TENAX THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS

Tenax Therapeutics, Inc., together with its subsidiaries (collectively “Tenax” or the “Company”), is a Phase 3, development-stage pharmaceutical company using clinical insights to develop novel cardiopulmonary therapies.

The Company is incorporated in Delaware and is headquartered in Chapel Hill, North Carolina.

Liquidity and Capital Resources

The Company has financed its operations since September 1990 primarily through the sale of equity and debt securities and loans from stockholders. The Company had an accumulated deficit of$383.2 million at March 31, 2026 and incurred losses of$15.7 million and$10.4 million during the three months ended March 31, 2026 and 2025, respectively. The Company expects to continue to incur expenses related to the development of levosimendan for pulmonary hypertension and other potential indications and, over the long term, imatinib for pulmonary arterial hypertension (“PAH”), as well as identifying and developing other potential product candidates. At March 31, 2026, the Company had cash and cash equivalents of$118.8 million. Based on its resources on March 31, 2026, Company management believes that it has sufficient funds for the Company to continue its operations over at least the next 12 months from the date these condensed consolidated financial statements were available to be issued.

To the extent that the Company raises additional funds by issuing shares of its common stock or other securities convertible or exchangeable for shares of common stock, stockholders will experience dilution, which may be significant. In the event the Company raises additional capital through debt financings, the Company may incur significant interest expense and become subject to restrictive covenants in the related transaction documents that may affect the manner in which the Company conducts its business. To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates or grant licenses on terms that may not be favorable to the Company. Any or all of the foregoing may have a material adverse effect on the Company’s business and financial performance.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10‑Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Certain information and footnote disclosures normally included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period.

The accompanying unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the unaudited condensed consolidated financial statements have read or have access to the audited financial statements for the preceding fiscal year. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Form 10-K, which was filed with the United States Securities and Exchange Commission (“SEC”) on March 10, 2026, from which the Company derived the balance sheet data on December 31, 2025.

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation.

Use of Estimates

The preparation of the accompanying unaudited condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted.

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025, other than the following:

Cash Concentration Risk

The Federal Deposit Insurance Corporation (the “FDIC”) insurance limits are $250,000 per depositor per insured bank. The Company had cash balancesof $118.5 million and $97.0 million uninsured by the FDIC as of March 31, 2026 and December 31, 2025, respectively.

Loss Per Share

Basic loss per share, which excludes antidilutive securities, is computed by dividing net loss by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, restricted stock, and warrants.

The following outstanding options, restricted stock grants, convertible preferred shares and warrants were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect.

NOTE 3. BALANCE SHEET COMPONENTS

Prepaid expenses and other current assets consist of the following (in thousands):

Accrued liabilities consist of the following (in thousands):

NOTE 4. COMMITMENTS AND CONTINGENCIES

Simdax license agreement

On November 13, 2013, the Company acquired certain assets of Phyxius Pharma, Inc. (“Phyxius”) pursuant to an asset purchase agreement by and among the Company, Phyxius and the stockholders of Phyxius, dated October 21, 2013. Among these assets was a license with Orion Corporation (“Orion”) for the exclusive, sublicensable right to develop and commercialize pharmaceutical products containing levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada (as amended from time to time, the “License”). On October 9, 2020 and January 25, 2022, the Company entered into amendments to the License to include in the scope of the License two new product formulations containing levosimendan, in capsule and solid dosage form (TNX-103) and a subcutaneously administered dosage form (TNX-102), subject to specified limitations (together, the “Product”).

On February 19, 2024, the Company entered into an amendment to the License providing global rights to oral and subcutaneous formulations of levosimendan used in the treatment of pulmonary hypertension in heart failure with preserved ejection fraction (“PH-HFpEF”). The amendment also reduced the tiered royalties based on worldwide net sales of the product by the Company and its sublicensees, increased the License’s existing milestone payment due to Orion upon the grant of United States Food and Drug Administration (the “FDA”) approval of a levosimendan-based product to $10.0 million and added a milestone payment to Orion of $5.0 million due upon the grant of regulatory approval for a levosimendan-based product in Japan. The amendment also (i) increased the Company’s obligations to make certain non-refundable commercialization milestone payments to Orion, aggregating to up to $45.0 million, contingent upon achievement of certain cumulative worldwide sales of the product by the Company, and (ii) reduced the maximum price per capsule payable by the Company to Orion, under a yet-to-be-negotiated supply agreement, for the commercial supply of oral levosimendan-based product. Pursuant to the License, the Company and Orion will agree to a new trademark when commercializing levosimendan in either of the dosage forms.

On September 3, 2025, the Company entered into an amendment to the License providing exclusive worldwide rights to develop, commercialize, manufacture, and have manufactured any orally-administered pharmaceutical product containing levosimendan and, in addition to the Company’s existing rights to develop and commercialize subcutaneously administered products containing levosimendan, to manufacture or have manufactured such products. The amendment also calls for Orion to supply the Company with levosimendan to the extent reasonably necessary or useful to manufacture orally-administered products containing levosimendan for purposes of developing such products, and sets forth the terms for such supply, including the price of levosimendan ordered by the Company of low triple-digit thousands in Euros per kilogram, payment terms, and active pharmaceutical ingredient specifications.

The term of the License extends until 10 years after the launch of the Product in the territory, provided that the License will continue after the end of the term in each country in the territory until the expiration of Orion’s patent rights in the Product in such country. In the event that no regulatory approval for the Product has been granted in the United States on or before September 20, 2030, however, either party will have the right to terminate the License with immediate effect.

The License also grants the Company a right of first refusal to commercialize new developments of the Product, including developments as to the formulation, presentation, means of delivery, route of administration, dosage or indication but, pursuant to the February 2024 amendment, excluding new applications of levosimendan for neurological diseases and disorders developed by Orion.

As of March 31, 2026, the Company has not met any of the developmental milestones under the License and, accordingly, has not recorded any liability for the contingent payments due to Orion.

Litigation

The Company is subject to litigation in the normal course of business, none of which management believes will have a material adverse effect on the Company’s consolidated financial statements.

NOTE 5. STOCKHOLDERS’ EQUITY

Common Stock and Preferred Stock

Common Stock

The Company’s Certificate of Incorporation, as amended, authorizes the issuance of 400,000,000 shares of $0.0001 par value common stock. As of March 31, 2026 and December 31, 2025, there were 24,275,500 and 9,314,130 shares of common stock issued and outstanding, respectively.

Preferred Stock

Under the Company’s Certificate of Incorporation, as amended, the Board is authorized, without further stockholder action, to provide for the issuance of up to 10,000,000 shares of preferred stock, par value $0.0001 per share, in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof. Of the potential 10,000,000 shares of preferred stock,5,181,346 are designated as Series A Stock and 4,818,654 remain undesignated. As of March 31, 2026 and December 31, 2025, there were 210 shares of Series A Stock outstanding, convertible in the aggregate intoone share of common stock.

Common Stock and Pre-Funded Warrants

March 2025 Private Placement Financing (the “March 2025 Offering”)

On March 4, 2025, the Company entered into a securities purchase agreement with certain accredited investors for the purchase and sale, in a private placement financing by the Company, of (i) an aggregate of 378,346 shares of its common stock, and pre-funded warrants to purchase an aggregate of 3,760,726 shares of common stock at an offering price of $6.04 per share of common stock and $6.03 per pre-funded warrant, resulting in gross proceeds of $25.0 million. The pre-funded warrants do not expire and have an exercise price of $0.01. The net proceeds of the March 2025 Offering, after deducting placement agent fees and direct offering expenses were $23.2 million. The relative fair value allocated to the common stock and pre-funded warrants was $2.3 million and $22.7 million, respectively.

Also, on March 5, 2025 and in connection with the March 2025 Offering, the Company entered into a registration rights agreement (the “March 2025 Registration Rights Agreement”) with the purchasers, pursuant to which the Company agreed to register for resale the shares of common stock issued in the March 2025 Offering and the shares of common stock issuable upon exercise of the pre-funded warrants issued in the March 2025 Offering within 45 days of the closing date. Pursuant to the March 2025 Registration Rights Agreement, on April 15, 2025, the Company filed a resale registration statement on Form S-3 with the SEC, which went effective on April 23, 2025.

The March 2025 Registration Rights Agreement includes liquidated damages provisions that meet the definition of a registration payment arrangement that is within the scope of ASC 825-20. The Company determined at the initial issuance of the pre-funded warrants that it is not probable that a payment would be required as it has both the intent and ability to satisfy the March 2025 Registration Rights Agreement. Therefore, the Company did not record a liability at inception but will evaluate the contingency at each reporting period. As of March 31, 2026, no events had occurred that would change our initial assessment of this provision.

Pre-Funded Warrants Activity

The following table summarizes the Company’s pre-funded warrant activity for the three months ended March 31, 2026:

Warrants

The following table summarizes the Company’s warrant activity for thethree months ended March 31, 2026, not including pre-funded warrants:

August 2024 Warrants

As part of the Company’s private placement in August 2024 (the “2024 Offering”), the Company issued unregistered common warrants to purchase 16,666,666 shares of its common stock at an exercise price of $4.50 per share(the “August 2024 Warrants”) and pre-funded warrants to purchase an aggregate of 31,882,671 shares of common stock. The August 2024 Warrants expire at the earlier of (i) 30 trading days following the date of the Company’s initial public announcement of topline data from its Phase 3 LEVEL trial (the “Topline Data Announcement”), (ii) immediately upon the exercise of the pre-funded warrants if such exercise is prior to the Topline Data Announcement, provided that if the pre-funded warrant is not exercised in full, the warrant expires proportionally to the extent the pre-funded warrant is exercised, and (iii) August 8, 2029. At March 31, 2026,10,232,295 of the August 2024 Warrants remained outstanding.

February 2024 Warrants

As part of the Company’s registered public offering in February 2024, the Company issued registered warrants to purchase 3,200,000 shares of its common stock at an exercise price of $5.65 per share and contractual term of five years. At March 31, 2026,223,880 of the February 2024 Warrants remained outstanding.

Stock-Based Compensation

Stock Incentive Plans

In June 2022, the Company adopted the 2022 Stock Incentive Plan, as amended on June 7, 2024 and October 25, 2024, (the “2022 Plan”), with the outstanding shares available for future grants under prior plans, as well as outstanding awards under prior plans that subsequently expire, terminate or are surrendered or forfeited, generally being assumed by the 2022 Plan. Unexpired awards granted under certain prior plans may be subject to the terms of such prior plans.

Under the 2022 Plan, with the approval of the Board’s Compensation Committee, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares, performance units, cash-based awards or other stock-based awards. Stock options granted under the 2022 Plan may be either incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”). ISOs may be granted only to employees. NSOs may be granted to employees, consultants and directors. Stock options under the 2022 Plan may be granted with a term of up toten years and at prices no less than fair market value at the time of grant. Stock options granted generally vest overone tofour years.

A total of 457,621 shares remained available for issuance under the 2022 Plan as of March 31, 2026.

Summary of Stock Option Activity

Transactions during thethree months ended March 31, 2026 related to stock options granted to employees and directors under Company option plans were as follows:

The Company estimated the fair value of stock options granted during the three months ended March 31, 2026 using the Black-Scholes option pricing model and the following range of assumptions:

The Company recorded compensation expense for stock options granted under Company stock incentive plans of$2.7 million and$4.0 million and for the three months ended March 31, 2026 and March 31, 2025, respectively.

As of March 31, 2026, there were unrecognized compensation costs of $26.5 million related to non-vested stock option awards that will be recognized on a straight-line basis over the weighted average remaining vesting period of 2.56 years.

Inducement Stock Options

The Company granted an employment inducement stock option award for 250,000 shares of common stock to a new employee on January 21, 2025. This employment inducement stock option was awarded in accordance with the employment inducement award exemption provided by Nasdaq Listing Rule 5635(c)(4) and was therefore not awarded under the Company’s stockholder approved equity plan. The option has a 10-year term and an exercise price of $6.45 per share, the January 21, 2025 closing price of the Company’s common stock. This award vests as follows:25% on the one-year anniversary of employment start date and an additional 25% on each of the following three anniversaries of the employment start date, subject to the recipient’s continued employment through each applicable vesting date. As of March 31, 2026,25% of this award had vested. The estimated fair value of the inducement stock option award was $1.4 million using the Black-Scholes option pricing model based on market prices and the following assumptions at the date of inducement option grant: risk-free interest rate of 4.49%, dividend yield of 0%, volatility factor for our common stock of 123.41% and an expected life of 6 years.

The Company granted an employment inducement stock option award for 157 shares of common stock, to its then-new President and Chief Executive Officer on July 6, 2021. The employment inducement stock option award was granted in accordance with the employment inducement award exemption provided by Nasdaq Listing Rule 5635(c)(4) and was therefore not awarded under the Company’s stockholder approved equity plan. The option has a 10-year term and an exercise price of $3,152 per share, the July 6, 2021 closing price of our common stock. This award vests as follows:25% on the one-year anniversary of the Chief Executive Officer's employment start date and an additional 25% on each of the following three anniversaries of the Chief Executive Officer's employment start date. As of March 31, 2026, the option had fully vested. The estimated fair value of this inducement stock option award was $403 thousand using the Black-Scholes option pricing model based on market prices and the following assumptions at the date of inducement option grant: risk-free interest rate of 1.13%, dividend yield of 0%, volatility factor for our common stock of 99.36% and an expected life of 7 years.

The Company also granted an employment inducement stock option award for 157 shares of common stock to its then-new Chief Medical Officer on January 15, 2021. This employment inducement stock option was awarded in accordance with the employment inducement award exemption provided by Nasdaq Listing Rule 5635(c)(4) and was therefore not awarded under the Company’s stockholder approved equity plan. The option has a 10-year term and an exercise price of $2,848 per share, the January 15, 2021 closing price of our common stock. The award will vest as follows:25% upon initiation of a Phase 3 trial;25% upon database lock;25% upon acceptance for review of an investigational NDA; and 25% upon approval, subject to continued employment through each applicable vesting date. As of March 31, 2026, two of the vesting milestones had been achieved. The estimated fair value of the inducement stock option award granted was $403 thousand using the Black-Scholes option pricing model based on market prices and the following assumptions at the date of inducement option grant: risk-free interest rate of 11%, dividend yield of 0%, volatility factor for our common stock of 103.94% and an expected life of 10 years.

Inducement stock option compensation expense totaled$0.1 million and$0.1 million for the three months ended March 31, 2026 and March 31, 2025, respectively. As of March 31, 2026, there was $1.0 million of remaining unrecognized compensation expense related to inducement stock options.

NOTE 6. SEGMENTS

Operating segments are identified as components of an entity about which separate discrete financial information is available for evaluation by the Chief Operating Decision Maker ("CODM"), or decision-making group, in making decisions on how to allocate resources and assess performance. The Company's CODM, the President and Chief Executive Officer, views the

Company'soperations asone operating segment, which is focused on identifying and developing therapeutics that address cardiovascular and pulmonary diseases with high unmet medical need, with an initial therapeutic focus on pulmonary hypertension. The Company doesnot have revenue in the current comparative period, incurs expenses primarily in the United States and manages the business activities on a consolidated basis.

The accounting policies of the cardiovascular and pulmonary therapeutics segment are the same as those described in the summary of significant accounting policies.

The CODM assesses performance for the cardiovascular and pulmonary therapeutics segment and decides how to allocate resources based on net loss that also is reported on the income statement as consolidated net loss. The measure of segment assets is reported on the balance sheet as cash and cash equivalents.

The Company hasnot generated any product revenue in the current period and expects to continue to incur significant expenses and operating losses for the foreseeable future as the Company advances its product candidates through all stages of development and clinical trials.

As such, the CODM uses cash forecast models in deciding how to invest into the cardiovascular and pulmonary therapeutics segment. Such cash forecast models are reviewed to assess the entity-wide operating results and performance. Net loss is used to monitor budget versus actual results. Monitoring budgeted versus actual results, net cash used in operating activities for the period and cash on hand are used in assessing performance of the segment.

The table below summarizes the significant expense categories regularly reviewed by the CODM for thethree months ended March 31, 2026 and 2025 (in thousands).

(a)

Other segment items included in segment loss includes interest income and interest expense.

(b)

The Company is a single operating segment and therefore the measure of segment net loss is the same as consolidated net loss and does not require reconciliation.

For the three months ended March 31, 2026 and 2025, the net cash used in operating activities was$9.3 million and$7.0 million, respectively. The table below summarizes the significant asset categories regularly reviewed by the CODM at March 31, 2026 and March 31, 2025 (in thousands).

NOTE 7. SUBSEQUENT EVENTS

On April 22, 2026, the Company announced the appointment of Thomas R. Staab, II as Chief Financial Officer of the Company effective May 11, 2026 (the “Start Date”). The Company’s current Interim Chief Financial Officer and Principal Financial Officer and Principal Accounting Officer, Thomas A. McGauley, continued as the Company’s Principal Financial Officer and Principal Accounting Officer through the filing of this Quarterly Report on Form 10-Q. Under the terms of the Company’s existing consulting agreement with Danforth Advisors, LLC, Mr. McGauley will continue to provide consulting services to the Company as Mr. Staab transitions into his new role until at least the end of May 2026. In connection with Mr. Staab’s appointment, on May 11, 2026, the Company awarded Mr. Staab inducement awards consisting of (i)10,000 RSUsand (ii)

optionsto purchase 450,000 shares of common stock. The employment inducement awards were made in accordance with the employment inducement award exemption provided by Nasdaq Listing Rule 5635(c)(4) and were therefore not awarded under the Company’s stockholder approved equity plan. One quarter of the RSU award will vest 10 days after Mr. Staab’s Start Date, with the remainder vesting in three equal installments on the four-month, eight-month, and twelve-month anniversaries of the Start Date. One quarter of the option award will vest on the first anniversary of Mr. Staab’s Start Date, with the remainder vesting in 36 approximately equal installments on the monthly anniversaries thereafter. The vesting of both awards is subject to Mr. Staab’s continued employment with the Company through each applicable vesting date. The option has a 10-year term and an exercise price equal to the May 11, 2026 closing price of the Company’s common stock.

Between April 28, 2026 and June 1, 2026, the Company has awarded or will award inducement option awards as inducements to the employment of four non-executive individuals newly hired by the Company. The employees received or will receive, in the aggregate, non-qualified stock options to purchase 657,500 shares of the Company’s common stock with an exercise price equal to the closing price of the Company's common stock as reported by Nasdaq on the start date of each respective employee. The employment inducement awards were made in accordance with the employment inducement award exemption provided by Nasdaq Listing Rule 5635(c)(4) and were therefore not awarded under the Company’s stockholder approved equity plan. One quarter of each option award will vest and become exercisable on the first anniversary of the grant date, and the remaining underlying shares will vest in 36 substantially equal installments each month thereafter, subject to the employee's continued service with the Company through each applicable vesting date. Each option award has a 10 year term.

Subsequent to March 31, 2026, the Company received a total of $7.9 million from the exercise of 494,459, net, pre-funded warrants for shares of common stock and 1,755,200 warrants for shares of common stock.