ORAGENICS INC

Notes to Condensed Consolidated Financial Statements

1. Organization

Oragenics, Inc. (the “Company” or “we”, or “our”) was incorporated in November 1996. We are a development-stage company dedicated to the research and development of nasal delivery pharmaceutical medications and vaccines.

Commencing in December of 2023, we are focused on the development of medical products that treat brain related illnesses and diseases and our lead product candidate and focus is on the development and commercialization of ONP-002 for the treatment of mild traumatic brain injury (“mTBI” or “Concussion”).

Prior to the purchase of our lead asset ONP-002, starting in May 2020 and through December 31, 2023 our lead asset was a nasal delivery vaccine candidate to provide long-lasting immunity from SARS-CoV-2, which causes COVID-19.

Currently research and development activities related to the nasal vaccine platform and our lantibiotic program are inactive, we will evaluate alternative opportunities for these programs moving forward as we continue to strengthen our focus and expertise on our intranasal drug delivery platform and drug candidates.

2. Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim condensed consolidated financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete condensed consolidated financial statements. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the financial condition, results of operations and cash flows for the periods presented. The results of operations for the interim period ended March 31, 2024 are not necessarily indicative of the results of operations that may be expected for the year ended December 31, 2024, or any future period.

These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2023, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2024.

Going Concern Consideration

The Company has incurred recurring losses and negative cash flows from operations since inception. To date, the Company has not generated significant revenues from operations. The Company incurred a net loss of $2,450,833 and used cash of $3,064,249 in its operating activities during the three months ended March 31, 2024. As of March 31, 2024, the Company had an accumulated deficit of $208,669,087.

The Company expects to incur substantial expenditures to further develop its technologies. The Company believes its working capital at March 31, 2024 will be sufficient to meet the business objectives as presently structured only through the third quarter of 2024. As such, there is substantial doubt that we can continue as a going concern beyond that date. As a result, the Company has implemented certain cost-saving initiatives, including the termination of its lease of the corporate office located in Tampa, Florida.

The Company’s ability to continue operations after its current cash resources are exhausted depends on its ability to obtain additional financing or achieve profitable operations, as to which no assurances can be given. Cash requirements may vary materially from those now planned because of changes in the Company’s focus and direction of its research and development programs, competitive and technical advances, or other developments. Additional financing will be required to continue operations after the Company exhausts its current cash resources and to continue its long-term plans for clinical trials and new product development. There can be no assurance that any such financing can be realized by the Company, or if realized, what the terms thereof may be, or that any amount that the Company is able to raise will be adequate to support the Company’s working capital requirements until it achieves profitable operations.

The Company intends to seek additional funding through sublicensing arrangements, joint venturing or partnering, sales of rights to technology, government grants and public or private financings. The Company’s future success depends on its ability to raise capital and ultimately generate revenue and attain profitability. The Company cannot be certain that additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to it or, if available, will be on terms acceptable to the Company. If the Company issues additional securities to raise funds, these securities may have rights, preferences, or privileges senior to those of its common stock, and the Company’s current shareholders may experience dilution. If the Company is unable to obtain funds when needed or on acceptable terms, the Company may be required to curtail its current development programs, cut operating costs and forego future development and other opportunities.

3. Significant Accounting Policies

Basis of Consolidation

The condensed consolidated financial statements include the accounts of Oragenics, Inc. and our wholly owned subsidiaries Noachis Terra, Inc.(“NTI”) and Oragenics Australia Pty Ltd. All intercompany balances and transactions have been eliminated.

New Accounting Standards

There are no additional accounting pronouncements issued or effective during the three months ended March 31, 2024, that have had, or are expected to have, a material impact on our condensed consolidated financial statements.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. The principal area of estimation reflected in the condensed consolidated financial statements are estimates for research and development expenses and related prepaid and accrued expenses, which are based on the percentage of completion of the Company’s contracts with Contract Research Organizations.

Net Loss Per Share

During all periods presented, the Company had securities outstanding that could potentially dilute basic earnings per share in the future but were excluded from the computation of diluted net loss per share, as their effect would have been antidilutive because the Company reported a net loss for all periods presented. All references to common stock for the comparative three month periods ended March 31, 2023, have been adjusted to reflect the effect of the reverse split. Net loss per share is computed using the weighted average number of shares of common stock outstanding.

4. Prepaid Expense, Deposits, and Other Current Assets

Prepaid expenses, deposits, and other current assets consist of the following at March 31, 2024 and December 31, 2023:

5. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following as of March 31, 2024, and December 31, 2023:

6. Short-Term Notes Payable

The Company had the following short-term notes payable as of March 31, 2024 and December 31, 2023:

7. Shareholders’ Equity

Common Stock

Reverse Stock Split

On December 22, 2022, the Board of Directors approved an amendment to our Amended and Restated Articles of Incorporation to effect a reverse stock split of our common stock by a ratio of one for sixty. The Company’s common stock began trading on a split-adjusted basis on January 23, 2023. All references to common stock for the comparative three month period ended March 31, 2023, have been adjusted to reflect the effect of the reverse split.

Other Share Issuances

Pursuant to the Company’s effective registration statement on Form S-3 (File No. 333-269225) and a related prospectus and prospectus supplement, in each case filed with the Securities and Exchange Commission. On March 1, 2024, through an underwriting agreement with ThinkEquity, LLC as representative (the “Representative”) of the underwriters (collectively, the “Underwriters”), the Company sold 1,400,000 shares of our common stock at a price of $1.50 per share to the public. According to the terms of the underwriting agreement, the Underwriters agreed to purchase the common shares at a price of $1.395 per share. The Company also granted the Underwriters an option exercisable for 45 days from the date of the underwriting agreement to purchase up to an additional 210,000 shares of common stock solely for the purpose of covering over-allotments (the “Over-allotment Options”). No Over-allotment Options were exercised. The Company also agreed to issue warrants to the designees of the Representative exercisable one hundred eighty (180) days after February 27, 2024 and expiring on February 27, 2029, to purchase up to 5% of the shares sold through the underwriting agreement at an exercise price of $1.875 per share. The gross proceeds from the sale of the shares were $2.1 million before underwriting discounts and commissions and other expenses payable by the Company were deducted.

The Underwriting Agreement contained customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination provisions.

8. Warrants

The Company’s outstanding and exercisable warrants as of March 31, 2024 are presented below:

All outstanding warrants are classified as equity on the Company’s Condensed Consolidated Balance Sheets.

9. Stock Compensation Plan

On September 29, 2023 the Board of Directors approved an amendment to the 2021 Equity Incentive Plan (the “Incentive Plan”) to increase the authorized shares available under the Incentive Plan by 1,000,000. The amendment was approved by the Shareholders on December 14, 2023.

As amended the Incentive Plan provides aggregate number of shares of Common Stock that may be issued under the 2021 Plan will not exceed the sum of (i)1,166,167 new shares, plus (ii) the Prior Plan’s Available Reserve; plus, (iii) the number of Returning Shares, if any, as such shares become available from time to time.

Options are granted at the fair market value of the Company’s stock on the date of grant which determines the exercise price after the completion of the vesting period. Options can vest either immediately or over a period of up tothree years from their respective grant dates and expire 10 years from the date of grant. As of March 31, 2024 and December 31, 2023, the Company did not award any stock appreciation rights under the 2021 Incentive Plan.

A summary of stock option activity for the three months ended March 31, 2024 is as follows:

As of March 31, 2024, an aggregate of 241,814 shares of common stock are covered by outstanding option awards and 1,042,812 shares of common stock are available for future awards under the 2021 Incentive Plan.

Total compensation cost related to stock options was approximately $64,289 and $79,966 for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, there was approximately $223,569 of unrecognized compensation costs related to stock options, which is expected to be recognized over a weighted average period of less thanone year.

Restricted stock grant activity during the quarter ended March 31, 2024 was as follows:

Total compensation cost related to restricted stock awards was approximately $5,055 for the three months ended March 31, 2024. There wasno compensation cost related to restricted stock awards for the three months ended March 31, 2024.

10. License and Royalty Agreements

Inspirevax License

On February 23, 2023, the Company entered into a Commercial License Agreement (the “Inspirevax License Agreement”) for its vaccine product candidate with Inspirevax Inc. (“Inspirevax”) pursuant to which Inspirevax granted the Company an exclusive worldwide license to use Inspirevax’s inventions, patents, trade secrets, know-how, copyright, biological material, designs, and/or technical information created by or on behalf of Inspirevax (the “Inspirevax Technologies”) relating to its novel lipid-protein based intranasal adjuvants, to make, research, and develop an intra-nasal vaccine in combination with an antigen (“Combination Product”) to be used in an intranasal vaccine for use against diseases caused by coronaviruses and any genetic variants thereof to be sold by us. The Company agreed to pay in consideration for the Inspirevax License Agreement an upfront signing fee and to certain milestone payment obligations. As of March 31, 2024 none of the milestone payment obligations for the Inspirevax License Agreement have been met.

11. Commitments and Contingencies

Three-Way Collaborative Agreement

In May of 2023 the Company entered into a Collaborative Research Agreement (the “Collaboration”) with Inspirevax, and the NRC (the “Collaborators”) for research related to the Company’s vaccine product candidate. The Collaboration received non-dilutive funding from Consortium Québécois Sur La Découverte Du Médicament (the “CQDM”) a not-for-profit corporation governed by Canada created to promote, stimulate, and support drug research, development and discovery. The CQDM also provides funding for drug research and discovery projects. The project is budgeted to cost approximately $1.7 million Canadian dollars over 27 months. Each collaborator is responsible for funding a portion of the project with payments made upon certain milestones, the CQDM grant award will fund approximately 40% of the budgeted project costs with the Collaborators. As part of the Company’s efforts to focus financial resources to the development of it new lead asset, ONP-002, as of the three months ended March 31, 2024 the Company has suspended its participation in the three-way agreement until additional financial resources can be allocated for the vaccine related research project.

12. Subsequent Events

Noncompliance with Shareholder equity

On April 18, 2024, the Company received notification (the “Notice”) from the NYSE American LLC (the “NYSE American”) that the Company was no longer in compliance with NYSE American’s continued listing standards. Specifically, the letter stated that the Company was not in compliance with the continued listing standards set forth in Sections 1003(a)(ii) and 1003(a)(iii) of the NYSE American Company Guide (the “Company Guide”). Section 1003(a)(ii) requires a listed company to have stockholders’ equity of $4 million or more if the listed company has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years. Section 1003(a)(iii) requires a listed company to have stockholders’ equity of $6 million or more if the listed company has reported losses from continuing operations and/or net losses in its five most recent fiscal years. The Company reported shareholders’ equity of $3.2 million as of December 31, 2023, and losses from continuing operations and/or net losses in its five most recent fiscal years ended December 31, 2023.

The Notice further provided that the Company must submit a plan of compliance (the “Plan”) by May 18, 2024 addressing how it intends to regain compliance with the continued listing standards by October 18, 2025. The Plan is required to include specific milestones, quarterly financial projections and details related to any strategic initiatives the Company plans to complete.

The Company has begun to prepare its Plan for submission to the NYSE American by the May 18, 2024 deadline. If the NYSE American accepts the Company’s Plan, the Company will be able to continue its listing during the Plan period and will be subject to continued periodic review by the NYSE American staff. If the Plan is not submitted, or not accepted, or is accepted but the Company is not in compliance with the continued listing standards by October 18, 2025 or if the Company does not make progress consistent with the Plan during the Plan period, the Company will be subject to delisting procedures as set forth in the NYSE American Company Guide.

The Company is committed to undertaking a transaction or transactions in the future to achieve compliance with the NYSE American’s requirements. However, there can be no assurance that the Company will be able to achieve compliance with the NYSE American’s continued listing standards within the required timeframe.

The Notice has no immediate impact on the listing of the Company’s shares of common stock, par value $0.001 per share (the “Common Stock”), which will continue to be listed and traded on the NYSE American during this period, subject to the Company’s compliance with the other listing requirements of the NYSE American. The Common Stock will continue to trade under the symbol “OGEN”, but will have an added designation of “.BC” to indicate the status of the Common Stock as “below compliance”. The notice does not affect the Company’s ongoing business operations or its reporting requirements with the Securities and Exchange Commission.

If the Common Stock ultimately were to be delisted for any reason, it could negatively impact the Company by (i) reducing the liquidity and market price of the Company’s Common Stock; (ii) reducing the number of investors willing to hold or acquire the Common Stock, which could negatively impact the Company’s ability to raise equity financing; and (iii) limiting the Company’s ability to use a registration statement to offer and sell freely tradable securities, thereby preventing the Company from accessing the public capital markets; and (iv) impairing the Company’s ability to provide equity incentives to its employees.