved by the FDA for the management of FM. Lyrica previously had been approved and marketed to treat
pain in other conditions. FM shares a number of symptoms with depression, and a number of FM patients are believed to experience
depression as a co-existing condition. In 2008, Cymbalta (duloxetine) became the second medicine approved by the FDA for the management
of FM. Cymbalta previously had been approved and marketed to treat depression. Savella (milnacipran) was the third medicine approved
by the FDA for the management of FM. Savella's active ingredient, milnacipran, is approved in Europe to treat depression.
Since Lyrica and Cymbalta
also are marketed for other conditions beyond FM, the sales of these products related specifically to FM can only be estimated.
According to Frost & Sullivan, the overall gross sales for FM prescription drugs in 2010 was believed to be about $1.2 billion,
which has grown since 2007 at a compounded annual growth rate of 18.4%. This significant increase is a result of more FM patients
switching to branded FM prescription drugs that sell for a higher cost than the generic FM prescription drugs previously used.
For example, in 2010, Lyrica prescriptions are estimated to have accounted for 248 million doses for FM and to have generated $478
million in sales, while Cymbalta prescriptions are estimated to have accounted for 93 million doses for FM and to have generated
$342 million in sales. Launched in January 2009, Savella, which is only approved for the treatment of FM, prescriptions accounted
for approximately 43 million doses and generated approximately $68 million in sales in 2010.
Use of the FDA approved
medications for FM is growing while the use of off-label treatments is declining. Overall, in terms of the number of doses of FM
prescription drugs prescribed, Frost & Sullivan expects the FM market to grow at only a 1.2% compounded annual growth rate
from 2007 to 2010. These market dynamics are consistent with the interpretation that Lyrica's growth came at the expense
of off-label pain killers and Cymbalta's and Savella's growth came at the expense of off-label anti-depressants.
According to Frost
and Sullivan, FM is an emerging market and sales are anticipated to continue growing in future years. Despite the availability
of FDA approved products, we believe the current treatment options for FM continue to leave many patients dissatisfied.
49
The FM market for muscle
relaxants lacks an FDA-approved product and continues to be satisfied by off-label medicines such as cyclobenzaprine, tizanidine,
baclofen, carisoprodol and metaxalone. These muscle relaxants have generic and branded versions. According to Frost & Sullivan,
48 million doses of the Flexeril brand and its associated immediate-release cyclobenzaprine generic products were prescribed off-label
for FM in 2010 and accounted for approximately 35% of the muscle spasm pills prescribed for FM. However, the off-label cyclobenzaprine
sales for FM in terms of dollars amount to only approximately $10 million, due to the low price of generic cyclobenzaprine.
Challenges in the Market for CNS Therapies
Developers of pharmaceutical
treatments for syndromes and disorders that affect the CNS face special challenges. In many cases, the causes and exacerbating
factors of CNS conditions remain unknown. Frequently, key symptoms are known only by patient reports and cannot be objectively
validated or measured. Symptoms like pain, fatigue, disturbed sleep or altered mood are characteristics of more than one condition.
Often, physicians may not agree that a particular patient is affected by one or another condition or by more than one co-existing
conditions.
CNS conditions are
typically defined by committees of expert professionals who set criteria based on the presence of several symptoms or groups of
symptoms. Sometimes groups of subjective symptoms are insufficient to describe CNS disorders and further refinement of diagnostic
categories can be achieved by patient demographics, such as gender, age or concurrent medical processes, such as menopause or adolescence.
Many CNS conditions, including syndromes and disorders, have not yet been characterized by laboratory tests, such as blood tests
or x-ray imaging. However, laboratory tests are often important to exclude other conditions, such as inflammatory or infectious
processes. Consequently, a CNS condition is sometimes called a diagnosis of exclusion because inflammation and infection should
typically be ruled out by laboratory tests before applying the criteria of groups of symptoms to diagnose it.
Once a CNS condition
is diagnosed, physicians may select from among treatment options based on a patient's symptoms and history. Some medications
improve or relieve only one or another symptom in a condition. Consequently, physicians may prescribe several different medications
concurrently to treat individual symptoms or groups of symptoms. A desirable quality for CNS medications is the ability to relieve
more than one symptom of a CNS condition. Another desirable quality for CNS medications is safety, particularly if a medicine is
safe enough to be used with other medicines concurrently or at different times of the day.
Opportunity for New Treatments of FM
We believe the market
for the treatment of FM is underserved which we believe fuels a need for new therapeutic options. Due to the market acceptance
of FM treatments (such as Lyrica, Cymbalta and Savella), we believe there will be a growing interest in alternative drug treatment
options.
We believe that if
TNX-102 won FDA approval, it would be an appealing option because it has an entirely different mechanism of action from the currently
approved products and we expect TNX-102 will be recommended for use before bedtime. Lyrica is recommended for twice or three-times
daily dosing. Cymbalta was found effective at once-daily dosing and is generally restricted to daytime use and not recommended
for bedtime use. Cymbalta and Savella act on the CNS in ways that are believed to interfere with sleep.
Competition
Our industry is highly
competitive and subject to rapid and significant technological change. Our potential competitors include large pharmaceutical and
biotechnology companies, specialty pharmaceutical and generic drug companies, academic institutions, government agencies and research
institutions. We believe that key competitive factors that will affect the development and commercial success of our product candidates
are efficacy, safety, tolerability, reliability, price and reimbursement level. Many of our potential competitors, including many
of the organizations named below, have substantially greater financial, technical and human resources than we do and significantly
greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of products
and the commercialization of those products. Accordingly, our competitors may be more successful than we may be in obtaining FDA
approval for drugs and achieving widespread market acceptance. Our competitors' drugs may be more effective, or more effectively
marketed and sold, than any drug we may commercialize and may render our product candidates obsolete or non-competitive before
we can recover the expenses of developing and commercializing any of our product candidates. We anticipate that we will face intense
and increasing competition as new drugs enter the market and advanced technologies become available. Further, the development of
new treatment methods for the conditions we are targeting could render our drugs non-competitive or obsolete.
50
The markets for medicines
to treat FM, PTSD and other CNS conditions are well developed and populated with established drugs marketed by large and small
pharmaceutical, biotechnology and generic drug companies. Pfizer (Lyrica), Eli Lilly (Cymbalta) and Forest Laboratories/Cyprus
Biosciences (Savella) market FDA approved drugs for FM. Pfizer (Zoloft) and GlaxoSmithKline (Paxil) market FDA approved drugs for
PTSD.
As of September 15,
2011 several companies are pursuing treatments for FM. Chelsea Therapeutics International, Inc. (CHTP) is developing droxidopa
for the treatment of hypotension associated with fibromyalgia. Droxidopa is a precursor of the neurotransmitter norephinephrine
which suggests it would compete with Cymbalta and Savella which also increase norephinephrine activity. Clinical trials in the
U.S. are registered with the FDA and reported on the website, www.ClinicalTrials.gov. A trial of Amrix is recruiting subjects (trial
NCT01041495), which may indicate that Cephalon is developing its long-acting formulation of cyclobenzaprine to treat symptoms of
FM. Another trial of Ultracet® (tramadol and acetaminophen combination) is listed (trial NCT00766675), which may indicate that
Johnson and Johnson is developing Ultracet to treat symptoms of FM.
A number of companies
are specifically engaged in developing drugs for PTSD. According to ClinicalTrials.gov, ongoing or recent trials of medicines include:
quetiapine by AstraZeneca (trial NCT00237393) and by Mclean Hospital (trial NCT01066156), levetiracetam by UCB (trial NCT00413296),
Δ9-THC by Hadassah Medical Organization (trial NCT00965809), paroxetine hydrochloride hydrate by GlaxoSmithKline (trial NCT00557622),
topiramate by Ortho-McNeil Janssen Scientific Affairs (trial NCT00203463), hydrocortisone by Lightfighter Trust (trial NCT01090518),
mirtazapine by Research Foundation for Mental Hygiene (trial NCT01178671) and by Department of Veterans Affairs (trial NCT00302107),
orvepitant by GlaxoSmithKline (trial NCT01000493), d-cycloserine by Weill Medical College of Cornell University (trial NCT00875342),
duloxetine by Yale University (trial NCT00763178), ziprasidone by Pfizer (trial NCT00208208),and aripiprazole by Durham VA Medical
Center (trial NCT00489866). Other medications that may be used for the treatment of PTSD include anti-depressants such as: nefazodone
and trazodone; the antihistamine cyproheptadine and certain atypical antipsychotics such as olanzapine and risperidone. Several
of these products are supported by companies such as AstraZeneca, GlaxoSmithKline and Pfizer.
A potential competing
medication for treating FM symptoms at bedtime had been Rekinla® which was being developed by Jazz Pharmaceuticals, or Jazz.
The active ingredient in Rekinla is sodium oxybate, which results in profound sedation and amnesia. Sodium oxybate is the active
ingredient in XYREM®, approved by the FDA for the treatment of excessive daytime sleepiness and cataplexy, the sudden loss
of muscle tone, in adult patients with narcolepsy. Rekinla is administered at bedtime and a second dose is administered by awakening
the patient four hours later. Jazz' studies of Rekinla showed that a treatment that affects sleep quality can improve FM
symptoms to meet FDA requirements for an effective product. While Jazz obtained compelling evidence supporting the efficacy of
its treatment on FM symptoms, the FDA rejected their application to market Rekinla for treating FM in 2010. Sodium oxybate is a
controlled substance under the auspices of the Drug Enforcement Administration (DEA). In June 2011, Jazz publicly announced their
intention to cease development of Rekinla for FM.
Intellectual Property
Proprietary protection
for our product candidates, technology and processes are important to our business and we seek patent protection in the U.S. and
internationally when we deem appropriate. We also rely on trade secrets, know-how and continuing technological advances to protect
various aspects of our core technology. We require our employees, consultants and scientific collaborators to execute confidentiality
and invention assignment agreements with us.
We own numerous patents
and have patent applications pending in the United States and abroad. In addition, we have one trademark application pending.
51
Our commercial success
will depend in part on obtaining and maintaining patent protection and trade secret protection of our current and future product
candidates and the methods used to manufacture them, as well as successfully defending these patents against third-party challenges.
Our ability to stop third parties from making, using, selling, offering to sell or importing our products depends on the extent
to which we have rights under valid and enforceable patents or trade secrets that cover these activities. We cannot assure you
that our pending patent applications will result in issued patents.
Approved Patents
Our current patents
owned are as follows:
Number
Name
Jurisdiction
Expiration
Date
6,541,523
"Methods For Treating Or Preventing Fibromyalgia Using Very Low Doses Of Cyclobenzaprine"
U.S.A.
August 11, 2020
6,395,788
"Methods And Compositions For Treating Or Preventing Sleep Disturbances And Associated Illnesses Using Very Low Doses Of Cyclobenzaprine"
U.S.A.
August 11, 2020
6,358,944
"Methods And Compositions For Treating Generalized Anxiety Disorder"
U.S.A.
August 11, 2020
EP 1202722
"Uses of Compositions for Treating or Preventing Sleep Disturbances Using Very  Low Doses of Cyclobenzaprine"
European Patent Office, Belgium, France, Ireland, Luxembourg, Monaco, Portugal, Switzerland and United Kingdom
August 11, 2020
AT 299369
"Uses of Compositions for Treating or Preventing Sleep Disturbances Using Very  Low Doses of Cyclobenzaprine"
Austria
August 11, 2020
DE 60021266
"Uses of Compositions for Treating or Preventing Sleep Disturbances Using Very  Low Doses of Cyclobenzaprine"
Germany
August 11, 2020
NZ 516749
"Uses of Compositions for Treating or Preventing Sleep Disturbances Using Very  Low Doses of Cyclobenzaprine"
New Zealand
August 11, 2020
ES 2245944
"Uses of Compositions for Treating or Preventing Sleep Disturbances Using Very  Low Doses of Cyclobenzaprine"
Spain
August 11, 2020
HK 1047691
"Uses of Compositions for Treating or Preventing Sleep Disturbances Using Very  Low Doses of Cyclobenzaprine"
Hong Kong
August 11, 2020
8,093,300
"Compositions and Methods for Increasing Compliance with Therapies using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism"
U.S.A.
May 25, 2023
AU 2002354017
"Compositions and Methods for Increasing Compliance with Therapies using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism"
Australia
November 4, 2022
CA 2463987
"Compositions and Methods for Increasing Compliance with Therapies using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism"
Canada
November 4, 2022
EP 1441708
"Compositions and Methods for Increasing Compliance with Therapies using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism"
European Patent Office, Austria, Belgium, Switzerland, Denmark,
        Luxembourg, Monaco, Germany,
France, Portugal and
United Kingdom
November 4, 2022
NZ 532583
"Compositions and Methods for Increasing Compliance with Therapies using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism"
New Zealand
November 4, 2022
52
Patent Applications
Our current patent
applications that are pending are as follows:
Number
Name
Jurisdiction
12/948,828
"Methods And Compositions For Treating Symptoms Associated With Post-Traumatic Stress Disorder Using Cyclobenzaprine"
U.S.A.
61/449,838
"Methods and Compositions for Treating Depression Using Cyclobenzaprine"
U.S.A.
13/157,270
"Method for Improving Fatigue Using Low Dose Cyclobenzaprine"
U.S.A.
PCT/US
10/02979
"Methods And Compositions For Treating Symptoms Associated With Post-Traumatic Stress Disorder Using Cyclobenzaprine"
PCT
PCT/US
11/01529
"Method for Treating Cocaine Addiction"
PCT
12/151,200
"Method For Treating Neurodegenerative Dysfunction"
U.S.A.
CA 2723688
"Method For Treating Neurodegenerative Dysfunction"
Canada
EP 2299822
"Method For Treating Neurodegenerative Dysfunction"
European Patent Office
Trademark Application
We have one trademark
application that is pending as follows:
Number
Name
Jurisdiction
85088881
Tonix Pharmaceuticals
U.S.A.
Research and Development
We have one employee
dedicated to research and development. We anticipate that our research and development expenditures will increase several fold
as we move TNX-102 and TNX-105 into clinical development and investigate other product candidates for incorporation into our portfolio.
We need to raise additional capital to fund our development plans and there is no certainty that we will be successful in continuing
to attract new investments. Our research and development operations are located in New York, NY. We expect to use third parties
to conduct our preclinical and clinical trials.
Manufacturing
We intend to contract
with third parties for the manufacture of our compounds for investigational purposes, for preclinical and clinical testing and
for any FDA approved products for commercial sale. We contracted with Lipocine Inc. to manufacture TNX-102 used in our completed
pharmacokinetic study. We will need to contract with a larger scale cGMP contract manufacturer for product to be used in further
studies of TNX-102, which we do not anticipate any problems in securing as needed. All of our compounds are small molecules, generally
constructed using industry standard processes and use readily accessible raw materials.
Government Regulation
The FDA and other federal,
state, local and foreign regulatory agencies impose substantial requirements upon the clinical development, approval, labeling,
manufacture, marketing and distribution of drug products. These agencies regulate, among other things, research and development
activities and the testing, approval, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, advertising
and promotion of our product candidates. The regulatory approval process is generally lengthy and expensive, with no guarantee
of a positive result. Moreover, failure to comply with applicable FDA or other requirements may result in civil or criminal penalties,
recall or seizure of products, injunctive relief including partial or total suspension of production, or withdrawal of a product
from the market.
53
The FDA regulates,
among other things, the research, manufacture, promotion and distribution of drugs in the United States under the FFDCA and other
statutes and implementing regulations. The process required by the FDA before prescription drug product candidates may be marketed
in the United States generally involves the following:
·
completion of extensive nonclinical laboratory tests, animal studies and formulation studies, all performed in accordance with the FDA's Good Laboratory Practice regulations;
·
submission to the FDA of an IND, which must become effective before human clinical trials may begin;
·
for some products, performance of adequate and well-controlled human clinical trials in accordance with the FDA's regulations, including Good Clinical Practices, to establish the safety and efficacy of the product candidate for each proposed indication;
·
submission to the FDA of an NDA;
·
satisfactory completion of an FDA preapproval inspection of the manufacturing facilities at which the product is produced to assess compliance with current Good Manufacturing Practice, or cGMP, regulations; and
·
FDA review and approval of the NDA prior to any commercial marketing, sale or shipment of the drug.
The testing and approval
process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our product
candidates will be granted on a timely basis, if at all.
Nonclinical tests include
laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate toxicity in animals and
other animal studies. The results of nonclinical tests, together with manufacturing information and analytical data, are submitted
as part of an IND to the FDA. Some nonclinical testing may continue even after an IND is submitted. The IND also includes one or
more protocols for the initial clinical trial or trials and an investigator's brochure. An IND automatically becomes effective
30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions relating to
the proposed clinical trials as outlined in the IND and places the clinical trial on a clinical hold. In such cases, the IND sponsor
and the FDA must resolve any outstanding concerns or questions before any clinical trials can begin. Clinical trial holds also
may be imposed at any time before or during studies due to safety concerns or non-compliance with regulatory requirements. An independent
institutional review board, or IRB, at each of the clinical centers proposing to conduct the clinical trial must review and approve
the plan for any clinical trial before it commences at that center. An IRB considers, among other things, whether the risks to
individuals participating in the trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves
the consent form signed by the trial participants and must monitor the study until completed.
Clinical Trials
Clinical trials involve
the administration of the product candidate to human subjects under the supervision of qualified medical investigators according
to approved protocols that detail the objectives of the study, dosing procedures, subject selection and exclusion criteria, and
the parameters to be used to monitor participant safety. Each protocol is submitted to the FDA as part of the IND.
Human clinical trials
are typically conducted in three sequential phases, but the phases may overlap, or be combined.
·
Phase 1 clinical trials typically involve the initial introduction of the product candidate into healthy human volunteers. In Phase 1 clinical trials, the product candidate is typically tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics.
·
Phase 2 clinical trials are conducted in a limited patient population to gather evidence about the efficacy of the product candidate for specific, targeted indications; to determine dosage tolerance and optimal dosage; and to identify possible adverse effects and safety risks.
54
·
Phase 3 clinical trials are undertaken to evaluate clinical efficacy and to test for safety in an expanded patient population at geographically dispersed clinical trial sites. The size of Phase 3 clinical trials depends upon clinical and statistical considerations for the product candidate and disease, but sometimes can include several thousand patients. Phase 3 clinical trials are intended to establish the overall risk-benefit ratio of the product candidate and provide an adequate basis for product labeling.
Clinical testing must
satisfy extensive FDA regulations. Reports detailing the results of the clinical trials must be submitted at least annually to
the FDA and safety reports must be submitted for serious and unexpected adverse events. Success in early stage clinical trials
does not assure success in later stage clinical trials. The FDA, an IRB or we may suspend a clinical trial at any time on various
grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.
New Drug Applications
Assuming successful
completion of the required clinical trials, the results of product development, nonclinical studies and clinical trials are submitted
to the FDA as part of an NDA. An NDA also must contain extensive manufacturing information, as well as proposed labeling for the
finished product. An NDA applicant must develop information about the chemistry and physical characteristics of the drug and finalize
a process for manufacturing the product in accordance with cGMP. The manufacturing process must be capable of consistently producing
quality product within specifications approved by the FDA. The manufacturer must develop methods for testing the quality, purity
and potency of the final product. In addition, appropriate packaging must be selected and tested and stability studies must be
conducted to demonstrate that the product does not undergo unacceptable deterioration over its shelf life. Prior to approval, the
FDA will conduct an inspection of the manufacturing facilities to assess compliance with cGMP.
The FDA reviews all
NDAs submitted before it accepts them for filing. The FDA may request additional information rather than accept an NDA for filing.
In this event, the NDA must be resubmitted with the additional information and is subject to review before the FDA accepts it for
filing. After an application is filed, the FDA may refer the NDA to an advisory committee for review, evaluation and recommendation
as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory
committee, but it considers them carefully when making decisions. The FDA may deny approval of an NDA if the applicable regulatory
criteria are not satisfied. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently
than we interpret the same data. The FDA may issue a complete response letter, which may require additional clinical or other data
or impose other conditions that must be met in order to secure final approval of the NDA. If a product receives regulatory approval,
the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited,
which could restrict the commercial value of the product. In addition, the FDA may require us to conduct Phase 4 testing which
involves clinical trials designed to further assess a drug's safety and effectiveness after NDA approval, and may require
surveillance programs to monitor the safety of approved products which have been commercialized. Once issued, the FDA may withdraw
product approval if ongoing regulatory requirements are not met or if safety or efficacy questions are raised after the product
reaches the market.
Section 505(b)(2) NDAs
There are two types
of NDAs: the full NDA and the Section 505(b)(2) NDA. When possible, we intend to file Section 505(b)(2) NDAs that might,
if accepted by the FDA, save time and expense in the development and testing of our product candidates. A full NDA is submitted
under Section 505(b)(1) of the FFDCA, and must contain full reports of investigations conducted by the applicant to demonstrate
the safety and effectiveness of the drug. A Section 505(b)(2) NDA may be submitted for a drug for which one or more of the
investigations relied upon by the applicant was not conducted by or for the applicant and for which the applicant has no right
of reference from the person by or for whom the investigations were conducted. A Section 505(b)(2) NDA may be submitted based
in whole or in part on published literature or on the FDA's finding of safety and efficacy of one or more previously approved
drugs, which are known as reference drugs. Thus, the filing of a Section 505(b)(2) NDA may result in approval of a drug based
on fewer clinical or nonclinical studies than would be required under a full NDA. The number and size of studies that need to be
conducted by the sponsor depends on the amount and quality of data pertaining to the reference drug that are publicly available,
and on the similarity of and differences between the applicant's drug and the reference drug. In some cases, extensive, time-consuming,
and costly clinical and nonclinical studies may still be required for approval of a Section 505(b)(2) NDA.
55
Because we are developing
new formulations of previously approved chemical entities, such as cyclobenzaprine, our drug approval strategy is to submit Section 505(b)(2)
NDAs to the FDA. The FDA may not agree that our product candidates are approvable as Section 505(b)(2) NDAs. If the FDA determines
that Section 505(b)(2) NDAs are not appropriate and that full NDAs are required for our product candidates, the time and financial
resources required to obtain FDA approval for our product candidates could substantially and materially increase, and our products
might be less likely to be approved. If the FDA requires full NDAs for our product candidates, or requires more extensive testing
and development for some other reason, our ability to compete with alternative products that arrive on the market more quickly
than our product candidates would be adversely impacted.
Based on our intent
to file under Section 505(b)(2) with respect to our two lead product candidates, we believe it is unlikely the development process
for these product candidates will follow the ordinary course of Phase 1, Phase 2 and Phase 3 studies. Our human pharmacokinetic
study of reformulated cyclobenzaprine pills will represent the first use of TNX-102 in humans and could therefore be described
as "Phase 1." However, because the study compared TNX-102 to existing approved formulations of cyclobenzaprine and
specified the comparable ability to deliver effective levels of cyclobenzaprine to the bloodstream of FM patients, this study provided
a reference to the therapeutic effects previously observed in our dose-ranging clinical study of immediate-release cyclobenzaprine
capsules in FM patients. For these reasons, rather than always identifying clinical trials by Phase, we find it more illustrative
to describe in a narrative form the purpose of the studies and the nature and potential significance of the results. Because our
double-blind, randomized, placebo-controlled, dose-ranging study on bedtime cyclobenzaprine was performed in Canada, we did not
meet with the FDA's Center for Drug Evaluation and Research to discuss our approach and plans until August 2011.
Patent Protections
An applicant submitting
a Section 505(b)(2) NDA must certify to the FDA with respect to the patent status of the reference drug upon which the applicant
relies in support of approval of its drug. With respect to every patent listed in the FDA's Orange Book, which is the FDA's
list of approved drug products, as claiming the reference drug or an approved method of use of the reference drug, the Section 505(b)(2)
applicant must certify that: (1) there is no patent information listed by the FDA for the reference drug; (2) the listed
patent has expired; (3) the listed patent has not expired, but will expire on a particular date; (4) the listed patent
is invalid, unenforceable, or will not be infringed by the manufacture, use, or sale of the product in the Section 505(b)(2)
NDA; or (5) if the patent is a use patent, that the applicant does not seek approval for a use claimed by the patent. If the
applicant files a certification to the effect of clause (1), (2) or (5), FDA approval of the Section 505(b)(2) NDA may
be made effective immediately upon successful FDA review of the application, in the absence of marketing exclusivity delays, which
are discussed below. If the applicant files a certification to the effect of clause (3), the Section 505(b)(2) NDA approval
may not be made effective until the expiration of the relevant patent and the expiration of any marketing exclusivity delays.
If the Section 505(b)(2)
NDA applicant provides a certification to the effect of clause (4), referred to as a paragraph IV certification, the applicant
also must send notice of the certification to the patent owner and the holder of the NDA for the reference drug. The filing of
a patent infringement lawsuit within 45 days of the receipt of the notification may prevent the FDA from approving the Section 505(b)(2)
NDA for 30 months from the date of the receipt of the notification unless the court determines that a longer or shorter period
is appropriate because either party to the action failed to reasonably cooperate in expediting the action. However, the FDA may
approve the Section 505(b)(2) NDA before the 30 months have expired if a court decides that the patent is invalid, unenforceable,
or not infringed, or if a court enters a settlement order or consent decree stating the patent is invalid or not infringed.
56
Notwithstanding the
approval of many products by the FDA pursuant to Section 505(b)(2), over the last few years certain brand-name pharmaceutical
companies and others have objected to the FDA's interpretation of Section 505(b)(2). If the FDA's interpretation
of Section 505(b)(2) is successfully challenged in court, the FDA may be required to change its interpretation of Section 505(b)(2)
which could delay or even prevent the FDA from approving any Section 505(b)(2) NDA that we submit. The pharmaceutical industry
is highly competitive, and it is not uncommon for a manufacturer of an approved product to file a citizen petition with the FDA
seeking to delay approval of, or impose additional approval requirements for, pending competing products. If successful, such petitions
can significantly delay, or even prevent, the approval of the new product. Moreover, even if the FDA ultimately denies such a petition,
the FDA may substantially delay approval while it considers and responds to the petition.
Marketing Exclusivity
Market exclusivity
provisions under the FFDCA can delay the submission or the approval of Section 505(b)(2) NDAs, thereby delaying a Section 505(b)(2)
product from entering the market. The FFDCA provides five-year marketing exclusivity to the first applicant to gain approval of
an NDA for a new chemical entity, or NCE, meaning that the FDA has not previously approved any other drug containing the same active
moiety. This exclusivity prohibits the submission of a Section 505(b)(2) NDA for any drug product containing the active ingredient
during the five-year exclusivity period. However, submission of a Section 505(b)(2) NDA that certifies that a listed patent
is invalid, unenforceable, or will not be infringed, as discussed above, is permitted after four years, but if a patent infringement
lawsuit is brought within 45 days after such certification, FDA approval of the Section 505(b)(2) NDA may automatically
be stayed until 7 1/2 years after the NCE approval date. The FFDCA also provides three years of marketing exclusivity for
the approval of new and supplemental NDAs for product changes, including, among other things, new indications, dosage forms, routes
of administration or strengths of an existing drug, or for a new use, if new clinical investigations, other than bioavailability
studies, that were conducted or sponsored by the applicant are deemed by FDA to be essential to the approval of the application.
Five-year and three-year exclusivity will not delay the submission or approval of another full NDA; however, as discussed above,
an applicant submitting a full NDA under Section 505(b)(1) would be required to conduct or obtain a right of reference to
all of the preclinical and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.
Other types of exclusivity
in the United States include orphan drug exclusivity and pediatric exclusivity. The FDA may grant orphan drug designation to a
drug intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals
in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that
the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered
from sales in the United States for that drug. Seven-year orphan drug exclusivity is available to a product that has orphan drug
designation and that receives the first FDA approval for the indication for which the drug has such designation. Orphan drug exclusivity
prevents approval of another application for the same drug for the same orphan indication, for a period of seven years, regardless
of whether the application is a full NDA or a Section 505(b)(2) NDA, except in limited circumstances, such as a showing of
clinical superiority to the product with orphan exclusivity. Pediatric exclusivity, if granted, provides an additional six months
to an existing exclusivity or statutory delay in approval resulting from a patent certification. This six-month exclusivity, which
runs from the end of other exclusivity protection or patent delay, may be granted based on the voluntary completion of a pediatric
study in accordance with an FDA-issued "Written Request" for such a study.
Section 505(b)(2)
NDAs are similar to full NDAs filed under Section 505(b)(1) in that they are entitled to any of these forms of exclusivity
if they meet the qualifying criteria. They also are entitled to the patent protections described above, based on patents that are
listed in the FDA's Orange Book in the same manner as patents claiming drugs and uses approved for NDAs submitted as full
NDAs.
57
Other Regulatory Requirements
Maintaining substantial
compliance with appropriate federal, state and local statutes and regulations requires the expenditure of substantial time and
financial resources. Drug manufacturers are required to register their establishments with the FDA and certain state agencies,
and after approval, the FDA and these state agencies conduct periodic unannounced inspections to ensure continued compliance with
ongoing regulatory requirements, including cGMPs. In addition, after approval, some types of changes to the approved product, such
as adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval.
The FDA may require post-approval testing and surveillance programs to monitor safety and the effectiveness of approved products
that have been commercialized. Any drug products manufactured or distributed by us pursuant to FDA approvals are subject to continuing
regulation by the FDA, including:
·
record-keeping requirements;
·
reporting of adverse experiences with the drug;
·
providing the FDA with updated safety and efficacy information;
·
reporting on advertisements and promotional labeling;
·
drug sampling and distribution requirements; and
·
complying with electronic record and signature requirements.
In addition, the FDA
strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market. There
are numerous regulations and policies that govern various means for disseminating information to health-care professionals as well
as consumers, including to industry sponsored scientific and educational activities, information provided to the media and information
provided over the Internet. Drugs may be promoted only for the approved indications and in accordance with the provisions of the
approved label.
The FDA has very broad
enforcement authority and the failure to comply with applicable regulatory requirements can result in administrative or judicial
sanctions being imposed on us or on the manufacturers and distributors of our approved products, including warning letters, refusals
of government contracts, clinical holds, civil penalties, injunctions, restitution, and disgorgement of profits, recall or seizure
of products, total or partial suspension of production or distribution, withdrawal of approvals, refusal to approve pending applications,
and criminal prosecution resulting in fines and incarceration. The FDA and other agencies actively enforce the laws and regulations
prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject
to significant liability. In addition, even after regulatory approval is obtained, later discovery of previously unknown problems
with a product may result in restrictions on the product or even complete withdrawal of the product from the market.
Food and Drug Administration Amendments
Act of 2007
In September 2007,
the Food and Drug Administration Amendments Act of 2007, or FDAAA, became law. This legislation grants significant new powers to
the FDA, many of which are aimed at improving drug safety and assuring the safety of drug products after approval. In particular,
the new law authorizes the FDA to, among other things, require post-approval studies and clinical trials, mandate changes to drug
labeling to reflect new safety information, and require risk evaluation and mitigation strategies for certain drugs, including
certain currently approved drugs. In addition, the new law significantly expands the federal government's clinical trial
registry and results databank and creates new restrictions on the advertising and promotion of drug products. Under the FDAAA,
companies that violate these and other provisions of the new law are subject to substantial civil monetary penalties.
The FDA has not yet
implemented many of the provisions of the FDAAA, so we cannot predict the impact of the new legislation on the pharmaceutical industry
or our business. However, the requirements and changes imposed by the FDAAA may make it more difficult, and more costly, to obtain
and maintain approval for new pharmaceutical products, or to produce, market and distribute existing products. In addition, the
FDA's regulations, policies and guidance are often revised or reinterpreted by the agency or the courts in ways that may
significantly affect our business and our products. It is impossible to predict whether additional legislative changes will be
enacted, or FDA regulations, guidance or interpretations changed, or what the impact of such changes, if any, may be.
58
Employees
As of April 25, 2012,
we had three full time employees, Benjamin Selzer, our Chief Operating Officer, Leland Gershell, our Chief Financial Officer, and
Bruce Daugherty, our Senior Director of Drug Development and Controller, as well as one part-time senior director of research.
In addition, we rely
on consultants instead of employees for critical activities, including Seth Lederman who serves as our Chief Executive Officer
and as President of Tonix Sub pursuant to a consulting agreement with Lederman & Co., and Seth Lederman and Donald Landry who
provide scientific consulting pursuant to a consulting agreement with L&L Technologies, LLC. None of our employees are represented
by a labor union, and we believe that our relations with our employees are good.
DESCRIPTION OF PROPERTIES
We maintain our principal
office at 509 Madison Avenue, Suite 306, New York, New York 10022.  Our telephone number at that office is (212) 980-9155
and our fax number is (212) 923-5700. Our current office space consists of approximately 2,355 square feet. The lease expires in
September 2015. The base rent is as follows:
Lease Period
Amount Per Annum
October 1, 2010 – September 30, 2011
$
120,105.00
October 1, 2011 – September 30, 2012
$
123.496.20
October 1, 2012 – September 30, 2013
$
126,989.14
October 1, 2013 – September 30, 2014
$
130,586.86
October 1, 2014 – September 30, 2015
$
134,292.52
We believe that our
existing facilities are suitable and adequate to meet our current business requirements. We maintain websites at www.tonixpharma.com
and www.krele.com and the information contained on those websites is not deemed to be a part of this prospectus.
LEGAL PROCEEDINGS
From time to time,
we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm
our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in
the aggregate, a material adverse effect on our business, financial condition or operating results.
59
MANAGEMENT
The names of our executive
officers and directors and their age, title, and biography as of April 25, 2012 are set forth below:
Name
Age
Title
Seth Lederman
54
President, CEO and Chairman of the Board of Directors
Leland Gershell
40
Chief Financial Officer
Benjamin Selzer
35
Chief Operating Officer, Secretary and Treasurer
Bruce Daugherty
54
Senior Director of Drug Development and Controller
Stuart Davidson
54
Director
Patrick Grace
55
Director
Donald Landry
57
Director
Ernest Mario
73
Director
Charles Mather IV
51
Director
John Rhodes
55
Director
Directors are elected
annually and hold office until the next annual meeting of the stockholders of the Company and until their successors are elected.
Officers are elected annually and serve at the discretion of the Board of Directors.
Seth Lederman,
MD
became our President, Chief Executive Officer, Chairman of the Board and a Director in October 2011. Dr. Lederman founded
Tonix Sub in June of 2007 and has acted as its Chairman of the Board of Directors since inception and as President since June 2010.
Dr. Lederman has been the Chairman of Krele since its inception in August 2010. Since 1996, Dr. Lederman has been an Associate
Professor at Columbia University. As an Assistant Professor at Columbia, Dr. Lederman discovered and characterized the CD40-ligand
and invented therapeutic candidates to treat autoimmune diseases and transplant rejection. Dr. Lederman has been a Manager of L&L
Technologies LLC since 1996. In addition, Dr. Lederman has been the Managing Member of Seth Lederman Co, LLC since January 2007
and the Managing Member of Lederman & Co, LLC since 2002, both of which are biopharmaceutical consulting and investing companies.
Dr. Lederman has also been the Managing Member of Targent Pharmaceuticals since 2000, and Managing Member of Plumbline LLC since
2002. Targent Pharmaceuticals, LLC was a founder of Targent Pharmaceuticals Inc. on which Board of Directors Dr. Lederman served
from inception in 2001 until the sale of its assets to Spectrum Pharmaceuticals Inc. in 2006. Between January 2007 and November
2008, Dr. Lederman was a Managing Partner of Konanda Pharma Partners, LLC, a Director of Konanda Pharma Fund I, LP, and a Managing
Partner of Konanda General Partner, LLC, which were related private growth equity fund entities. As well, between January 2007
and November 2008, Dr. Lederman was Chairman of Validus Pharmaceuticals, Inc. and Fontus Pharmaceuticals, Inc., which were portfolio
companies of the Konanda private growth equity fund. Since December 2011, Dr. Lederman has served as CEO and Chairman of Leder
Laboratories Inc. and Starling Pharmaceuticals Inc, which are biopharmaceutical development companies. Between 2006 and 2011, Dr.
Lederman was a director of Research Corporation, a New York-based non-profit Dr. Lederman received his BA degree in Chemistry from
Princeton University in 1979 and his MD from Columbia University in 1983. Dr. Lederman has been a New York State licensed physician
since 1985. Dr. Lederman's significant experience with our patent portfolio and his experience as an entrepreneur, seed
capital investor, fund manager, and director of start-up biopharmaceutical companies were instrumental in his selection as a member
of the board of directors.
Leland Gershell,
MD PhD
became our Chief Financial Officer on April 1, 2012. From May 2011 to December 2011, Dr. Gershell was Managing Director
and Senior Analyst at Madison Williams and Company, where he was responsible for equity research coverage of specialty pharmaceutical
and biotechnology companies. From April 2010 to October 2010, Dr. Gershell was Senior Analyst at Favus Institutional Research,
where he was responsible for issuing research reports on a variety of healthcare companies to institutional investors. From October
2008 to October 2009, Dr. Gershell was Senior Analyst at Apothecary Capital, a healthcare investment firm. From November 2004 to
September 2008, Dr. Gershell was an equity research analyst at Cowen and Company, most recently as Vice President, where he was
responsible for the equity research coverage of small and middle capitalization biotechnology companies. Dr. Gershell earned his
M.D. and Ph.D. in Organic Chemistry from Columbia University and his B.A. magna cum laude in Chemistry and Asian Studies from Dartmouth
College. Dr. Gershell is an inventor on Columbia's patents for SAHA/vorinostat, which is marketed by Merck as Zolinza®
and is the first histone deacetylase (HDAC) inhibitor to receive FDA approval.
60
Benjamin Selzer
became our Chief Operating Officer in October 2011 and our interim Chief Financial Officer, Secretary and Treasurer in February
2012. Mr. Selzer resigned as our interim Chief Financial Officer on April 1, 2012. Mr. Selzer has served as the Chief Operating
Officer of Tonix Sub since April 2011. Between February 2011 and April 2011, Mr. Selzer served as Tonix Sub's Chief Business
Officer. Between May 2009 and January 2011, Mr. Selzer was a private consultant. Previously, Mr. Selzer was the Executive Director,
International Operations and Alliance Management at Aton Pharma, Inc. from April 2008 to May 2009 and Director, Business Development
at Reliant Pharmaceuticals, Inc. from July 2004 to March 2008. From 1999 through 2004, Mr. Selzer was a healthcare investment banker
at Banc of America Securities LLC, Lehman Brothers Inc., and Warburg Dillon Read LLC in New York. Mr. Selzer received his BA in
Economics from The Johns Hopkins University.
Bruce Daugherty
became our Senior Director of Drug Development and Controller on April 1, 2012. Since January 2009, Dr. Daugherty has worked as
a consultant to academia and biotechnology companies in drug discovery/development and licensing through his consulting company,
LeClair Pharma Consulting, LLC. Dr. Daugherty was a consultant to our company between November 2011 and March 2012. In 2009, Dr.
Daugherty was employed at Assumption College in Mendham, New Jersey, where he was a lecturer in Biology for freshman students.
From 1987 to 2008, Dr. Daugherty was employed at Merck & Co., where he was a scientist in drug discovery and development. Dr.
Daugherty earned his MBA from Emory University's Goizueta Business School, his PhD in Molecular Genetics and Microbiology
from UMDNJ-Robert Wood Johnson Medical School, his MS in Zoology from Rutgers University and his BA in Biology from Washington
University in St. Louis.
Stuart Davidson
became a Director in October 2011. Between July 2010 and October 2011, Mr. Davison served as a director of Tonix Sub. Since 1994,
Mr. Davidson has been a Managing Partner of Labrador Ventures. Prior to Labrador, Mr. Davidson founded and served as CEO of Combion,
Inc., which was acquired by Incyte. He also served as President of Alkermes, Inc., a biotechnology company focused on drug delivery.
Mr. Davidson received his Bachelor's Degree from Harvard College in 1978 and his MBA from Harvard Business School in 1984.
Mr. Davidson's prior experience as a venture capital investor, entrepreneur, and biotechnology industry executive experience
leading pharmaceutical companies was instrumental in his selection as a member of our board of directors.
Patrick Grace
became a Director in October 2011. Between June 2007 and October 2011, Mr. Grace served as a director of Tonix Sub. Since 1996,
he has been a director of Chemed Corporation. Mr. Grace was the co-founder of and has served as the Managing
Partner of Apollo Philanthropy Partners, L.L.C. since October 2008. He has also been President of MLP Capital,
Inc., New York, New York, an investment holding company, since 1996. Mr. Grace served in various senior management roles
with W. R. Grace & Co. from 1977-1995, and was last President and CEO of Grace Logistics Services, Inc. From
January 2002 to August 2002, Mr. Grace was also President and Chief Executive Officer of Kingdom Group, LLC ("Kingdom"),
New York, New York (a provider of turnkey compressed natural gas fueling systems), which filed for bankruptcy January 2002,
and he was Executive Vice President of Kingdom from August 1999 to December 2000. Mr. Grace was a liberal arts major
at the University of Notre Dame and earned a MBA in finance from Columbia University. Mr. Grace's extensive
executive experience, along with his membership on the board of directors of a public company was instrumental in
his selection as a member of our board of directors.
Donald W. Landry,
MD, PhD
became a Director in October 2011. Between June 2007 and October 2011, Dr. Landry served as a director of Tonix
Sub. Dr. Landry has been a member of the faculty of Columbia University since 1986, and has served as the Samuel Bard Professor
of Medicine, Chair of the Department of Medicine and Physician-in-Chief at New York Presbyterian Hospital/Columbia University since
2008. Dr. Landry was a co-founder and has been a member of L&L Technologies, LLC since 1996. Dr. Landry received his BS degree
in Chemistry from Lafayette College in 1975, his PhD in Organic Chemistry from Harvard University in 1979 and his M.D. from Columbia
University in 1983. Dr. Landry has been a New York State licensed physician since 1985. In 2008, Dr. Landry was awarded the Presidential
Citizens Medal, the second-highest award that the President can confer upon a civilian. Dr. Landry's significant medical
and scientific background was instrumental in his selection as a member of the board of directors.
61
Ernest Mario,
PhD
became a Director in October 2011. Between September 2010 and October 2011, Dr. Mario served as a director of Tonix
Sub. Dr. Mario is a former Deputy Chairman and Chief Executive of Glaxo Holdings plc and a former Chairman and Chief Executive
Officer of ALZA Corporation. Since August 2007, Dr. Mario has served as a Director of Celgene Corporation, a Director of Boston
Scientific since October 2001 and currently is the Lead Director of Pharmaceutical Product Development, Inc. From 2003 to 2007,
he was Chairman and Chief Executive of Reliant Pharmaceuticals, Inc. Since August 2007, Dr. Mario has served as the Chief
Executive Officer and Chairman of Capnia, Inc., a privately held specialty pharmaceutical company in Palo Alto, CA. He is Chairman
of the American Foundation for Pharmaceutical Education and serves as an advisor to the pharmacy schools at the University of Rhode
Island and The Ernest Mario School of Pharmacy at Rutgers University. In 2007, Dr. Mario was awarded the Remington Medal by
the American Pharmacists' Association, pharmacy's highest honor. Dr. Mario received a PhD and an MS in physical
sciences from the University of Rhode Island and a BS in pharmacy from Rutgers University. Dr. Mario brings to his service
as a director his significant executive leadership experience, including his experience leading several pharmaceutical companies,
as well as his membership on public company boards and foundations. He also has extensive experience in financial and operations
management, risk oversight, and quality and business strategy.
Charles Mather
IV
became a Director in October 2011. Between April and October 2011, Mr. Mather served as a director of Tonix Sub. Mr.
Mather has been the Head of Private and Alternative Capital and Co-Head of ECM at Janney Montgomery Scott since December 2009.
Between October 2008 and December 2009, Mr. Mather served as an independent consultant to various securities firms. Between May
2007 and September 2008, Mr. Mather was the head of the Structured Equity Group at Jefferies Group Inc. Prior to that, Mr. Mather
held various senior investment banking positions at Cowen and Company, including as Co-Head of the Private Equity Group. Mr. Mather
received a BA in History from Brown University and an MBA in Finance from The Wharton School, University of Pennsylvania. Mr. Mather's
extensive experience as an investment banker was instrumental in his selection as a member of our board of directors.
John Rhodes
became a Director in October 2011. Between October 2010 and October 2011, Mr. Rhodes served as a director of Tonix Sub. Mr. Rhodes
has been a director of Dewey Electronics Company, a manufacturer of electronic and electromechanical systems for the military and
commercial markets, since 2005. Between April 2007 and June 2010, Mr. Rhodes was a Senior Advisor to Good Energies, Inc., a renewable
energy company. Mr. Rhodes is a former Vice President of Booz Allen Hamilton, Inc. Mr. Rhodes is a graduate of Princeton University
and the Yale School of Management. Mr. Rhodes' extensive business and consulting experience, along with his membership
on the board of directors of a public company was instrumental in his selection as a member of our board of directors.
Family Relationships
None.
Board Independence
We are not required
to have any independent members of the Board of Directors. The board of directors has determined that (i) Seth Lederman, has a
relationship which, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director and is not an "independent director" as defined in the Marketplace Rules of
The NASDAQ Stock Market and (ii) Stuart Davidson, Patrick Grace, Donald Landry, Ernest Mario, Charles Mather and John Rhodes are
each an independent director as defined in the Marketplace Rules of The NASDAQ Stock Market.
62
Meetings and Committees of the Board
of Directors
During the fiscal year
ended December 31, 2011, our board of directors held two meetings and approved certain actions by unanimous written consent. We
currently have one board committee, the audit committee. The board as a whole carries out the functions of the compensation and
nominating committees. We expect our directors to attend all board and committee meetings and to spend the time needed and meet
as frequently as necessary to properly discharge their responsibilities.
Audit Committee
Our Audit Committee
consists of Patrick Grace and Charles Mather, with Mr. Grace elected as Chairman of the Committee. Our Board of Directors has determined
that each of Messrs. Grace and Mather are "independent" as that term is defined under applicable SEC rules and under
the current listing standards of the NASDAQ Stock Market. Mr. Grace is our audit committee financial expert.
Our Audit Committee's
responsibilities include: (i) reviewing the independence, qualifications, services, fees, and performance of the independent auditors,
(ii) appointing, replacing and discharging the independent auditor, (iii) pre-approving the professional services provided by the
independent auditor, (iv) reviewing the scope of the annual audit and reports and recommendations submitted by the independent
auditor, and (v) reviewing our financial reporting and accounting policies, including any significant changes, with management
and the independent auditor. The Audit Committee has reviewed and discussed with management the Company's audited financial
statements for the year ended December 31, 2011.  Based on the reviews and discussions referred to above, the Audit
Committee has recommended to the Board of Directors that the financial statements referred to above be included in this Form 10-K.
Involvement in Certain Legal Proceedings
Our Directors and Executive
Officers have not been involved in any of the following events during the past ten years:
1.
any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
2.
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
3.
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;
4.
being found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
5.
being subject of, or a party to, any federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
6.
being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
63
EXECUTIVE COMPENSATION
The following table
provides certain summary information concerning compensation awarded to, earned by or paid to our Chief Executive Officer, the
two highest paid executive officers and up to two other highest paid individuals whose total annual salary and bonus exceeded $100,000
for fiscal years 2011 and 2010.
Name & Principal
Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Change in
Pension
Value and
Non-
Qualified
Deferred
Compensation
Earnings ($)
All Other
Compensation
($)
Total
($)
Seth Lederman (1)
2011
-
-
-
-
-
-
300,750
(3)
300,750
Chief Executive Officer
2010
-
-
69,738
(2)
-
-
-
205,833
(3)
275,571
Rhonda Rosen (4)
2011
140,463
-
-
-
-
-
-
140,463
Chief Financial Officer
2010
93,750
-
8,865
(5)
-
-
-
-
102,615
David J. Moss (6)
2011
-
-
-
-
-
-
-
-
Chief Executive Officer
2010
-
-
-
-
-
-
-
-
Mark Lawson (7)
2010
-
-
-
-
-
-
-
-
Chief Executive Officer
Robert Gebert (8)
2010
-
-
-
-
-
-
-
-
Chief Executive Officer
Susan Oliver (9)
2011
113,249
-
-
-
-
-
-
113,249
Secretary
(1)
Dr. Lederman become our President and Chief Executive Officer on October 7, 2011. His compensation reflects payments made to him either through Tonix or Tonix Sub.
(2)
Represents (i) 52,362 shares of common stock granted to Lederman & Co., LLC, and (ii) 256,575 shares of common stock granted to L&L Technologies, LLC, which stock was vested at a value of $0.23/share as of December 31, 2010.
(3)
Represents $96,000 and $56,000 of consulting fees paid to L&L Technologies, $198,750 and $145,833 of consulting fees paid to Lederman & Co. and $6,000 and $4,000 of director fees paid for the years ended December 31, 2011 and 2010, respectively.
(4)
Ms. Rosen become our Chief Financial Officer on October 7, 2011. Her compensation reflects payments made to her either through Tonix or Tonix Sub. Ms. Rosen was terminated effective February 16, 2012.
(5)
Represents 39,272 shares of common stock granted and vested at a value of $0.23/share as of December 31, 2010.
(6)
Mr. Moss become our Chief Executive Officer on November 22, 2010 and resigned effective October 7, 2011.
(7)
Mr. Lawson become our Chief Executive Officer on January 14, 2010 and resigned on November 22, 2010.
(8)
Mr. Gebert resigned as our Chief Executive Officer on January 14, 2010.
(9)
Ms. Oliver was terminated effective October 20, 2011.
64
Option/SAR Grants in Fiscal Year Ended December 31, 2011
None.
Outstanding Equity Awards at Fiscal Year-End Table
None.
Equity Compensation Plan Information
Plan category
Number of
securities to
be issued
upon
exercise of
outstanding
options
(a)
Weighted-
average
exercise
price of
outstanding
options
(b)
Securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
(c)
Equity compensation plans approved by security holders
-
$
-
4,000,000
Equity compensation plans not approved by security holders
-
-
-
Total
-
$
-
4,000,000
Employment Contracts and Termination
of Employment and Change-In-Control Arrangements
Employment Agreement with Leland Gershell
Effective April 1,
2012, we entered into an employment agreement (the "Gershell Agreement") with Dr. Gershell to serve as Chief Financial
Officer. The base salary under the Gershell Agreement is $175,000 per annum, which shall increase to $325,000 per annum upon our
consummation of an equity sale of securities in excess of $20 million (the "Gershell Threshold"). The Gershell Agreement
provides for at-will employment and can be terminated at any time by either party, provided, however, that if we terminate Dr.
Gershell for any reason other than cause (as defined in the Gershell Agreement), then Dr. Gershell shall be entitled to six weeks
of severance, which severance payment shall increase to six months if such termination occurs after the Gershell Threshold. In
addition, Dr. Gershell is entitled to participate in any and all benefit plans, from time to time, in effect for our employees,
along with vacation, sick and holiday pay in accordance with its policies established and in effect from time to time.
Employment Agreement with Benjamin Selzer
Effective April 2,
2012, we entered into an employment agreement (the "Selzer Agreement") with Benjamin Selzer to serve as Chief Operating
Officer. The Selzer Agreement replaces and terminates the employment agreement Mr. Selzer had previously entered into with Tonix
Sub. The base salary under the Selzer Agreement is $175,000 per annum, which shall increase to $250,000 per annum effective October
7, 2012, and shall increase to $320,000 per annum upon our consummation of an underwritten public offering of equity securities
in excess of $10 million net to us (the "Selzer Threshold"). In the event that the Selzer Threshold occurs subsequent
to October 7, 2012, Mr. Selzer shall be entitled to retroactive adjustment of the base salary to the $320,000 per annum rate, not
to exceed an aggregate adjustment of $170,000.
65
The Selzer Agreement
has an initial term of two years, and renews thereafter for additional one year terms unless either party provides 90 days written
notice prior to the termination of a term not to extend the Selzer Agreement. If we terminate Mr. Selzer after the Selzer Threshold
and for any reason other than cause (as defined in the Selzer Agreement), then Mr. Selzer shall be entitled to six months of severance.
In addition, Mr. Selzer is entitled to participate in any and all benefit plans, from time to time, in effect for our employees,
along with vacation, sick and holiday pay in accordance with its policies established and in effect from time to time.
Director Compensation
The following table
sets forth summary information concerning the total compensation paid to our non-employee directors in 2011 for services to our
company.
Name
Fees Earned
or Paid in
Cash ($)
Stock
Awards ($)
Total ($)
Stuart Davidson
6,000
-
6,000
Patrick Grace
4,000
-
4,000
Donald Landry
6,000
-
6,000
Ernest Mario
6,000
-
6,000
Charles Mather IV
6,000
-
6,000
John Rhodes
6,000
-
6,000
Total:
34,000
-
34,000
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than as disclosed
below, since January 1, 2011, there have been no transactions, or proposed transactions, which have materially affected or will
materially affect us in which any director, executive officer or beneficial holder of more than 5% of the outstanding common, or
any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest.
We have no policy regarding entering into transactions with affiliated parties.
On June 4, 2010, Tonix
Sub entered into a consulting agreement with Lederman & Co., LLC, of which our Chairman, CEO and President Seth Lederman is
the Managing Member. Pursuant to this agreement, Lederman & Co. shall provide clinical development, strategic, management and
operational consulting services. In exchange for its services, Tonix Sub shall pay Lederman & Co. compensation of $250,000
per annum and issued to Lederman & Co. 261,784 shares of its common stock, 20% of which vested on the date of the agreement
and the remainder vesting in equal amounts on each of the first, second, third and fourth anniversaries of the date of the agreement.
On August 1, 2011, the cash compensation was reduced to $127,000 per annum. On February 1, 2012, the cash compensation was increased
to $250,000 per annum. Immediately prior to the Share Exchange, the unvested shares of common stock vested.
On June 4, 2010, Tonix
Sub entered into a technology transfer and assignment agreement with Lederman & Co., LLC. Pursuant to this agreement, Lederman
& Co. transferred intellectual property rights related to isometheptene mucate to Tonix Sub. In exchange for the assignment
of the intellectual property rights, Tonix Sub issued to Lederman & Co. 1,308,921 shares of its common stock.
On June 4, 2010 Tonix
Sub entered into a consulting agreement with L&L Technologies, LLC, of which our Chairman, CEO and President Seth Lederman
is the Manager. Pursuant to this agreement, L&L Technologies shall provide scientific and medical consulting services. In exchange
for its services, Tonix Sub shall pay L&L Technologies compensation of $96,000 per annum, or such greater amount as the Board
may designate from time to time, and issued to L&L Technologies 1,026,194 shares of its common stock, 25% of which vested on
the date of the agreement and the remainder vesting in equal amounts on each of the first, second and third anniversaries of the
date of the agreement. Immediately prior to the Share Exchange, the unvested shares of common stock vested.
66
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table
sets forth certain information regarding beneficial ownership of our common stock as of April 25, 2012:
·
by each person who is known by us to beneficially own more than 5% of our common stock;
·
by each of our officers and directors; and
·
by all of our officers and directors as a group.
Unless otherwise indicated
in the footnotes to the following table, each person named in the table has sole voting and investment power and that person's
address is c/o Tonix Pharmaceuticals Holding Corp., 509 Madison Avenue, Suite 306, New York New York 10022.
NAME OF OWNER
TITLE OF
CLASS
NUMBER OF
SHARES OWNED (1)
PERCENTAGE OF
COMMON STOCK (2)
Seth Lederman
Common Stock
12,116,044
(3)
35.06
%
Benjamin Selzer
Common Stock
532,350
1.55
%
Leland Gershell
Common Stock
50,000
(4)
*
Bruce Daugherty
Common Stock
0
*
Stuart Davidson
Common Stock
1,338,288
(5)
3.90
%
Patrick Grace
Common Stock
130,906
*
Donald Landry
Common Stock
2,342,877
(6)
6.83
%
Ernest Mario
Common Stock
1,163,745
3.39
%
Charles Mather IV
Common Stock
110,369
*
John Rhodes
Common Stock
901,936
2.63
%
Officers and Directors as a Group (10 persons)
Common Stock
14,857,001
(7)
42.74
%
Lederman & Co., LLC (8)
Common Stock
5,963,565
(9)
17.35
%
Eli Lederman (10)
Common Stock
2,352,810
(11)
6.85
%
L&L Technologies, LLC (12)
Common Stock
1,924,857
(13)
5.61
%
National Holdings Corporation (14)
Common Stock
1,865,406
5.44
%
David J. Moss (15)
Common Stock
2,116,818
(16)
6.13
%
* Denotes less than 1%
(1) Beneficial Ownership is determined
in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of
common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days
of April 25, 2011 are deemed outstanding for computing the percentage of the person holding such option or warrant but are not
deemed outstanding for computing the percentage of any other person.
(2) Percentage based upon 34,278,432 shares
of common stock issued and outstanding as of April 25, 2012.
(3) Includes 5,873,565 shares of common
stock and 90,000 shares of common stock underlying warrants owned by Lederman & Co., LLC, 1,904,857 shares of common stock
and 20,000 shares of common stock underlying warrants owned by L&L Technologies, Inc., 1,179,424 shares of common stock and
165,000 shares of common stock underlying warrants owned by Targent Pharmaceuticals, LLC and 73,961 shares owned by the Seth M.
Lederman 1999 Trust. Seth Lederman, as the Managing Member of Lederman & Co., LLC and Targent Pharmaceuticals, LLC, the Manager
of L&L Technologies, Inc. and the Trustee of the Seth M. Lederman 1999 Trust, has investment and voting control over the shares
held by these entities.
67
(4) Includes 25,000 shares of common stock
underlying warrants.
(5) Includes 1,090,882 shares of common
stock and 50,000 shares of common stock underlying warrants owned by Lysander, LLC and 130,906 shares owned by Oystercatcher Trust.
Stuart Davidson, as the Member of Lysander, LLC and Trustee of Oystercatcher Trust, has investment and voting control over the
shares held by these entities.
(6) Includes 1,904,857 shares of common
stock and 20,000 shares of common stock underlying warrants owned by L&L Technologies, Inc. Donald Landry, as a Member of L&L
Technologies, Inc., has investment and voting control over the shares held by this entity.
(7) Includes 5,873,565 shares of common
stock and 90,000 shares of common stock underlying warrants owned by Lederman & Co., LLC, 1,904,857 shares of common stock
and 20,000 shares of common stock underlying warrants owned by L&L Technologies, Inc., 1,179,424 shares of common stock and
165,000 shares of common stock underlying warrants owned by Targent Pharmaceuticals, LLC, 73,961 shares owned by the Seth M. Lederman
1999 Trust, 1,090,882 shares of common stock and 50,000 shares of common stock underlying warrants owned by Lysander, LLC, 130,906
shares owned by Oystercatcher Trust and 25,000 shares of common stock underlying warrants owned by Leland Gershell.
(8) Seth Lederman, our President and Chief
Executive Officer, has investment and voting control over the shares held by this entity. The mailing address for this entity is
245 E. 93
rd
St. 14E, New York, New York 10128.
(9) Includes 90,000 shares of common stock
underlying warrants.
(10) The mailing address for this beneficial
owner is Malt House Cottage, Hurley, Berkshire, SL6 5LT, United Kingdom.
(11) Includes 50,000 shares of common stock
underlying warrants.
(12) Seth Lederman, our President and Chief
Executive Officer and Donald Landry, a Director, have investment and voting control over the shares held by this entity. The mailing
address for this entity is 245 E. 93
rd
St. 14E, New York, New York 10128.
(13) Includes 20,000 shares of common stock
underlying warrants.
(14) Mark Goldwasser, C.E.O. has investment
and voting control over the shares held by this entity. The mailing address for this entity is 120 Broadway, 27
th
Floor,
New York, NY 10271.
(15) The mailing address for this beneficial
owner is 23046 Avenida de la Carlota, Suite 600, Laguna Hills, CA 92653.
(16) Includes 230,000 shares of common
stock underlying warrants.
68
DESCRIPTION OF SECURITIES
COMMON STOCK
We are authorized to
issue up to 75,000,000 shares of our common stock, par value $0.001 per share. As of April 25, 2012, there were 34,278,432 shares
of our common stock issued and outstanding. The outstanding shares of our common stock are validly issued, fully paid and nonassessable.
Holders of our common
stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of our common stock do not
have cumulative voting rights. Therefore, holders of a majority of the shares of our common stock voting for the election of directors
can elect all of the directors. Holders of our common stock representing a majority of the voting power of our capital stock issued,
outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of stockholders.
A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such
as liquidation, merger or an amendment to our articles of incorporation.
Holders of our common
stock are entitled to share in all dividends that our Board of Directors, in its discretion, declares from legally available funds.
In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in
all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over
our common stock. Our common stock has no pre-emptive, subscription or conversion rights and there are no redemption provisions
applicable to our common stock.
PREFERRED STOCK
We are not authorized
to issue shares of Preferred Stock.
OPTIONS
None.
WARRANTS
In connection with
the 2011 Financing, we issued Conversion Warrants to purchase 275,000 shares of Common Stock. In addition, we issued 2011 Agent
Warrants to the placement agents to purchase an aggregate of 30,750 shares of Common Stock. The Conversion Warrants have a three
year term and $1.00 exercise price. The 2011 Agent Warrants have a $1.00 exercise price and 15,000 have a two year term and the
remaining 15,750 have a three year term. The Conversion Warrants may be exercised on a cashless basis.
In connection with
the 2012 Financing, we issued Class A Warrants to purchase 6,617,765 shares of Common Stock. In addition, we issued 2012 Agent
Warrants to the placement agent to purchase 466,777 shares of Common Stock. The Class A Warrants have a five year term and $1.25
exercise price. The 2012 Agent Warrants have a seven year term and $1.25 exercise price. The Class A Warrants and 2012 Agent Warrants
may be exercised on a cashless basis and contain customary anti-dilution protection.
CONVERTIBLE SECURITIES
None.
69
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Chapter 78 of the Nevada
Revised Statutes ("NRS") provides that a corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action,
suit or proceeding if he is not liable pursuant to NRS Section 78.138 or acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. NRS Chapter 78 further provides that a corporation similarly may indemnify
any such person serving in any such capacity who was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such action
or suit if he is not liable pursuant to NRS Section 78.138 or acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent
that the court or other court of competent jurisdiction in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court or other court of competent jurisdiction shall deem proper.
Our bylaws provide
that we may indemnify our officers, directors, employees, agents and any other persons to the maximum extent permitted by the NRS.
70
PLAN OF DISTRIBUTION
We are registering
the shares of common stock previously issued and the shares of common stock issuable upon exercise of the warrants to permit the
resale of these shares of common stock by the holders of the common stock and warrants from time to time after the date of this
prospectus.  We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common
stock.  We will bear all fees and expenses incident to our obligation to register the shares of common stock.
The selling stockholders
may sell all or a portion of the shares of common stock held by them and offered hereby from time to time directly or through one
or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers,
the selling stockholders will be responsible for underwriting discounts or commissions or agent's commissions. The shares
of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at
varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions, which may involve
crosses or block transactions, pursuant to one or more of the following methods:
·
on any national securities exchange or quotation service on which
the securities may be listed or quoted at the time of sale;
·
in the over-the-counter market;
·
in transactions otherwise than on these exchanges or systems or in
the over-the-counter market;
·
through the writing or settlement of options, whether such options
are listed on an options exchange or otherwise;
·
ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
·
block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
·
purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
·
an exchange distribution in accordance with the rules of the applicable
exchange;
·
privately negotiated transactions;
·
settlement of short sales entered into after the effective date of
the registration statement of which this prospectus is a part;
·
in transactions through broker-dealers that agree with the Selling
Stockholders to sell a specified number of such shares at a stipulated price per share;
·
through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
·
a combination of any such methods of sale; or
·
any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares
under Rule 144 under the Securities Act of 1933, as amended (the "
Securities Act
"), if available, rather than
under this prospectus.
In addition, the selling
stockholders may transfer the shares of common stock by other means not described in this prospectus. If the selling stockholders
effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders
or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal
(which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of
common stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short
and deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection
with such short sales. The selling stockholders may also loan or pledge shares of common stock to broker-dealers that in turn may
sell such shares.
71
The selling stockholders
may pledge or grant a security interest in some or all of the warrants or shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock
from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus. The selling stockholders also may transfer and donate the shares of
common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.
To the extent required
by the Securities Act and the rules and regulations thereunder, the selling stockholders and any broker-dealer participating in
the distribution of the shares of common stock may be deemed to be "underwriters" within the meaning of the Securities
Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a particular offering of the shares of common stock is made, a prospectus
supplement, if required, will be distributed, which will set forth the aggregate amount of shares of common stock being offered
and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other
terms constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed or re-allowed
or paid to broker-dealers.
The following selling
stockholders are deemed an "underwriter" as that term is defined under the Securities Exchange Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, and the rules and regulations of such acts, in connection with the sale of their
common stock under this prospectus: Dawson James Securities, Inc., a registered broker-dealer; WFG Investments, Inc., a registered
broker-dealer; Seagate Advisors Inc., an offshore registered broker-dealer; Thomas Hands, Donald Shek, Tom Curtis, Bret Shapiro,
Joseph Balagot and Jonathan Blum; all of whom are employees or affiliates of Dawson James Securities, Inc. With the exception of
the foregoing, no other underwriter or person has been engaged to facilitate the sale of shares of common stock in this offering.
Under the securities
laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers.
In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is available and is complied with.
There can be no assurance
that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement,
of which this prospectus forms a part.
The selling stockholders
and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders
and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged
in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock.
All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage
in market-making activities with respect to the shares of common stock.
We will pay all expenses
of the registration of the shares of common stock pursuant to the registration rights agreement, estimated to be approximately
$108,333 in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with
state securities or "blue sky" laws; provided, however, a selling stockholder will pay all underwriting discounts and
selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some liabilities under the
Securities Act in accordance with the registration rights agreements or the selling stockholders will be entitled to contribution.
We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act that
may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, in accordance
with the related registration rights agreements or we may be entitled to contribution.
Once sold under the
registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands
of persons other than our affiliates.
72
SELLING STOCKHOLDERS
This prospectus relates
to the offering by the selling stockholders identified in the table below of up to 14,543,807 shares of common stock, par value
$0.001 per share. All of the shares of common stock offered by this prospectus are being sold by the selling stockholders.
These shares consist of (i) 585,750 shares and warrants to purchase 275,000 shares were issued to investors in our 2011 Financing,
(ii) warrants to purchase 30,750 shares issued to placement agents in connection with the 2011 Financing, (iii) 6,592,765 shares
and warrants to purchase 6,592,765 shares were issued to investors in our 2012 Financing, (ii) warrants to purchase 466,777 shares
issued to a placement agent in connection with the 2012 Financing.
The table below has
been prepared based upon the information furnished to us by the selling stockholders. The selling stockholders identified
below may have sold, transferred or otherwise disposed of some or all of their shares since the date on which the information in
the following table is presented in transactions exempt from, or not subject to, the registration requirements of the Securities
Act. Information concerning the selling stockholders may change from time to time and, if necessary, we will amend or supplement
this prospectus accordingly. We cannot provide an estimate as to the number of shares of common stock that will be held by
the selling stockholders upon termination of the offering covered by this prospectus because the selling stockholders may offer
some or all of their shares of common stock under this prospectus. The selling stockholders may also sell, transfer or otherwise
dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act or
pursuant to another effective registration statement covering those shares.
The following selling
stockholders are deemed an "underwriter" as that term is defined under the Securities Exchange Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, and the rules and regulations of such acts, in connection with the sale of their
common stock under this prospectus: Dawson James Securities, Inc., a registered broker-dealer; WFG Investments, Inc., a registered
broker-dealer; Seagate Advisors Inc., an offshore registered broker-dealer; Thomas Hands, Donald Shek, Tom Curtis, Bret Shapiro,
Joseph Balagot and Jonathan Blum; all of whom are employees or affiliates of Dawson James Securities, Inc. With the exception of
the foregoing, no other underwriter or person has been engaged to facilitate the sale of shares of common stock in this offering.
Dawson James Securities,
Inc. and WFG Investments, Inc. are registered broker-dealers and FINRA member firms, and Seagate Advisors Inc., an offshore registered
broker-dealer, are listed as selling stockholders in this prospectus. Each of these entities served as placement agents in our
2011 Financing or 2012 Financing, and received, in addition to cash commissions, warrants to purchase an aggregate of 466,777,
15,000, and 15,750 shares of our common stock, respectively, with an exercise price of $1.25, $1.00, and $1.00 per share,
respectively. The registration statement of which this prospectus forms a part includes the shares of common stock underlying the
warrants held by these firms and Thomas Hands, Donald Shek, Tom Curtis, Bret Shapiro, Joseph Balagot and Jonathan Blum, all of
whom are employees or affiliates of Dawson James Securities, Inc.. The SEC has indicated that it is their position that any broker-dealer
firm which is a selling stockholder is deemed an underwriter and therefore these firms and such associated persons may be deemed
an underwriter with respect to the securities being sold by them.
The following table
sets forth, based on information provided to us by the selling stockholders or known to us, the name of each selling stockholder,
the nature of any position, office or other material relationship, if any, which the selling stockholder has had, within the past
three years, with us or with any of our predecessors or affiliates, and the number of shares of our common stock beneficially owned
by the stockholder before this offering. The number of shares owned are those beneficially owned, as determined under the
rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under these
rules, beneficial ownership includes any shares of common stock as to which a person has sole or shared voting power or investment
power and any shares of common stock which the person has the right to acquire within 60 days through the exercise of any option,
warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation
of a trust, discretionary account or similar arrangement.
73
We have assumed all
shares of common stock reflected on the table will be sold from time to time in the offering covered by this prospectus. Because
the selling stockholders may offer all or any portions of the shares of common stock listed in the table below, no estimate can
be given as to the amount of those shares of common stock covered by this prospectus that will be held by the selling stockholders
upon the termination of the offering.
Selling Stockholder
Shares of
Common
Stock Owned
Before this
Offering
Shares of
Common Stock
Underlying
Warrants Owned
Before this
Offering  (1)
Percentage of
Common Stock
Beneficially
Owned Before
this Offering (2)
Shares of
Common
Stock Being
Offered in
this Offering
Shares of
Common
Stock
Owned
After this
Offering (3)
Percentage of
Common
    Stock
Beneficially
Owned After this
Offering (2)
Targent Pharmaceuticals, LLC (4)
1,179,424
165,000
3.90
%
384,450
959,974
2.31
%
Lederman & Co, LLC (5)
5,873,565
90,000
17.35
%
209,700
5,753,865
13.82
%
Sandor Capital Master Fund, L.P. (6)
832,000
400,000
3.55
%
932,000
300,000
*
JSL Kids Partners (7)
233,000
100,000
*
233,000
100,000
*
L & L Technologies, LLC (8)
1,904,857
20,000
5.61
%
30,000
1,894,857
4.55
%
John Selzer (9)
100,000
200,000
*
300,000
0
0
%
Lysander LLC (10)
1,157,382
50,000
3.52
%
116,500
1,090,882
2.62
%
Ernest Mario (11)
1,113,745
50,000
3.39
%
116,500
1,047,245
2.51
%
Donald W. Landry (12)
393,020
25,000
1.22
%
58,250
359,770
*
Charles E. Mather III (13)
13,300
10,000
*
23,300
0
0
%
Adam B. Connors
33,250
25,000
*
58,250
0
0
%
Eli Lederman (14)
2,302,810
50,000
6.85
%
116,500
2,236,310
5.37
%
The London Trust (15)
99,500
50,000
*
149,500
0
0
%
John Rhodes (16)
851,936
50,000
2.63
%
116,500
785,436
1.89
%
Ryan Fernan
33,250
25,000
*
58,250
0
0
%
Charles E. Mather IV (17)
100,569
10,000
*
23,300
87,269
*
Frank C. Condella, Jr.
142,337
25,000
*
58,250
109,087
*
David Moss
1,886,818
230,000
6.13
%
345,000
1,771,818
4.25
%
The Hashad Family Trust (18)
199,500
150,000
1.02
%
349,500
0
0
%
Continental Trust Corporation Limited (19)
266,000
200,000
1.35
%
466,000
0
0
%
Dorothy M. Ix
25,000
50,000
*
75,000
0
0
%
John N. Alessandro
36,000
36,000
*
72,000
0
0
%
Jack and Marcy Garson
200,000
200,000
1.16
%
400,000
0
0
%
CL Anderson and Associates Profit Sharing Plan (20)
25,000
25,000
*
50,000
0
0
%
James C. Miller
12,500
12,500
*
25,000
0
0
%
Bengt Elvir Ling
100,000
100,000
*
200,000
0
0
%
Michael Mulieri
12,500
12,500
*
25,000
0
0
%
Brett Nesland
99,750
75,000
*
174,750
0
0
%
Iredell and Virginia Iglehart, III, TBE
44,636
25,000
*
50,000
19,636
*
Korrigan AG (21)
133,000
100,000
*
233,000
0
0
%
Gregory Harrison
50,000
50,000
*
100,000
0
0
%
Carl Stevens
50,000
50,000
*
100,000
0
0
%
Robert B. Stanger
12,500
12,500
*
25,000
0
0
%
Jeffrey & Jennifer Stagnoli
12,500
12,500
*
25,000
0
0
%
Vincent Rose. Jr.
25,000
25,000
*
50,000
0
0
%
Richard A. Wienecke, II
12,500
12,500
*
25,000
0
0
%
Terry and Denis Altenburg
25,000
25,000
*
50,000
0
0
%
74
Selling Stockholder
Shares of
Common
Stock Owned
Before this
Offering
Shares of
Common Stock
Underlying
Warrants Owned
Before this
Offering  (1)
Percentage of
Common Stock
Beneficially
Owned Before
this Offering (2)
Shares of
Common
Stock Being
Offered in
this Offering
Shares of
Common
Stock
Owned
After this
Offering (3)
Percentage of
Common Stock
Beneficially
Owned After this
Offering (2)
Gilbert E. Ludwig IRA
25,000
25,000
*
50,000
0
0
%
Geoffrey Poremba, IRA
58,000
58,000
*
116,000
0
0
%
Theo Olison, IRA
12,500
12,500
*
25,000
0
0
%
Timothy & Patricia Gillis
12,500
12,500
*
25,000
0
0
%
Denis Robert Daun
18,000
18,000
*
36,000
0
0
%
Alessandro Lamon
25,000
25,000
*
50,000
0
0
%
Woody S. Byars, IRA
25,000
25,000
*
50,000
0
0
%
John Sloan Jr., IRA
50,000
50,000
*
100,000
0
0
%
John Blum Jr.
50,000
50,000
*
100,000
0
0
%
Mary Louise Marcin
25,000
25,000
*
50,000
0
0
%
John Grohe
25,000
25,000
*
50,000
0
0
%
Jeffrey E. Burt
12,700
12,700
*
25,400
0
0
%
Wardenburg 2009 Family Trust (22)
25,000
25,000
*
50,000
0
0
%
Frank and Hope Patton
13,000
13,000
*
26,000
0
0
%
WP O'Reilly & Associates Ltd. (23)
100,000
100,000
*
200,000
0
0
%
SLMI Holdings LLC (24)
50,000
50,000
*
100,000
0
0
%
Pamela Corson, IRA
12,500
12,500
*
25,000
0
0
%
Brian Wolf
25,000
25,000
*
50,000
0
0
%
Jan Backvall
65,000
65,000
*
130,000
0
0
%
Fred Militello
18,750
18,750
*
37,500
0
0
%
Kevin Lydon
25,000
25,000
*
50,000
0
0
%
Cadence Investments IV, LLLP (25)
70,000
70,000
*
140,000
0
0
%
Francis and Jeffrey Chan
25,000
25,000
*
50,000
0
0
%
Alan David Cohen
25,000
25,000
*
50,000
0
0
%
Kerston Coombs
37,500
37,500
*
75,000
0
0
%
Constantine Hagepanos
25,000
25,000
*
50,000
0
0
%
Peter Kaplan
50,000
50,000
*
100,000
0
0
%
Gerald and Seena Sperling JTWROS
200,000
200,000
1.16
%
400,000
0
0
%
Bunkap Industries, Inc. (26)
25,000
25,000
*
50,000
0
0
%
Steven Etra
170,000
170,000
*
340,000
0
0
%
Cadence Investments III LLLP (27)
60,000
60,000
*
120,000
0
0
%
Michael Berenhaus
50,000
50,000
*
100,000
0
0
%
Donald S. Darendinger Revocable Trust UA 07/03/2007 (28)
25,000
25,000
*
50,000
0
0
%
John Black
25,000
25,000
*
50,000
0
0
%
Bruce Robinson
25,000
25,000
*
50,000
0
0
%
Joe A. Holle
50,000
50,000
*
100,000
0
0
%
Christopher Moore
50,000
50,000
*
100,000
0
0
%
Raymond G. Tinney 1995 Inter Vivos Trust U/A (29)
50,000
50,000
*
100,000
0
0
%
Jason Curtis
19,000
19,000
*
38,000
0
0
%
Stanley & Larisa Minkin
25,000
25,000
*
50,000
0
0
%
David Hansen
25,000
25,000
*
50,000
0
0
%
Michael Brodherson
25,000
25,000
*
50,000
0
0
%
Umesh B Malyavantham, IRA
50,000
50,000
*
100,000
0
0
%
75
Selling Stockholder
Shares of
Common
Stock Owned
Before this
Offering
Shares of
Common Stock
Underlying
Warrants Owned
Before this
Offering  (1)
Percentage of
Common Stock
Beneficially
Owned Before
this Offering (2)
Shares of
Common
Stock Being
Offered in
this Offering
Shares of
Common
Stock
Owned
After this
Offering (3)
Percentage of
Common Stock
Beneficially
Owned After this
Offering (2)
William S. Atkins Living Trust dtd. 8/14/1998 (30)
12,500
12,500
*
25,000
0
0
%
James Rees
37,500
37,500
*
75,000
0
0
%
F. Richard Stark
50,000
50,000
*
100,000
0
0
%
Paul & Teri Sallwasser Joint Tenants
25,000
25,000
*
50,000
0
0
%
Dr. Carl Eric Mayer Revocable Trust (31)
25,000
25,000
*
50,000
0
0
%
John E. Nash
12,500
12,500
*
25,000
0
0
%
B Mark Paull
25,000
25,000
*
50,000
0
0
%
Dominic Martos
12,500
12,500
*
25,000
0
0
%
Bayard Henry
100,000
100,000
*
200,000
0
0
%
Robert J. Rosenberg
25,000
25,000
*
50,000
0
0
%
Virginia Anne Cahal
250,000
250,000
1.45
%
500,000
0
0
%
Melvyn Gober
25,000
25,000
*
50,000
0
0
%
William C. Kottke
15,000
15,000
*
30,000
0
0
%
Jim & Mike Narutowicz, JTWROS
25,000
25,000
*
50,000
0
0
%
George Rosch
12,500
12,500
*
25,000
0
0
%
Donald Myrtue
25,000
25,000
*
50,000
0
0
%
Mark Wiley
20,000
20,000
*
40,000
0
0
%
Ashley Weatherford, IRA
25,000
25,000
*
50,000
0
0
%
Kyl Scott, IRA
47,000
47,000
*
94,000
0
0
%
William & Rosalyn Gershell, JTWROS (32)
25,000
25,000
*
50,000
0
0
%
Cheryl Martos
12,500
12,500
*
25,000
0
0
%
Charles McElheney, IRA
25,000
25,000
*
50,000
0
0
%
James E. Anderson
100,000
100,000
*
200,000
0
0
%
Niamh O.Reilly
75,000
75,000
*
150,000
0
0
%
John D. Marks
50,000
50,000
*
100,000
0
0
%
Timothy Douglas Quartly-Watson
25,000
25,000
*
50,000
0
0
%
Gerald & Janice Johnson, JTWROS
50,000
50,000
*
100,000
0
0
%
Robert A. Kiesz
12,500
12,500
*
25,000
0
0
%
George A. Long, III
25,000
25,000
*
50,000
0
0
%
David Hawks
25,000
25,000
*
50,000
0
0
%
Martha Blackwood Zeh
50,000
50,000
*
100,000
0
0
%
Gurpreet S. Ahluwalia
30,000
30,000
*
60,000
0
0
%
Susan Doukas
25,000
25,000
*
50,000
0
0
%
James Streett
25,000
25,000
*
50,000
0
0
%
Jacques Lee Smith
50,000
50,000
*
100,000
0
0
%
John R. Rogers
30,000
30,000
*
60,000
0
0
%
Joseph Mulieri
25,000
25,000
*
50,000
0
0
%
Elizabeth Burrow Living Trust (33)
25,000
25,000
*
50,000
0
0
%
Susan Loewenstein
12,500
12,500
*
25,000
0
0
%
Becky A. Davis
12,500
12,500
*
25,000
0
0
%
John Sloan Jr., IRA
50,000
50,000
*
100,000
0
0
%
Kerry Staton
100,000
100,000
*
200,000
0
0
%
76
Selling Stockholder
Shares of
Common
Stock Owned
Before this
Offering
Shares of
Common Stock
Underlying
Warrants Owned
Before this
Offering  (1)
Percentage of
Common Stock
Beneficially
Owned Before
this Offering (2)
Shares of
Common
Stock Being
Offered in
this Offering
Shares of
Common
Stock
Owned
After this
Offering (3)
Percentage of
Common Stock
Beneficially
Owned After this
Offering (2)
Philip Stark
25,000
25,000
*
50,000
0
0
%
Thomas J. Minton and Mary Jo R. Minton
25,000
25,000
*
50,000
0
0
%
F. Larry Holcomb
50,000
50,000
*
100,000
0
0
%
JJ2002 Inc. (34)
25,000
25,000
*
50,000
0
0
%
Jason Morjain
12,500
12,500
*
25,000
0
0
%
Robert & Elsie Mathews
12,500
12,500
*
25,000
0
0
%
Leland and Lauren Gershell (35)
25,000
25,000
*
50,000
0
0
%
Cadence Investments III LLLP (27)
10,000
10,000
*
20,000
0
0
%
Cadence Investments IV LLLP (25)
15,000
15,000
*
30,000
0
0
%
Gerard W. Walterhoefer & Nancy Lynn Walterhoefer
12,515
12,515
*
25,030
0
0
%
Bruce Robinson
200,000
200,000
1.16
%
400,000
0
0
%
Nigel Francis Burrow Living Trust (36)
24,500
24,500
*
49,000
0
0
%
JJB GA SF LLC (37)
75,000
75,000
*
150,000
0
0
%
Patrick & Zoe Lynch, JTWROS
50,000
50,000
*
100,000
0
0
%
Mario Cabrera
12,500
12,500
*
25,000
0
0
%
PES Property Corp 401k Profit Sharing Plan (38)
50,000
50,000
*
100,000
0
0
%
Eric Schweiger
10,000
10,000
*
20,000
0
0
%
Cecelia Maben, IRA
12,500
12,500
*
25,000
0
0
%
Geoffrey Poremba, IRA
13,300
13,300
*
26,600
0
0
%
Michael White
25,000
25,000
*
50,000
0
0
%
Edward Karr
8,250
0
*
8,250
0
0
%
Joseph Rudick
0
25,000
*
25,000
0
0
%
WFG Investments, Inc. (39)
0
15,000
*
15,000
0
0
%
Seagate Advisors Inc. (40)
0
15,750
*
15,750
0
0
%
Dawson James Securities, Inc. (41)
60,000
177,973
*
177,973
60,000
*
Thomas Hands
0
31,000
*
31,000
0
0
%
Donald Shek
0
31,000
*
31,000
0
0
%
Tom Curtis
0
34,565
*
34,565
0
0
%
Bret Shapiro
0
26,767
*
26,767
0
0
%
Joseph Balagot
0
16,547
*
16,547
0
0
%
Jonathan Blum
0
148,925
*
148,925
0
0
%
TOTALS:
23,754,664
7,365,292
74.73
%
14,543,807
16,576,149
39.80
%
*
Represents less than 1%.
(1)
Represents shares of our common stock remaining issuable under warrants issued in connection with the 2011 Financing and 2012 Financing. All warrants are immediately exercisable.
(2)
Applicable percentage ownership before the offering is based on 34,278,432 shares of common stock outstanding as of April 25, 2012.  Applicable percentage ownership after the offering is based on 41,643,724 shares of common stock, which includes the 7,365,292 shares of common stock issuable upon exercise of all of the outstanding warrants to purchase common stock registered pursuant to this prospectus.
(3)
Assumes that (i) all of the shares of common stock to be registered on the registration statement of which this prospectus is a part, including all shares of common stock underlying warrants held by the selling stockholders, are sold in the offering and (ii) that no other shares of common stock are acquired or sold by the selling stockholder prior to the completion of the offering. However, subject to the restrictions of transfer agreed to by the selling stockholders (see "Plan of Distribution" in this prospectus), the selling stockholders may sell all, some or none of the shares offered pursuant to this prospectus and may sell other shares of our common stock that they may own pursuant to another registration statement under the Securities Act or sell some or all of their shares pursuant to an exemption from the registration provisions of the Securities Act, including under Rule 144.
77
(4)
Seth Lederman, our chairman and chief executive officer, is the managing member of Targent Pharmaceuticals, LLC and has voting and investment power over the securities owned by it.
(5)
Seth Lederman, our chairman and chief executive officer, is the managing member of Lederman & Co, LLC and has voting and investment power over the securities owned by it.
(6)
John Lemak is the manager of Sandor Capital Master Fund, L.P. and has voting and investment power over the securities owned by it. Mr. Lemak is affiliated with WFG Investments, Inc., a registered broker-dealer.
(7)
John Lemak is the manager of JSL Kids Partners and has voting and investment power over the securities owned by it. Mr. Lemak is affiliated with WFG Investments, Inc., a registered broker-dealer.
(8)
Seth Lederman, our chairman and chief executive officer, is the manager of L&L Technologies, LLC and has voting and investment power over the securities owned by it.
(9)
John Selzer is the brother of Benjamin Selzer, our Chief Operating Officer.  Benjamin Selzer disclaims beneficial ownership of the securities held by John Selzer.
(10)
Stuart Davidson, a member of our board of directors, is a member of Lysander LLC and has voting and investment power over the securities owned by it.
(11)
Ernest Mario is a member of our board of directors.
(12)
Donald W. Landry is a member of our board of directors.
(13)
Charles E. Mather III is the father of Charles E. Mather IV, a member of our board of directors.  Charles E. Mather IV disclaims beneficial ownership of the securities held by Charles E. Mather III.
(14)
Eli Lederman is the brother of Seth Lederman, our chairman and chief executive officer.  Seth Lederman disclaims beneficial ownership of the securities held by Eli Lederman.
(15)
Tara Callen is the trustee of The London Trust and has voting and investment power over the securities owned by it.
(16)
John Rhodes is a member of our board of directors.
(17)
Charles Mather IV is a member of our board of directors.
(18)
Adel Hashad and Farida Hashad are the trustees of the Hashad Family Trust and have voting and investment power over the securities owned by it.
(19)
Colin G. Hames is the Director of Continental Trust Corporation Limited and has voting and investment power over the securities owned by it.
(20)
Charles L. Anderson is the trustee of the CL Anderson and Associates Profit Sharing Plan and has voting and investment power over the securities owned by it.
(21)
David Craven and Geoffrey Long are the Directors of Korrigan AG and have voting and investment power over the securities owned by it.
(22)
Peter Wardenburg is the trustee of Wardenburg Family Trust and has voting and investment power over the securities owned by it.
(23)
Niamh O'Reilly is the Managing Director of WP O'Reilly Associates Ltd. and has voting and investment power over the securities owned by it.
(24)
Arthur Slack is the managing partner of SLMI Holdings LLC and has voting and investment power over the securities owned by it.
(25)
John Rogers is the general partner of Cadence Investments IV, LLLP and has voting and investment power over the securities owned by it.
(26)
Peter Kaplan is the president of Bunker Industries, Inc. and has voting and investment power over the securities owned by it.
(27)
John Rogers is the general partner of Cadence Investments III, LLLP and has voting and investment power over the securities owned by it.
(28)
Donald S. Darendinger is the trustee of the Donald S. Darendinger Revocable Trust and has voting and investment power over the securities owned by it.
(29)
Raymond Tinney is the trustee of the Raymond G. Tinney 1995 Inter Vivos Trust and has voting and investment power over the securities owned by it.
(30)
William S. Atkins and Sally S. Atkins are the trustees of the William S. Atkins Living Trust and have voting and investment power over the securities owned by it.
78
(31)
Carl Erik Mayer is the trustee of the Dr. Carl Erik Mayer Revocable Trust and has voting and investment power over the securities owned by it.
(32)
William and Rosalyn Gershell are the parents of Leland Gershell, our chief financial officer.  Leland Gershell disclaims beneficial ownership of the securities held by William and Rosalyn Gershell.
(33)
Elizabeth Burrow is the trustee of the Elizabeth Burrow Living Trust and has voting and investment power over the securities owned by it.
(34)
Jason Morjian is the president of JJ2002 Inc. and has voting and investment power over the securities owned by it.
(35)
Leland Gershell is our chief financial officer.
(36)
Nigel Burrow is the trustee of the Nigel Burrow Living Trust and has voting and investment power over the securities owned by it.
(37)
John Smithgall is the Co-Manager of JJB GA SF LLC and has voting and investment power over the securities owned by it.
(38)
Peter Subesan is the president of PES Property Corp 401(k) Profit Sharing Plan and has voting and investment power over the securities owned by it.
(39)
Wilson H. Williams is the President and Chief Executive Officer of WFG Investments, Inc. and has voting and investment power over the securities owned by it.
(40)
Mabel Moreno is the President and Owner of Seagate Advisors Inc. and has voting and investment power over the securities owned by it.
(41)
Thomas Hands is the President of Dawson James Securities, Inc. and has voting and investment power over the securities owned by it.
2011 Private Placement
Between October and
November, 2011 we consummated the 2011 Financing pursuant to which we sold $2,075,000 principal amount of Debentures for aggregate
cash proceeds of $1,575,000 and the exchange of $500,000 in previously issued Notes of Tonix Sub that were converted into Debentures
in the principal face amount of $500,000.
Upon conversion or
repayment of the Debenture, the holders were entitled to receive, at the holder's option, either (i) the Conversion Warrant
or (ii) the Incentive Shares. The private placement that closed in January 2012 met the requirements of a Subsequent Financing,
therefore, the holders of the Debentures elected to receive 275,000 Conversion Warrants and 594,000 Incentive Shares. In connection
with the 2011 Financing, we issued the 2011 Agent Warrants.
The Incentive Shares
and shares underlying the Conversion Warrants and 2011 Agent Warrants are registered pursuant to this prospectus.
2012 Private Placement
Between January and
March, 2012, we consummated the 2012 Financing pursuant to which we issued an aggregate of 264.7106 Units.
Each Unit had a purchase
price of $25,000 per Unit and consisted of twenty five thousand (25,000) shares of our Common Stock, 25,000 Class A Warrants and
25,000 Class B Warrants. The Class A Warrants have an exercise price of $1.25 per share of Common Stock and will be exercisable
for a period of five years from the date of issuance. In connection with the 2012 Financing, we issued the 2012 Agent Warrants.
The shares included
in the Units and shares underlying the Class A Warrants and 2012 Agent Warrants are registered pursuant to this prospectus.
79
LEGAL MATTERS
Sichenzia Ross Friedman
Ference LLP, New York, New York will issue an opinion with respect to the validity of the shares of common stock being offered
hereby.
EXPERTS
EisnerAmper LLP, an
independent registered public accounting firm, has audited, as set forth in its report thereon appearing elsewhere herein, our
financial statements at December 31, 2011 and 2010 and for the years then ended that appear in the prospectus. The financial statements
referred to above are included in this prospectus in reliance upon the independent registered public accounting firm's report
on their given authority as experts in accounting and auditing.
AVAILABLE INFORMATION
We have filed a registration
statement on Form S-1 under the Securities Act of 1933, as amended, relating to the shares of common stock being offered by this
prospectus, and reference is made to such registration statement. This prospectus constitutes the prospectus of Tonix Pharmaceuticals
Holding Corp., filed as part of the registration statement, and it does not contain all information in the registration statement,
as certain portions have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission.
We are subject to the
informational requirements of the Securities Exchange Act of 1934 which requires us to file reports, proxy statements and other
information with the Securities and Exchange Commission. Such reports, proxy statements and other information may be inspected
at public reference facilities of the SEC at 100 F Street, N.E., Washington D.C. 20549. Copies of such material can be obtained
from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. Because we file
documents electronically with the SEC, you may also obtain this information by visiting the SEC's Internet website at
http://www.sec.gov
.
80
INDEX TO FINANCIAL STATEMENTS
TONIX PHARMACEUTICALS HOLDING CORP.
INDEX TO FINANCIAL STATEMENTS
For the Years Ended December 31, 2011 and 2010
Report of Independent Registered Public Accounting Firm
F-1
Consolidated balance sheets as of December 31, 2011 and 2010
F-2
Consolidated statements of operations for the years ended December 31, 2011 and 2010 and for the period from June 7, 2007 (date of inception) through December 31, 2011
F-3
Consolidated statements of stockholders' deficiency for the years ended December 31, 2011, 2010, 2009, 2008 and for the period from June 7, 2007 (date of inception) through December 31, 2007
F-4
Consolidated statements of cash flows for the years ended December 31, 2011 and 2010 and for the period from June 7, 2007 (date of inception) through December 31, 2011
F-5
Notes to consolidated financial statements
F-6 to F-16
81
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Tonix Pharmaceuticals Holding Corp.
We have audited the accompanying consolidated
balance sheets of Tonix Pharmaceuticals Holding Corp. (a development stage company) (the "Company") as of December
31, 2011 and 2010, the related consolidated statements of operations and cash flows for the years then ended and for the period
from June 7, 2007 (inception) through December 31, 2011 and the consolidated statements of stockholders' deficiency for each
of the four years in the period ended December 31, 2011 and for the period from June 7, 2007 (inception) through December 31, 2007.
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not
engaged to perform an audit of the Company's internal control over financial reporting. Our audits include consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the consolidated financial position of Tonix Pharmaceuticals Holding
Corp. as of December 31, 2011 and 2010, the consolidated results of its operations and its cash flows for the years ended December
31, 2011 and 2010 and for the period from June 7, 2007 (inception) through December 31, 2011 and consolidated changes in stockholders'
deficiency for each of the four years in the period ended December 31, 2011 and for the period June 7, 2007 through December 31,
2007, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the
Company has incurred recurring net losses and negative cash flows from operations, has both working capital and stockholders' deficiencies
at December 31, 2011 and requires additional financing to fund future operations. These events and conditions, among others referred
to in Note 2, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans concerning
these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/EisnerAmper LLP
EisnerAmper LLP
New York, New York
March 30, 2012
F-
1
TONIX PHARMACEUTICALS HOLDING
CORP.
(Formerly known as Tamandare
Explorations Inc.)
(a development stage company)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2011 AND 2010
2011
2010
ASSETS
Current assets:
Cash
$
41,123
$
65,359
Prepaid expenses
102,430
23,313
Total current assets
143,553
88,672
Furniture and equipment, net
25,550
32,086
Deferred financing costs, net
196,166
-
Restricted cash
60,177
60,087
Security deposit
-
3,156
$
425,446
$
184,001
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable
$
695,198
$
317,745
Accrued expenses
10,229
22,533
Accrued interest, including $5,006 to related parties
38,306
-
Liability to placement agent
31,543
-
Convertible Debentures
150,000
-
Total current liabilities
925,276
340,278
Convertible Debentures, including $265,000 to related parties
1,925,000
-
Deferred rent payable
29,083
19,174
Total liabilities
2,879,359
359,452
Commitments (Note 6)
-
-
Stockholders' deficiency:
Common stock, $0.001 par value; 75,000,000 shares authorized, 27,066,667 and 18,034,483 shares issued and outstanding as of December 31, 2011 and 2010, respectively
27,067
18,035
Additional paid in capital
3,913,700
2,731,081
Deficit accumulated during development stage
(6,394,680
)
(2,924,567
)
Total stockholders' deficiency
(2,453,913
)
(175,451
)
$
425,446
$
184,001
See notes to consolidated financial statements
F-
2
TONIX PHARMACEUTICALS HOLDING
CORP.
(Formerly known as Tamandare
Explorations Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF
OPERATIONS
From June 7, 2007
(date of inception)
Year ended December 31,
Through
2011
2010
December 31, 2011
Costs and expenses:
Research and development
$
1,158,167
$
584,298
$
1,951,954
General and administrative
2,220,361
1,344,390
4,255,247
3,378,528
1,928,688
6,207,201
Operating loss
(3,378,528
)
(1,928,688
)
(6,207,201
)
Gain on extinguishment of debt
-
-
7,908
Interest expense, net
(91,585
)
(35,782
)
(195,387
)
Net loss
$
(3,470,113
)
$
(1,964,470
)
$
(6,394,680
)
Net loss per common share, basic and  diluted
$
(0.16
)
$
(0.18
)
Weighted average common shares outstanding, basic and diluted
21,425,632
11,175,096
See notes to consolidated financial statements
F-
3
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
DEFICIENCY
Deficit
Accumulated
Additional
During
Common stock
Paid in
Development
Shares
Amount
Capital
Stage
Total
Shares issued to founders for intellectual property in June 2007 ($0.15 per share)
589,014
$
589
$
87,161
$
-
$
87,750
Shares issued to bankers for services in June 2007 ($0.15 per share)
65,446
66
9,684
-
9,750
Compensation related to restricted share awards issued to directors in November 2007
-
-
24,187
-
24,187
Net loss
-
-
-
(537,001
)
(537,001
)
Balance at December 31, 2007
654,460
655
121,032
(537,001
)
(415,314
)
Compensation related to cancelled restricted share awards in December 2008
-
-
72,563
-
72,563
Net loss
-
-
-
(202,262
)
(202,262
)
Balance at December 31, 2008
654,460
655
193,595
(739,263
)
(545,013
)
Conversion of senior convertible notes into capital stock in June 2009 ($0.03 per share)
7,200,000
7,200
192,800
-
200,000
Shares issued to directors in July 2009 ($0.15 per share)
31,414
31
4,649
-
4,680
Capital contribution in June 2009
-
-
23,725
-
23,725
Net loss
-
-
-
(220,834
)
(220,834
)
Balance at December 31, 2009
7,885,875
7,886
414,769
(960,097
)
(537,442
)
Conversion of demand notes into capital stock in July 2010 ($0.23 per share)
2,094,547
2,095
477,905
-
480,000
Conversion of accrued interest on demand notes into capital stock in July 2010 ($0.23 per share)
301,430
301
68,777
-
69,078
Issuance of capital stock in August to December 2010 ($0.23 per share)
5,856,005
5,856
1,336,145
-
1,342,001
Shares issued to founders for intellectual property in June 2010 ($0.23 per share)
1,308,921
1,309
294,191
-
295,500
Issuance of restricted shares to directors, employees and consultants in June to November 2010 ($0.24 per share)
587,705
588
139,294
-
139,882
Net loss
-
-
-
(1,964,470
)
(1,964,470
)
Balance at December 31, 2010
18,034,483
18,035
2,731,081
(2,924,567
)
(175,451
)
Vesting and issuance of capital stock in January to September 2011 ($0.23 per share)
2,670,548
2,670
609,330
-
612,000
Vesting and issuance of restricted shares to directors, employees and consultants in February to April  2011 and vesting of restricted shares pursuant to Share Exchange in October 2011
1,961,636
1,962
433,689
-
435,651
Common stock issued in connection with the share exchange transaction in October 2011
4,000,000
4,000
(4,000
)
-
-
Common stock issued in October 2011 in exchange for services rendered ($0.36 per share)
400,000
400
143,600
-
144,000
Net loss
-
-
-
(3,470,113
)
(3,470,113
)
Balance at December 31, 2011
27,066,667
$
27,067
$
3,913,700
$
(6,394,680
)
$
(2,453,913
)
See notes to consolidated financial statements
F-
4
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
From June 7, 2007
(date of inception)
Year ended December 31,
Through
2011
2010
December 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(3,470,113
)
$
(1,964,470
)
$
(6,394,680
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
9,300
3,854
17,312
Amortization of deferred financing costs
53,377
-
53,377
Common stock issued in exchange for intellectual property
-
295,500
383,250
Stock based compensation
435,651
139,882
686,713
Gain on extinguishment of debt
-
-
(7,908
)
Changes in operating assets and liabilities:
Prepaid expenses
(79,117
)
(19,315
)
(102,430
)
Accounts payable
377,453
294,132
695,198
Accrued interest
38,306
32,691
38,306
Accrued expenses
(12,304
)
(34,789
)
110,940
Deferred rent payable
9,909
19,174
29,083
Net cash used in operating activities
(2,637,538
)
(1,233,341
)
(4,490,839
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment
(2,764
)
(34,279
)
(42,862
)
Repayment of security deposit
3,156
-
-
Payment of restricted cash
(90
)
(60,087
)
(60,177
)
Net cash provided by (used in) investing activities
302
(94,366
)
(103,039
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from demand notes
-
50,000
480,000
Proceeds from notes payable
500,000
-
700,000
Proceeds from Convertible Debentures
1,501,000
-
1,501,000
Proceeds from the sale of capital stock
612,000
1,342,001
1,954,001
Net cash provided by financing activities
2,613,000
1,392,001
4,635,001
Net (decrease) increase in cash
(24,236
)
64,294
41,123
Cash, beginning of the period
65,359
1,065
-
Cash, end of period
$
41,123
$
65,359
$
41,123
Non cash investing and financing activities:
Senior convertible notes exchanged for preferred shares
$
-
$
200,000
$
200,000
Capital contribution of accrued interest on convertible notes
$
-
$
-
$
23,725
Demand notes together with accrued interest converted into capital stock
$
-
$
549,078
$
549,078
Common stock issued for deferred financing costs
$
144,000
$
-
$
144,000
See notes to consolidated financial statements
F-
5
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010
NOTE 1 –BUSINESS AND RECAPITALIZATION
Tonix Pharmaceuticals Holding Corp. through
its wholly owned subsidiary Tonix Pharmaceuticals, Inc. is attempting to develop safer and more effective versions of widely prescribed
central nervous system ("CNS") drugs. While some new applications can use the commercially available form of the drug,
in other cases reformulating the active ingredient improves its safety or effectiveness in treating the CNS condition. When formal
development programs have proven successful in clinical tests, Tonix Pharmaceuticals, Inc. intends to seek marketing approval from
the Food and Drug Administration ("FDA").
On August 16, 2010, Tonix Pharmaceuticals,
Inc. formed Krele LLC ("Krele") in the state of Delaware. Krele is a limited liability corporation whose sole member
is Tonix Pharmaceuticals Inc. Krele was established to commercialize products that are generic versions of predicate new drug application
products or versions of drug efficacy study implementation products. The Company expects that its relationship to Krele will be
similar to that of several other pharmaceutical companies and their subsidiaries that market generic versions of the parent's branded
products at different periods in their product life-cycle.
On October 7, 2011, Tonix Pharmaceuticals, Inc. (formerly Krele
Pharmaceuticals, Inc. incorporated on June 7, 2007 in the State of Delaware) and a publicly traded non-operating shell company
Tamandare Explorations Inc. ("Tamandare"), incorporated under the laws of the State of Nevada, along with certain other
parties executed and consummated a share exchange agreement (the "Share Exchange"). Pursuant to the Share Exchange,
each share of Tonix Pharmaceuticals Inc.'s common stock was exchanged for 0.9 shares of Tamandare's common stock and
each share of Tonix Pharmaceuticals, Inc.'s Series A and B preferred stock was exchanged for 4.8 shares of Tamandare's
common stock. Upon completion of the Share Exchange, the Tonix Pharmaceuticals, Inc. shareholders, including holders of restricted
shares, which were subject to accelerated vesting, received in exchange for all of their shares, an aggregate of 22,666,667 shares
of Tamandare's common stock and Tamandare's existing stockholders retained 4,000,000 shares of common stock. The 22,666,667
shares issued to the Tonix Pharmaceuticals, Inc. shareholders constituted approximately 85% of Tamandare's 26,666,667 issued
and outstanding shares of common stock after the Share Exchange. Upon completion of the Share Exchange, Tonix Pharmaceuticals,
Inc. became Tamandare's wholly-owned subsidiary and in October 2011 Tamandare was renamed Tonix Pharmaceuticals Holding Corp.
As the owners and management of Tonix Pharmaceuticals, Inc. obtained voting and operating control of Tamandare after the Share
Exchange and Tamandare was non-operating, had no assets or liabilities and did not meet the definition of a business, the transaction
has been accounted for as a recapitalization of Tonix Pharmaceuticals, Inc., accompanied by the issuance of its common stock for
outstanding common stock of Tamandare, which was recorded at a nominal value. The accompanying financial statements and related
notes give retroactive effect to the recapitalization as if it had occurred on June 7, 2007 (inception date) and accordingly all
share and per share amounts have been adjusted.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation:
The consolidated financial statements include
the accounts of Tonix Pharmaceuticals Holding Corp. and its wholly owned subsidiaries, Tonix Pharmaceuticals, Inc. and Krele
LLC (hereafter referred to as the "Company" or "Tonix"). All significant intercompany balances and transactions
have been eliminated in consolidation.
As the Company is devoting substantially
all of its efforts to establishing a new business, and while planned principal operations have commenced, there has been no revenue
generated from sales, license fees or royalties, the Company is considered a development stage enterprise. Accordingly, the Company's
consolidated financial statements are presented in accordance with authoritative accounting guidance related to a development stage
enterprise. Financial position, results of operations and cash flows of a development stage enterprise are presented in conformity
with generally accepted accounting principles that apply to established operating enterprises.
F-
6
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010
As a development stage enterprise, the
Company's primary efforts are devoted to conducting research and development for the treatment of CNS diseases. The Company has
experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the
foreseeable future. In addition, the Company has both working capital and stockholders' deficiencies at December 31, 2011
and requires additional financing to fund future operations. Although, in the first quarter of 2012, the Company raised approximately
$4,700,000 (see Note 11), it's expected that cash used in operations will increase significantly over the next several years.
The Company intends to raise additional capital to complete the development and commercialization of its current product candidates
through equity or debt financing; however the Company does not have any commitments or definitive or binding arrangements for such
funds. There can be no assurance that such funds, if available at all, can be obtained on terms reasonable to the Company. If the
Company is unsuccessful in raising additional capital it will need to reduce costs and operations substantially. Further, the Company
does not have any commercial products available for sale and has not generated revenues and there is no assurance that if 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 approved or
commercially viable.
The above factors raise substantial doubt
as to the Company's ability to continue as a going concern. The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern and do not include any adjustments that may result from the outcome
of this uncertainty.
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 and assumptions used in the fair value of stock-based
compensation.
Research and Development costs
The Company outsources its research and
development efforts and expenses 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 in 2007 and 2010 as research and development costs, as it related to particular research and development
projects and had no alternative future uses.
Reclassifications
The accompanying 2010 financial statements
together with cumulative amounts from inception have been reclassified to allocate professional services expenses to research and
development and general and administrative expenses to be consistent with current year presentation.
Furniture and equipment
Furniture 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 and five years for furniture and all other equipment. Expenditures for maintenance and
repairs are expensed as incurred.
Income taxes
Deferred income tax assets and liabilities
are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences
between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted
tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is not more likely than
not that these deferred income tax assets will be realized.
The Company recognizes a tax benefit from
an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities,
based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a
position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
As of December 31, 2011 and 2010, the Company has not recorded any unrecognized tax benefits.
F-
7
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010
Stock-based compensation
All stock-based payments to employees and
to nonemployee directors for their services as directors, including grants of restricted stock 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 vesting 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.
Per share data:
Basic and diluted net loss per common share
is calculated by dividing net loss, by the weighted average number of outstanding shares of common stock, adjusted to give effect
to the exchange ratio in the Share Exchange in October 2011 (see Note 1), which was accounted for as recapitalization of the Company.
In October 2011, upon completion of the
share exchange referred to above, the Company issued Convertible Debentures in the amount of $2,075,000 which as of December 31,
2011 were convertible into approximately 3,985,000 common shares. In computing diluted net loss per share, no effect has been given
to such shares as their effect would be antidilutive. See Notes 5 and 10 for subsequent issuance of securities.
NOTE 3 – FURNITURE AND EQUIPMENT
Furniture and equipment as of December
31, 2011 and 2010 is summarized as follows:
2011
2010
Office furniture and equipment
$
42,862
$
40,098
Less:  accumulated depreciation
(17,312
)
(8,012
)
$
25,550
$
32,086
Depreciation expense for the years ended December 31, 2011 and
2010 was $9,300 and $3,854, respectively.
NOTE 4 - RESTRICTED CASH
Restricted cash at December 31, 2011 and
2010 collateralizes a letter of credit in the amount of approximately $60,000 issued in connection with the lease of office space
in New York City (see Note 6).
NOTE 5 - CONVERTIBLE DEBENTURES
On October 7, 2011, concurrently with the
Share Exchange, the Company issued secured Convertible Debentures ("Convertible Debentures") in the amount of $1,625,000
of which $1,125,000 were sold to certain investors for aggregate cash proceeds of $1,065,000, net of selling commissions to a placement
agent of $40,000 and $20,000 of legal fees, and $500,000 were exchanged for 8% Notes Payable ("Notes Payable") issued
on September 9, 2011. In addition, 400,000 shares of common stock with the fair market value of $144,000 were issued to a second
placement agent. On November 16, the Company issued Convertible Debentures in the amount of $450,000 for aggregate cash proceeds
of $436,000, net of selling commissions to a third placement agent of $14,000.
F-
8
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010
The Convertible Debentures mature on the
earlier of (i) one year from the date of issuance or (ii) the date of closing of a private placement of equity, equity equivalent,
convertible debt or debt financing in which the Company receives gross proceeds, in one or more transactions, of at least $3,425,000
(a "Subsequent Financing"). The Convertible Debentures bear interest at 8% per annum and are convertible at the holder's
option into a Subsequent Financing. In the event that a Subsequent Financing has not occurred within 12 months from the date of
issuance of the Convertible Debentures, the holder has the option to convert into a number of shares of the Company's common stock
equal to 1% of the Company's shares of common stock on a fully diluted basis for every $125,000 of Convertible Debentures (the
"Conversion Shares") or an aggregate of approximately 3,985,000 shares based on the outstanding shares of the Company
common stock as of December 31, 2011. A Subsequent Financing comprised of Units consisting of common stock and warrants took place
on January 20, 2012 and $1,925,000 of debentures were exchanged for Units (see Note 10). The remaining $150,000 of debentures were
repaid. As a result of the exchange, $1,925,000 principal amount of debentures are classified as a non-current liability in the
accompanying balance sheet at December 31, 2011.
Upon conversion or repayment of the Convertible
Debenture, the holder is entitled to receive, at the holder's option, either (i) a warrant (the "Warrant"), which
has a three year term and is exercisable at the offering price in a Subsequent Financing, to purchase such number of shares of
the Company's common stock equal to the principal amount of the Convertible Debenture divided by the offering price in a Subsequent
Financing, (the "Warrant Shares") or (ii) shares of the Company's common stock equal to 33% of the principal amount
of the Debenture divided by the offering price in a Subsequent Financing (the "Incentive Shares"). The value of the
Warrant Shares or Incentive Shares will be measured and number of such shares determined upon occurrence of any Subsequent Financing.
The Conversion Shares, Warrant Shares and Incentive Shares are entitled to piggyback registration rights. Upon the Subsequent Financing
on January 20, 2012, the holders $1,925,000 principal amount of Convertible Debentures elected to receive 250,000 Warrants exercisable
at $1 per share and 536,250 Incentive Shares, and holders of the remaining $150,000 principal amount of Convertible Debentures,
which were redeemed, received 25,000 Warrants exercisable at $1 per share and 57,750 Incentive Shares. The value of the Warrants
and Incentive Shares will be charged to operations in the first quarter of 2012.
In addition to selling commissions paid
to the placement agents on the sale of certain Convertible Debentures, the placement agents received warrants which expire in October
2013 and November 2013, respectively, and are exercisable at the offering price in a Subsequent Financing to purchase shares of
the Company's common stock equal to 3% and 9%, respectively, of the gross proceeds delivered by purchasers introduced by such placement
agents divided by the purchase price per share in the Subsequent Financing. In the event that the Subsequent Financing has not
occurred within 12 months from the date of issuance of the Convertible Debentures, the placement agents will receive, in lieu of
the warrants, shares of common stock equal to 3% and 9%, respectively, of the number of shares of the Company's common stock such
purchasers are entitled to receive upon conversion of their Convertible Debentures or an aggregate of approximately 88,000 shares
based on the outstanding shares of the Company's common stock as of December 31, 2011. The Company recognized a liability to placement
agents to issue shares of its common stock based on their fair value of approximately $32,000 as of December 31, 2011. Upon the
Subsequent Financing on January 20, 2012, the placement agents become entitled to receive 30,750 warrants exercisable at $1.00
per share.
The following expenses in connection with
the issuance of Convertible Debenture are recorded as deferred financing costs: fair value of 400,000 shares of the Company's
common stock issued to the placement agent valued at $144,000, cash payments to the placement agents of $54,000, legal expenses
of $20,000 and fair value of the liability to placement agent to issue the Company's shares of common stock in the amount
of $32,000. The deferred financing costs are being amortized using the effective interest method over the twelve month term of
the Convertible Debentures. During the year ended December 31, 2011, amortization of deferred financing costs amounted to approximately
$53,000 and charged to interest expenses in the statement of operations. The unamortized balance will be charged to operations
in connection with the extinguishment of the debentures resulting from their exchange for the Units and repayment in 2012.
Pursuant to a Pledge and Security Agreement
and Subsidiary Guaranty, the Company granted the Debenture holders a first priority lien on all its assets.
NOTE 6 - COMMITMENTS
Operating leases
On September 28, 2010, the Company entered
into a five-year lease for office space in New York City, with monthly payments escalating from approximately $10,000 in first
year to approximately $11,000 in fifth year. The Company received a rent credit of $9,420 in each of the months of November 2010,
December 2010 and January 2011. The Company has posted a letter of credit in the amount of approximately $60,000 for the benefit
of the landlord which is collateralized by a money market account (see Note 7 - Restricted Cash).
F-
9
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010
Future minimum lease payments under the operating lease are
as follows:
Year Ending December 31,
2012
$
124,370
2013
127,889
2014
131,513
2015
100,719
$
484,491
Rent expense charged to operations, which
differs from rent paid due to the rent credits and to increasing amounts of base rent, is calculated by allocating total rental
payments on a straight-line basis over the term of the lease. During the years ended December 31, 2011 and 2010, rent expense was
$128,228 and $42,570, respectively and as of December 31, 2011 and 2010 deferred rent payable was $29,083 and $19,174, respectively.
The Company utilized office space in New York City provided by founders without remuneration until October 2010.
Consulting agreements
In June 2010, the Company entered into
a two-year consulting agreement with L&L Technologies, an entity controlled by a member of the Company's Board of Directors,
for scientific and medical consulting services. In consideration for such services, L&L Technologies will receive $96,000 per
annum and 1,026,194 shares of restricted common stock which were granted at the inception of the agreement. The consulting agreement
renews automatically for subsequent terms of one year at $96,000 per annum. The restricted shares vest as follows: 25% on the grant
date (June 4, 2010) and 25% on each of the first and second annual anniversaries of the grant date and, if the consulting agreement
is renewed, 25% on the third anniversary of the grant date. Vesting of the unvested 513,097 restricted shares accelerated on October
7, 2011, the date of the Share Exchange.
In June 2010, the Company entered into
a two-year consulting agreement with Lederman & Co., an entity controlled by a member of the Company's Board of Directors,
for clinical development, strategic, management and operational consulting services. In consideration for such services, Lederman
& Co. will receive $250,000 per annum and 261,784 shares of restricted common stock which were granted at the inception of
the agreement. The consulting agreement renews automatically for subsequent terms of one year at $250,000 per annum. The restricted
shares vest as follows: 20% on the grant date (June 4, 2010) and 20% on each of the first and second anniversaries of the grant
date and, if the consulting agreement is renewed, 20% on each of the third and fourth anniversaries of the grant date. Vesting
of the unvested 157,087 restricted shares accelerated on October 7, 2011, the date of the Share Exchange.
In June 2010, the Company entered into
an agreement with Burns McClellan, Inc. to provide media and investor relations services, including preparation of investor presentations
and press releases, media outreach and training and investor targeting and introductions, for a fee of $20,000 per month, plus
expenses. The agreement was terminated in January 2011.
In October 2010, the Company entered into
an agreement with Frost & Sullivan to prepare an assessment of the U.S. fibromyalgia market, including current market size
and historical and projected growth rates, as well as a formal presentation supporting their findings for a fee of $109,400, all
of which was recognized in 2010.
In July 2011, the Company entered into
an agreement with Catalent Pharma Solutions, LLC to investigate, for $58,080, the feasibility of developing the active pharmaceutical
ingredient ("API") used in TNX-102, one of the Company's product candidates, for use in a new, proprietary formulation
In August 2011, the Company entered into
an agreement with Porter, LeVay & Rose, Inc. to provide media and investor relations services, including preparation of investor
presentations and press releases, media outreach and training and investor targeting and introductions, for a fee of $12,000 per
month, plus expenses.  Also in August 2011, the Company entered into an agreement with JFC Technologies, LLC ("JFC")
for product development work for an initial fee of $75,000, of which $35,000 was paid upon signing. In September 2011, JFC was
acquired by Cyalume Specialty Products, Inc. ("Cyalume") and the Company's agreement was transferred to Cyalume.  Additionally,
in August 2011 the Company authorized the initiation of stage 2 work pursuant to a contract with Lipocine Inc. with respect to
a research and development project for reformulation work on TNX-102 for a fee of $235,000, which work started in the third quarter
of 2011.
F-
10
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010
In September 2011, the Company entered
into two contracts with Pharmanet Canada for contract research work with respect to the development of methods to measure the active
ingredient of TNX-102 in blood and urine. The full cost of the work to be performed is approximately $90,000.  Payment
is due in three installments based on the achievement of certain performance milestones. Also, in September 2011, the Company entered
into a contract with Pharmanet Canada for contract research work with respect to the pharmacokinetic study for TNX-102. The full
cost of the work to be performed is $637,231.  Payment is due in four installments based on the achievement of certain
performance milestones.
In October 2011, the Company entered into
an agreement with Applied Pharma Research to develop, and perform an exploratory pharmacokinetic study on a new formulation of
the API used in TNX-102 for an approximate cost of $180,000.
Employment agreements
In 2010, the Company entered into employment
agreements with the Chief Operating Officer and the Vice President of Marketing which expire in August 2012 and June 2012, respectively.
Under the terms of the employment agreements, the Chief Operating Officer and the Vice President of Marketing shall receive annual
base compensation of $250,000 and $150,000, respectively, which shall be adjusted to $320,000 and $200,000, respectively, or such
other rate as the Board may designate from time to time, upon completion of an initial public offering with net proceeds of at
least $15,000,000. The agreements will be automatically renewed for additional one-year periods (the "Renewal Terms")
unless either party notifies the other in writing of its intention not to renew within 90 days prior to the expiration of
the Initial Term or any Renewal Terms. Upon termination without cause, as defined in the agreements, the executives will continue
to receive compensation for up to nine months if termination is in connection with or following an initial public offering.
In February 2011, the Company entered into
an employment agreement with the Chief Business Officer which expires in February 2013. Under the terms of the employment agreement,
the Chief Business Officer shall receive annual base compensation of $150,000 which shall increase, with a retroactive adjustment,
upon the completion of an underwritten public offering, as defined, or certain other events. The employment agreement will be automatically
renewed for additional renewal terms unless either party notifies the other in writing of its intention not to renew within 90
days prior to the expiration of the initial term or any renewal terms. Upon termination without cause, as defined in the employment
agreement, the Chief Business Officer will continue to receive compensation for six months, or nine months if termination is in
connection with or following certain events.
In April 2011, the Company terminated existing
employment agreements with the three executive employees referred to in the first two paragraphs above and entered into new employment
agreements which stipulate such employees will receive minimum wage salary ($7.25 per hour) for a 40 hour week until the Company
receives new capital of at least $500,000 through the sale of equity securities. The expiration dates of the new agreements remain
the same as the terminated agreements. In addition, the Chief Business Officer assumed the title of Chief Operating Officer and
the Chief Operating Officer assumed the title of Chief Financial Officer and Chief Administrative Officer and the Vice President
of Marketing assumed the title of Vice President of Strategy. Upon receipt of $500,000 or more in new capital, the employees will
receive a lump sum payment in the amount of $50,000 each for the Chief Operating Officer and Chief Financial Officer and $30,000
for the Vice President of Strategy. Further, base salaries for all three employees will be increased with a retroactive adjustment
upon the completion of an underwritten offering, as defined, or certain other events. All other terms remain the same.  In
October 2011, the position of Vice President of Strategy was eliminated and the employment agreement was terminated. In conjunction
with this event, the Company paid $37,500 in December 2011 in exchange for the release from future obligations. In February 2012,
the Company terminated its employment agreement with its Chief Financial Officer and in accordance with the agreement paid such
officer approximately $88,000.
In July 2011, the Company entered into
agreements with the executive employees to defer payment of the lump sum amounts referred to above until the closing of a private
placement of securities, as defined.  In addition, salaries of the Chief Financial Officer and Chief Operating Officer
were adjusted to $175,000 per annum effective August 2011. The salary of the Chief Operating Officer shall increase to $250,000
per annum on the first anniversary of the Share Exchange provided that the Company has raised at least $500,000 in additional equity
securities.
F-
11
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010
NOTE 7 - INCOME TAXES
There is no provision for federal or state
income taxes for the years ended December 31, 2011 and 2010 since the Company has established a valuation allowance equal
to the total deferred tax asset related to losses incurred during such periods.
Deferred tax assets and liabilities and
related valuation allowance as of December 31, 2011 and 2010 are as follows:
December 31,
2011
2010
Deferred tax assets:
Organization costs
$
733
$
2,494
Research and development credit carryforward
6,188
6,188
Net operating loss carryforwards
2,329,829
1,107,688
Other
132,482
121,091
Total deferred tax assets
2,469,232
1,237,461
Deferred tax liabilities:
Restricted stock compensation(1)
-
(148,871
)
Net deferred tax assets
2,469,232
1,088,590
Valuation allowance
(2,469,232
)
(1,088,590
)
Net deferred tax assets
$
0
$
0
(1)  Relates
to restricted stock grants for which Internal Revenue Code ("IRC") Section 83(b) elections were filed in 2010, resulting
in tax deductions in excess of related compensation expense for financial reporting purposes in 2010.
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 not more likely
than not that the deferred tax assets will be realized and, accordingly, has provided a valuation allowance. The increase in the
valuation allowance for the years ended December 31, 2011 and 2010 was $1,380,642 and $783,696, respectively.
At December 31, 2011, the Company
has available unused net operating loss carryforwards of approximately $5.8 million that expire from 2027 to 2031 for federal tax
purposes and the same amount for New Jersey state tax purposes, which expire from 2014 to 2018. The Company also has approximately
$3 million of net operating loss carryforwards for New York state purposes expiring in 2031. These net operating loss carryforwards
may be subject to annual limitations in their use in accordance with IRC Section 382. Accordingly, the extent to which the net
operating loss carryforwards can be used to offset future taxable income may be limited. At December 31, 2011, the Company has
a research and development credit carryforward of $6,188 for federal tax purposes that expires in 2027.
The Company's federal and state tax returns
remain open and subject to examination by the tax authorities for the tax years 2008 and 2007, respectively through 2011.
A reconciliation of the effect of applying
the federal statutory rate and the effective income tax rate used to calculate the Company's income tax provision is as follows:
F-
12
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010
Year Ended
December 31,
2011
2010
Statutory federal income tax
(34.0
)%
(34.0
)%
State income tax, net of federal tax effect
(5.9
)%
(5.9
)%
Permanent difference
0.0
%
5.0
%
Increase in valuation allowance
39.9
%
34.9
%
Income tax provision
0
%
0
%
NOTE 8 – STOCK PLAN
In June and August 2010, respectively,
the board of directors and stockholders of Tonix Pharmaceuticals, Inc. approved, and in December 2010 and February 2011, the board
of directors amended, the terms and provisions of the 2010 Stock Plan ("Plan") whereby the Company reserved 4,564,641
shares of its Common Stock for issuance pursuant to the Plan. The Plan allowed for grants of options to purchase shares of Common
Stock and awards of restricted Common Stock to employees, officers, directors, consultants and advisors of the Company.
In 2010, the Company granted shares of
restricted Common Stock under the Plan to employees ("Employee Granted Shares") as follows: 196,359 shares to the Chief
Operating Officer, 109,088 shares to the Vice President of Clinical Development, 130,906 shares to the Vice President of Marketing
and 196,359 shares to the Chief Medical Officer. Employee Granted Shares vest: 20% on the grant date and 20% on each of the first,
second, third and fourth anniversaries of the grant date. Upon termination of the Chief Medical Officer's employment with Tonix,
157,087 unvested shares held by him were forfeited and he retained 39,272 shares of fully vested Common Stock. Upon termination
of the Vice President of Clinical Development's employment with Tonix, 87,270 unvested shares held by him were forfeited and he
retained 21,818 shares of fully vested Common Stock.
In 2010, the Company granted 1,288,112
shares of restricted Common Stock under the Plan to consultants.
In 2010, the Company granted 556,786 shares
of restricted Common Stock under the Plan to directors and also granted 52,362 shares of restricted Common Stock under the Plan
to members of the Scientific Advisory Board which vest: 25% on the grant date and 25% on each of the first, second and third anniversaries
of the grant date.
In February 2011, the Company granted shares
of restricted Common Stock to employees as follows: 196,359 shares to the Chief Business Officer and 130,906 shares to the incoming
President of Krele. The shares vest: 20% on the grant date and 20% on each of the first, second, third and fourth anniversaries
of the grant date. In August 2011, upon resignation of the President of Krele, 104,725 unvested shares were forfeited.
In March and April 2011, the Company granted
19,636 and 21,818 shares of restricted Common Stock, respectively, to newly appointed members of the Scientific Advisory Board
and the Board of Directors which vest: 25% on the grant date and 25% on each of the first, second and third anniversaries of the
grant date.
Following is a summary of the status of
the Company's nonvested restricted stock as of December 31, 2011 and the changes during the years 2010 and 2011:
F-
13
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010
Weighted
Number of
Average
Restricted
Grant-Date
Nonvested Restricted Stock
Shares
Fair Value
Nonvested at January 1, 2010
Granted
2,529,971
$
0.23
Vested
(587,767
)
$
0.23
Forfeited
(244,357
)
$
0.23
Nonvested at December 31, 2010
1,697,847
$
0.23
Granted
368,718
$
0.23
Vested prior to Share Exchange
(564,858
)
$
0.23
Vested pursuant to Share Exchange
(1,396,982
)
$
0.23
Forfeited
(104,725
)
$
0.23
Nonvested at December 31, 2011
0
$
0
Restricted stock is not considered to be issued until the stock
vests.
The Company recognized share-based compensation
expense of $139,063 prior to Share Exchange and remaining expense of $296,588 was recognized on October 7, 2011, the date of Share
Exchange, upon which all nonvested restricted shares vested and the Plan ceased to exist. Stock based compensation expense for
the year ended December 31, 2010 was $139,882.
NOTE 9 - RELATED PARTY TRANSACTIONS
Dr. Seth Lederman and Dr. Donald Landry
are primary founders of the Company and serve on the board of directors. They have entered into various transactions with the Company
through several companies under their control, including L&L Technologies and Lederman & Co as described in Note 6.
D
uring
2007, the Company issued senior convertible promissory notes (the "Senior Convertible Notes") pursuant to the Note Purchase
Agreements among the Company and National Holdings Corporation, Lederman & Co., LLC, Eli Lederman PhD and Dr. Seth Lederman,
all but one of whom are direct or indirect stockholders of the Company (collectively referred to herein as the "Noteholders"),
in the amount of $50,000 per Senior Convertible Note, or $200,000 in the aggregate. The Senior Convertible Notes bore interest
at the rate of 8% per annum and were payable together with the interest accrued thereon on the two year anniversary of the Senior
Convertible Notes. The outstanding principal and interest accrued thereon were to be automatically converted into fully paid shares
of capital stock upon the closing of a Qualified Financing of capital stock or securities convertible into preferred stock which
resulted in gross proceeds of at least $2,000,000.
In June 2009, although a Qualified Financing
had not occurred, the Noteholders agreed to exchange the Senior Convertible Notes for shares of capital stock of the Company at
the rate of one share of capital per $0.13 of the outstanding principal balance of such notes. The accrued interest on the notes
in the amount of $31,633 was forgiven. The excess of the carrying value of the notes including accrued interest over the fair value
of the capital stock for which they were exchanged amounted to $31,633 of which $23,725, representing the excess related to the
Noteholders who are direct or indirect stockholders, has been accounted for as a capital contribution and credited to additional
paid-in capital and the remaining $7,908 was recorded as a gain on extinguishment of debt. Interest expense relating to the Senior
Convertible Notes for the year ended December 31, 2009 was $8,044.
In 2007, Lederman & Co. loaned the
Company $10,000. On December 19, 2008, the Company issued to Lederman & Co. a demand note in the amount of $280,000, which
included new cash proceeds of $270,000 as well as the amount loaned in 2007, with interest accruing on the total demand note balance
commencing December 19, 2008. On December 7, 2009, the Company borrowed an additional $150,000 from Lederman & Co. and issued
a demand note. The principal balance of the demand notes outstanding as of December 31, 2009 was $430,000 with accrued interest
owed at December 31, 2009 of $36,387. On March 5, 2010, the Company issued to Dr. Donald Landry a demand note in the amount
of $50,000. The demand notes accrue interest at the rate of 12% per annum.
F-
14
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010
On July 30, 2010, the demand notes and
all interest accrued thereon were converted into shares of capital stock. Demand notes held by Lederman & Co. totaling $430,000
and accrued interest thereon of $66,629 were converted into 2,166,444 shares of capital stock, at a conversion price of $0.23 per
share of capital stock. The demand note held by Donald Landry totaling $50,000 and accrued interest thereon of $2,449 was converted
into 228,835 shares of capital stock, at a conversion price of $0.23 per share of capital stock.
On September 9, 2011, the Company sold
$500,000 principal amount of 8% convertible notes (the "Notes") to members of the board of directors and their related
parties. The Notes were due one year from the date of issuance, and were exchangeable for a future financing (the "New Financing")
at the option of the holders. Interest is payable on either the maturity date or on the date the Notes are exchanged into the New
Financing, or such accrued interest can be converted into the New Financing. On October 7, 2011, the Notes were exchanged into
debentures issued by the Company concurrently with the Share Exchange (see Note 5).
Interest expense on the demand notes for
the years ended December 31, 2010 and 2009 was $32,691 and $35,267, respectively.
NOTE 10 - SUBSEQUENT EVENTS
The Company amended and restated its Bylaws
and Articles of Incorporation on February 16, 2012 and among other changes, increased the number of authorized shares of common
stock, $0.001 par value to 150,000,000. Additionally, the Company is now authorized to issue 5,000,000 shares of preferred stock,
$0.001 par value with such designations, references and participating, optional or other special rights and qualifications, limitations
or restrictions thereof as shall be determined by the Company's Board of Directors.
On February 12, 2012 the Company's
Board of Directors approved the 2012 Incentive Stock Options Plan (the "Plan"). The Plan provides for the issuance
of options to purchase up to 4,000,000 shares of the Company's common stock to officers, directors, employees and consultants
of the Company. Under the terms of the Plan the Company may issue Incentive Stock Options as defined by the Internal Revenue Code
to employees of the Company only and nonstatutory options. The Board of Directors of the Company determines the exercise price,
vesting and expiration period of the grants under the Plan. However, the exercise price of an Incentive Stock Option should not
be less than 110% of fair value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair value
for a grantee who is not 10% stockholder. 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
Plan should not be more than five years and expiration period not more than ten years. The Company reserved 4,000,000 shares of
its common stock for future issuance under the terms of the Plan.
Subsequent financing
On January 20, 2012, the Company issued
an aggregate of 172.118 units ("Units") to certain investors (the "Purchasers") for aggregate cash proceeds
of $2,377,950 and $1,925,000 in previously issued Convertible Debentures of the Company that were exchanged for Units (the "Financing").
On March 1, 2012, the Company issued an aggregate of 92.5926 units to certain investors for aggregate cash proceeds of $2,314,815.
Each Unit had a purchase price of $25,000
per Unit and consisted of twenty five thousand (25,000) shares of the Company's common stock, a Class A Warrant to purchase
twenty five thousand (25,000) shares of Common Stock (the "Class A Warrants"), and a Class B Warrant to purchase up
to twenty five thousand (25,000) shares of Common Stock (the "Class B Warrants" and together with the Class A Warrants,
the "Warrants").
The Class A Warrants have an exercise price
of $1.25 per share of common stock and will be exercisable for a period of five years from the date of issuance. The Class B Warrants
are exercisable automatically on their expiration date by cashless exercise or expire without exercise. In the event that the average
of the Company's daily volume weighted average price is below $0.75 during the 10 trading days after the Announcement Date
(as hereinafter defined) (the "Measuring Period"), then the holder will be entitled to receive additional shares of
the Company's Common Stock upon the exercise of the Class B Warrants on the expiration date, which is the 12
th
trading day after the Announcement Date. In the event that the Company's average daily volume weighted average price is at
or above $0.75 during the Measuring Period, the Class B Warrants will expire unexercised. The Announcement Date is the earlier
of (1) the date on which the Company announces via press release the results of the pharmacokinetic study of its TNX-102 drug formulation;
or (2) June 1, 2012.
F-
15
TONIX PHARMACEUTICALS HOLDING CORP.
(Formerly known as Tamandare Explorations
Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010
In connection with the Financing, the Company
paid a placement agent (the "Agent") an aggregate cash payment of $466,777, which represented an 8% commission and
a 2% non-accountable expense allowance of the gross proceeds delivered by Purchasers in the Financing. In addition, the Agent earned
warrants to purchase shares of Common Stock equal to 10% of the gross proceeds delivered by Purchasers in the Financing (the "Agent
Warrants"), which have an exercise price of $1.25 per share of common stock, exercisable for a period of seven years, contain
customary anti-dilution protection and are entitled to piggy-back registration rights.
Pursuant to the Warrants, no Purchaser
may exercise such Purchaser's Warrant if such exercise would result in the Purchaser beneficially owning in excess of 4.99%
of the Company's then issued and outstanding common stock. A Purchaser may, however, increase or decrease this limitation
(but in no event exceed 9.99% of the number of shares of Common Stock issued and outstanding) by providing the Company with 61
days' notice that such holder wishes to increase or decrease this limitation.
In connection with the Financing, the Company
entered into a Registration Rights Agreements with Purchasers.  The Company is required to file a registration statement
registering for resale the common stock included in the Units and the common stock underlying the Warrants and the Agent Warrants
to be filed no later than 60 days from the date of termination of the Financing on March 1, 2012 and must be declared effective
no later than 120 days from the date of termination of the Financing (June 29, 2012).  The Company is required to maintain
the effectiveness of the registration statement from its effective date unless all securities registered under the registration
statement have been sold or are otherwise able to be sold.  If the Company fails to comply with the registration statement
filing or effective date requirements, the Company is required to pay the investors a fee equal to 1.0% of the Purchaser's
investment, for each 30-day period of delay, subject to a maximum payment of 10% to each Purchaser.
The Company determined the offering price
for the purpose of calculation of number of Warrants or Incentive Share to be issued to Convertible Debenture holders and warrants
to be issued the placement agents of Convertible Debentures to be $1.00 (see Note 5).
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Tonix Pharmaceuticals Holding Corp.
PROSPECTUS
Up to 14,543,807 shares of
Common Stock, par value $0.001 per share
__________________ , 2012
Dealer Prospectus Delivery Obligation
Until [*], 2012, all dealers that effect
transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
You should rely only on the information
contained in this prospectus. We have not authorized anyone to provide you with information different from that which is set forth
in this prospectus. We are offering to sell shares of our common stock and seeking offers to buy shares of our common stock only
in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the
date of this prospectus, regardless of the time of delivery of this prospectus or any sale of these securities. Our business, financial
condition, results of operation and prospects may have changed after the date of this prospectus.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table
sets forth the estimated costs and expenses to be incurred in connection with the issuance and distribution of the securities registered
under this Registration Statement. All amounts are estimates except the Securities and Exchange Commission registration fee. The
total expenses for this offering, borne solely by the registrant, are estimated to be approximately $107,041, including:
SEC registration fee
$
2,041
Legal fees and expenses
$
60,000
Accounting fees and expenses
$
40,000
Miscellaneous expenses
$
5,000
Total
$
107,041
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our bylaws, as amended, provide to the
fullest extent permitted by Nevada law, our directors or officers shall not be personally liable to us or our shareholders for
damages for breach of such director's or officer's fiduciary duty. The effect of this provision of our bylaws, as amended, is to
eliminate our right and our shareholders (through shareholders' derivative suits on behalf of our company) to recover damages against
a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches resulting from negligent
or grossly negligent behavior), except under certain situations defined by statute. We believe that the indemnification provisions
in our bylaws, as amended, are necessary to attract and retain qualified persons as directors and officers.
Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three
years, the registrant has sold the following securities which were not registered under the Securities Act of 1933, as amended.
We held a first closing
of units in the 2012 private placement on January 20, 2012 and held an additional closing of such units on March 1, 2012. We sold
172.118 units in the first closing and an additional 92.5926 units in the second closing for an aggregate of 264.7106 units. Each
of the units contained 25,000 shares of our common stock, a Class A Warrant to purchase 25,000 shares of our common stock and a
Class B Warrant to purchase 24,500 shares of our common stock for an aggregate of 6,617,765 shares of our common stock, 6,617,765
Class A Warrants to purchase our common stock and 6,485,410 765 Class B Warrants to purchase our common stock.
On October 7, 2011,
we issued 22,666,667 shares of our common stock to the shareholders of Tonix Sub in exchange for 100% of the issued and outstanding
shares of common stock of Tonix Sub. The shares were issued to accredited investors pursuant to Rule 506 of Regulation D or non-U.S.
Persons pursuant to Rule 903 of Regulation S of the Securities Act of 1933, as amended.
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On October 7, 2011,
we issued 400,000 shares of our common stock to a placement agent in connection with an amendment to a placement agent agreement.
The shares were issued to an accredited investor pursuant to Rule 506 of Regulation D or Section 4(2) of the Securities Act of
1933, as amended.
Between October and
November 2011, we sold to certain investors (the "Purchasers") for aggregate cash proceeds of $1,575,000, secured convertible
debentures (the "Debentures") in the principal face amount of $1,575,000 and the exchange of $500,000 in previously
issued notes of Tonix Sub that were converted into Debentures in the principal face amount of $500,000 (the "2011 Financing").
The Debentures were sold to accredited investors pursuant to Rule 506 of Regulation D or non-U.S. Persons pursuant to Rule 903
of Regulation S of the Securities Act of 1933, as amended.
The Debentures mature
on the earlier of (i) one year from the date of issuance or (ii) the date of closing of a private placement of equity, equity equivalent,
convertible debt or debt financing in which we receive gross proceeds, in one or more transactions, of at least $3,425,000 (a "Subsequent
Financing"). The Debentures bear interest at 8% per annum and are convertible at the holder's option into a Subsequent
Financing. In the event that a Subsequent Financing has not occurred within 12 months from the date of issuance of the Debenture,
the holder has the option to convert the Debenture into a number of shares of our common stock equal to 1% of our shares of common
stock on a fully diluted basis for every $125,000 of Debentures (the "Conversion Shares").
In addition, upon conversion
or repayment of the Debenture, the holder is entitled to receive, at the holder's option, either (i) a warrant (the "Warrant")
to purchase such number of shares of common stock equal to the principal amount of the Debenture divided by the offering price
in a Subsequent Financing (the "Warrant Shares") or (ii) shares of our common stock equal to 33% of the principal amount
of the Debenture divided by the offering price in a Subsequent Financing (the "Incentive Shares").
In connection with
the 2011 Financing, placement agents earned warrants to purchase shares of our common stock equal to 3% or 9% of the gross proceeds
delivered by Purchasers introduced by such placement agents in the 2011 Financing divided by the purchase price per share in the
Subsequent Financing (collectively, the "2011 Agent Warrants"). In the event that the Subsequent Financing has not
occurred within 12 months from the date of issuance of the Debentures, the placement agents will receive, in lieu of the 2011 Agent
Warrants, shares of common stock equal to 3% or 9% of the number of shares of our common stock such Purchasers introduced by such
placement agent in the 2011 Financing are entitled to receive upon conversion of their Debentures.
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits
are included as part of this Form S-1. References to "the Company" in this Exhibit List mean Tonix Pharmaceuticals
Holding Corp., a Nevada corporation.
2.01
Share Exchange Agreement, dated as of October 7, 2011 by and among Tamandare Explorations Inc., David J. Moss, Tonix Pharmaceuticals, Inc. and the shareholders of Tonix Pharmaceuticals, Inc. filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
3.01
Articles of Incorporation, filed as an exhibit to the Registration Statement on Form S-1, filed with the Securities and Exchange Commission (the "Commission") on April 9, 2008 and incorporated herein by reference.
3.02
Articles of Merger between Tamandare Explorations Inc. and Tonix Pharmaceuticals Holding Corp., effective October 11, 2011, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 17, 2011 and incorporated herein by reference.
3.03
Amended and Restated Bylaws, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on February 23, 2012 and incorporated herein by reference.
5.01
Opinion of Sichenzia Ross Friedman Ference LLP.
10.01
Feasibility and Option Agreement, dated as of June 20, 2007, by and between Krele Pharmaceuticals, Inc. (now, Tonix Pharmaceuticals, Inc.) and Lipocine, Inc., filed as an exhibit to the amended Current Report on Form 8-K/A, filed with the Commission on April 3, 2012 and incorporated herein by reference. †
10.02
Consulting Agreement, dated as of June 4, 2010, by and between Krele Pharmaceuticals, Inc. (now, Tonix Pharmaceuticals, Inc.) and Lederman & Co., LLC, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.03
Technology Transfer and Assignment Agreement, dated as of June 4, 2010, by and between Krele Pharmaceuticals, Inc. (now, Tonix Pharmaceuticals, Inc.) and Lederman & Co., LLC, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.04
Lease Agreement, dated as of September 28, 2010, by and between 509 Madison Avenue Associates, L.P. and Tonix Pharmaceuticals, Inc., filed as an exhibit to the amended Current Report on Form 8-K/A, filed with the Commission on February 3, 2012 and incorporated herein by reference.
10.05
Amendment to Feasibility and Option Agreement, dated as of October 4, 2010, by and between Tonix Pharmaceuticals, Inc. and Lipocine, Inc., filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference. †
10.06
Engagement Agreement, dated as of October 6, 2010, by and between Tonix Pharmaceuticals, Inc. and Frost and Sullivan, filed as an exhibit to the amended Current Report on Form 8-K/A, filed with the Commission on April 3, 2012 and incorporated herein by reference.
10.07
Amendment to Consulting Agreement, dated as of December 9, 2010, by and between Tonix Pharmaceuticals, Inc. and Lederman & Co., LLC, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.08
Employment Agreement, dated as of April 1, 2011, by and between Tonix Pharmaceuticals, Inc. and Rhonda Rosen, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
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10.09
Employment Agreement, dated as of April 1, 2011, by and between Tonix Pharmaceuticals, Inc. and Benjamin A. Selzer, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.10
Employment Agreement, dated as of April 1, 2011, by and between Tonix Pharmaceuticals, Inc. and Susan Oliver (now, Susan Kerridge), filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.11
API Supply and Development Agreement, dated as of April 7, 2011, by and between Tonix Pharmaceuticals, Inc. and JFC Technologies, Inc., filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.12
Consulting Agreement, dated as of June 2, 2011, by and between Tonix Pharmaceuticals, Inc. and Pharmanet Canada, Inc., filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.13
Amendment to Employment Agreement, dated as of July 27, 2011, by and between Tonix Pharmaceuticals, Inc. and Rhonda Rosen, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.14
Amendment to Employment Agreement, dated as of July 27, 2011, by and between Tonix Pharmaceuticals, Inc. and Benjamin A. Selzer, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.15
Amendment to Employment Agreement, dated as of July 27, 2011, by and between Tonix Pharmaceuticals, Inc. and Susan Oliver (now, Susan Kerridge), filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.16
Financial Public Relations Agreement, dated as of August 1, 2011, by and between Tonix Pharmaceuticals, Inc. and Porter, LeVay & Rose, Inc., filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.17
Form of 8% Secured Convertible Debenture, issued October 7, 2011, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.18
Form of Subscription Agreement, dated October 7, 2011, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.19
Form of Pledge and Security Agreement, dated as of October 7, 2011, by and among Tamandare Explorations Inc., Tonix Pharmaceuticals, Inc., Krele LLC and the investors, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.20
Form of Subsidiary Guaranty, dated as of October 7, 2011, by and among Tonix Pharmaceuticals, Inc., Krele LLC and Sandor Capital Master Fund L.P., on behalf of the investors, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
10.21
Form of Subscription Agreement, dated January 20, 2012, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on January 23, 2012 and incorporated herein by reference.
10.22
Form of Class A Warrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on January 23, 2012 and incorporated herein by reference.
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10.23
Form of Class B Warrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on January 23, 2012 and incorporated herein by reference.
10.24
Form of Registration Rights Agreement, dated January 20, 2012, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on January 23, 2012 and incorporated herein by reference.
10.25
Amendment to Consulting Agreement, dated as of March 30, 2012 but effective as of July 27, 2011, by and between Tonix Pharmaceuticals, Inc. and Lederman & Co., LLC, filed as an exhibit to the Annual Report on Form 10-K filed with the Commission on March 30, 2012 and incorporated herein by reference.
10.26
Employment Agreement, between Tonix Pharmaceuticals Holding Corp. and Leland Gershell, dated April 1, 2012, filed as an exhibit to the Current Report on Form 8-K filed with the Commission on April 5, 2012 and incorporated herein by reference.
10.27
Employment Agreement, between Tonix Pharmaceuticals Holding Corp. and Benjamin Selzer, dated April 2, 2012, filed as an exhibit to the Current Report on Form 8-K filed with the Commission on April 5, 2012 and incorporated herein by reference. , filed as an exhibit to the Current Report on Form 8-K filed with the Commission on April 5, 2012 and incorporated herein by reference.
21.01
List of Subsidiaries, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
23.01
Consent of EisnerAmper LLP
24.01
Power of Attorney (included on signature page to the registration statement).
99.01
Frost & Sullivan Fibromyalgia Market Study, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
99.02
Lipocine Cyclobenzaprine Study Results, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 14, 2011 and incorporated herein by reference.
†           Confidential
treatment granted for certain confidential portions of this exhibit pursuant to Rule 24b-2 under the Exchange Act. In accordance
with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Commission.
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ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1)         To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)          To
include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act");
(ii)         To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective registration statement, and
(iii)        To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
(2)         That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3)         To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4)         For
determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the
securities, the undersigned undertakes that in a primary offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are
offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller
to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)          Any preliminary prospectus or prospectus
of the undersigned registrant relating to the offering required to be filed
pursuant to
Rule 424
;
(ii)         Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant;
(iii)        The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv)        Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
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In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying
on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document immediately prior to such date of first use.
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SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that the registrant
meets all of the requirements for filing on Form S-1 and has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on this 26th day of April, 2012.
TONIX PHARMACEUTICALS HOLDING CORP.
Date:  April 26, 2012
By:
/s/ SETH LEDERMAN
Seth Lederman
Chief Executive Officer (Principal Executive
Officer)
Date:  April 26, 2012
By:
/s/ LELAND GERSHELL
Leland Gershell
Chief Financial Officer (Principal Accounting
Officer)
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned
officers and directors of Tonix Pharmaceuticals Holding Corp., a Nevada corporation, do hereby constitute and appoint Seth Lederman
and Leland Gershell and each of them his or her true and lawful attorney-in-fact and agent with full power and authority to do
any and all acts and things and to execute any and all instruments which said attorney and agent, determine may be necessary or
advisable or required to enable said corporation to comply with the Securities Act of 1933, as amended, and any rules or regulations
or requirements of the Securities and Exchange Commission in connection with this Registration Statement. Without limiting the
generality of the foregoing power and authority, the powers granted include the power and authority to sign the names of the undersigned
officers and directors in the capacities indicated below to this Registration Statement, and to any and all instruments or documents
filed as part of or in conjunction with this Registration Statement or amendments or supplements thereof, including post-effective
amendments, to this Registration Statement or any registration statement relating to this offering to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, and each of the undersigned hereby ratifies and confirms that said
attorney and agent, shall do or cause to be done by virtue thereof. This Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF,
each of the undersigned has executed this Power of Attorney. In accordance with the requirements of the Securities Act of 1933,
as amended, this registration statement was signed by the following persons in the capacities and on the dates stated:
Signature
Title
Date
/s/ SETH LEDERMAN
Chief Executive Officer (Principal Executive Officer) and Director
April 26, 2012
Seth Lederman
/s/ LELAND GERSHELL
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
April 26, 2012
Leland Gershell
/s/ STUART DAVIDSON
Director
April 26, 2012
Stuart Davidson
/s/ PATRICK GRACE
Director
April 26, 2012
Patrick Grace
/s/ DONALD W. LANDRY
Director
April 26, 2012
Donald W. Landry
/s/ ERNEST MARIO
Director
April 26, 2012
Ernest Mario
/s/ CHARLES MATHER IV
Director
April 26, 2012
Charles Mather IV
/s/ JOHN RHODES
Director
April 26, 2012
John Rhodes
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