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 therapies.

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 September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 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 September 30, 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 $7,218,795 and used cash of $6,579,029 in its operating activities during the nine months ended September 30, 2024. As of September 30, 2024, the Company had an accumulated deficit of $213,437,047.

The Company expects to incur substantial expenditures to further develop its technologies. The Company believes its working capital at September 30, 2024 will be sufficient to meet the business objectives as presently structured only through the fourth 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. In the nine-month period ended September 30, 2024 the Company secured funding through the sale of approximately 5.6 million shares of its common stock and approximately 5 million prefunded warrants to purchase shares of common stock in three public offerings; the gross proceeds from the offerings, in the aggregate, were approximately $7.7 million before underwriting discounts, commissions, and other expenses payable by 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 nine months ended September 30, 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. 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 September 30, 2024 and December 31, 2023:

5. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following as of September 30, 2024, and December 31, 2023:

6. Short-Term Notes Payable

The Company had the following short-term notes payable as of September 30, 2024 and December 31, 2023:

The Company’s policy renewals were completed in July of 2024.

7. Shareholders’ Equity

Common Stock

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 (the “Underwriting Agreement”) with ThinkEquity, LLC as representative (the “Representative”) of the underwriters (collectively, the “Underwriters”), the Company sold 1,400,000 shares of 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 contains customary representations, warranties and agreements by the Company, 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.

On June 25, 2024 the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with Dawson James Securities Inc. (“Dawson James” or the “Placement Agent”) pursuant to which the Company engaged Dawson James as the placement agent for a registered public offering (the “Offering”) of an aggregate of 1,100,000 shares of the Company’s common stock, par value $0.001 (“Common Stock”). The Offering was undertaken pursuant to the Company’s effective registration statement on Form S-3 (File No. 333-269225) and a related prospectus and prospectus supplement filed with the Securities and Exchange Commission. The offering price per share of Common Stock was $1.00. The Company agreed to pay the Placement Agent a placement agent fee in cash equal to 7.00% of the gross proceeds from the Offering, and to reimburse for certain out of pocket expenses, including legal fees not to exceed $75,000. In addition, the Company agreed to issue to the Placement Agent warrants to purchase up to five percent 5% of the aggregate number of securities sold in the Offering (“Dawson James Warrants”) with an exercise price of 125% of the offering price of the Common Stock in the Offering and exercisable for five years from the date of the closing of the Offering and are initially exercisable six months from the closing of the Offering.

The Offering resulted in gross proceeds to the Company of $1.1 million before underwriting discounts and commissions and other expenses payable by the Company were deducted.

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

On September 4, 2024, the Company entered into a second placement agency agreement (the “ Second Placement Agency Agreement”) with Dawson James Securities Inc. (“Dawson James” or the “Placement Agent”) pursuant to which the Company engaged Dawson James as the placement agent for a registered public offering by the Company (the “Offering”) of an aggregate of (i)8,106,584 shares of its common stock, par value $0.001 per share (“Common Stock”), or pre-funded warrants to purchase shares of Common Stock (“Pre-Funded Warrants”) in lieu thereof (the “Offering”). In connection with the Offering, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor to purchase Common Stock and Pre-Funded Warrants. The Purchase Agreement contains customary representations, warranties and agreements of the Company and the purchaser and customary indemnification rights and obligations of the parties.

The Offering Price was $0.55 per share of Common Stock. The Pre-Funded Warrants were priced at an offering price of $0.549 per Pre-Funded Warrant, which is equal to the offering price per share of Common Stock less the $0.001 per share exercise price of each such Pre-Funded Warrant. The Pre-Funded Warrants are immediately exercisable and terminate when exercised in full.

The Offering closed on September 5, 2024. Upon the closing of the Offering, the Company issued and sold 3,078,378 shares of Common Stock and Pre-Funded Warrants to purchase 5,028,206 shares of Common Stock.

Immediately after the Offering, the Company had 8,659,071 shares of Common Stock issued and outstanding and 5,028,206 Pre-Funded Warrants outstanding to acquire 5,028,206 shares of common stock. As of November 13, 2024 a total of 3,888,501 Pre-Funded Warrants were exercised for the same number of common shares and 1,139,705 Pre-Funded Warrants remain unexercised.

The Placement Agent agreed to use its reasonable best efforts to arrange for the sale of the Common Stock and Pre-Funded Warrants. The Company agreed to pay the Placement Agent a placement agent fee in cash equal to 7.00% of the gross proceeds from the sale of the Common Stock and Pre-Funded Warrants in this Offering. The Company also agreed to reimburse the Placement Agent for all reasonable travel and other out-of-pocket expenses, including the reasonable fees of legal counsel, not to exceed $125,000. In addition, the Company agreed to issue to the Placement Agent warrants to purchase up to five percent 5% of the aggregate number of securities sold in the Offering (the “Placement Agent Warrants”) with an exercise price 125% of the offering price of the Common Stock in the Offering and exercisable commencing six months from the closing of the Offering and for five years thereafter.

The Offering resulted in gross proceeds to the Company of approximately $4.45 million before deducting placement agent fees and other estimated offering expenses payable by the Company. The Company intends to use the net proceeds of approximately $3.79 million from the offering to fund the continued development of its ONP-002 product candidate and for general corporate purposes and working capital.

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

The Offering was made pursuant to a registration statement on Form S-1 (File No. 333-281618), which was declared effective by the Securities and Exchange Commission on September 3, 2024.

The Company also entered into a warrant agency agreement with its transfer agent, Continental Stock Transfer & Trust Company, who will act as warrant agent for the Company, setting forth the terms and conditions of the Pre-Funded Warrants sold in the Offering (the “Warrant Agency Agreement”).

8. At The Market

On October 11, 2024, the Company entered into an At-the-Market Sales Agreement (the “ATM Agreement”) with Dawson James Securities Inc. (“Dawson James” or the “Sales Agent”) pursuant to which the Company may issue and sell, from time to time, shares of its common stock (the “Shares”), depending on market demand, with the Sales Agent acting as the sales agent or principal (the “Offering”). Sales of the Shares may be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on or through the NYSE American. The Agent will use its commercially reasonable efforts to sell the Shares requested by the Company to be sold on its behalf, consistent with the Agent’s normal trading and sales practices, under the terms and subject to the conditions set forth in the ATM Agreement. The Company has no obligation to sell any of the Shares. The Company may instruct the Agent not to sell the Shares if the sales cannot be effected at or above the price designated by the Company from time to time and the Company may at any time suspend sales pursuant to the ATM Agreement.

The Company will pay the Agent a commission of up to 3.0% of the gross proceeds from the sale of Shares by the Agent under the ATM Agreement. The Company has also agreed to reimburse the Agent for the fees and disbursements of its counsel, payable upon execution of the Sales Agreement, in an amount not to exceed $30,000 in addition to certain ongoing disbursements of its legal counsel up to $2,500 per calendar quarter. In addition, the Company has agreed to provide customary indemnification rights to the Sales Agent.

Any sales of Shares under the ATM Agreement will be made pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-269225), including the related prospectus, filed with the Securities and Exchange Commission (the “SEC”) on January 13, 2023, and declared effective on January 25, 2023, as supplemented by the prospectus supplement dated October 11, 2024, and any applicable additional prospectus supplements related to the Offering that form a part of the Registration Statement.

The aggregate market value of Shares eligible for sale in the Offering and under the ATM Agreement will be subject to the limitations of General Instruction I.B.6 of Form S-3, to the extent required under such instruction. The prospectus supplement filed with the SEC on October 11, 2024, is offering Shares having an aggregate offering price of $10,000,000. The Company will be required to file another prospectus supplement in the event it determines to offer more than $10,000,000 of Shares in accordance with the terms of the Sales Agreement, to the extent then permitted under General Instruction I.B.6 of Form S-3.

The Company intends to use the net proceeds from the offering to fund the continued development of its ONP-002 product candidate and for general corporate purposes and working capital. The precise amount and timing of the application of these proceeds will depend upon a number of factors, such as the timing and progress of our research and development efforts, our funding requirements and the availability and costs of other funds. As of November 13, 2024 there have been no shares sold under the ATM Agreement.

Previously, on August 8, 2024, the Company entered into an At-The-Market Issuance Sales Agreement (the “Sales Agreement”) with Ascendiant Capital Markets, LLC, as sales agent (the “Agent”), pursuant to which the Company may offer and sell through or to the Agent (the “ATM”) up to $10.0 million in shares of its common stock at-the-market. On October 9, 2024, the Company terminated the Sales Agreement with Ascendiant Capital. There were no shares sold under the Sales Agreement with Ascendiant Capital in the nine months ended September 30, 2024.

9. Warrants

The Company’s outstanding and exercisable warrants as of September 30, 2024 are presented below:

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

10. 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.

The Incentive Plan, as amended, 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) any shares remaining available for the grant of new awards under the 2012 Plan as of immediately prior to the effective date of the 2021 Equity Incentive Plan; plus, (iii) certain shares subject to outstanding awards granted under the 2012 Plan that may become available for issuance under the 2021 Equity Incentive Plan, 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 the 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.

A summary of stock option activity for the nine months ended September 30, 2024 is as follows:

As of September 30, 2024, an aggregate of 1,022,503 shares of common stock are covered by outstanding option awards and 3,664 shares of common stock are available for future awards under the Incentive Plan.

Total compensation cost related to stock options was $330,802 and $402,805 for the three months ended September 30, 2024 and 2023, respectively. Total compensation cost related to stock options was $458,365 and $546,399 for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, there was $195,296 of unrecognized compensation costs related to stock options, which is expected to be recognized over a weighted average period of less thanone year.

11. 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 September 30, 2024, none of the milestone payment obligations for the Inspirevax License Agreement have been met.

12. 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 National Research Council (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 September 30, 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.

Ladenburg Thalmann Litigation

On December 7, 2022, the Company entered into an investment banking engagement letter with Ladenburg Thalmann, (“Ladenburg”). The engagement letter was subsequently amended at various times (together with amendments to the “Engagement Letter”). The Company terminated the Engagement Letter as of August 15, 2023. Ladenburg sent the Company an invoice in the amount of $2,500,000, and a demand letter from Ladenburg’s general counsel demanding payment thereof followed shortly thereafter. Ladenburg is of the view that a fee is owed based on the Company’s purchase of assets from Odyssey Health, Inc. The Company strongly disagrees that any such fee is due to Ladenburg and initiated a confidential action for arbitration against Ladenburg with the Financial Industry Regulatory Authority (“FINRA”) on March 12, 2024, seeking, among other things, a declaratory judgment that no such fee is owed. On April 17, 2024 Ladenburg filed a Complaint in federal court in the Southern District of Florida, and also filed motion for a temporary restraining order (“TRO”) and preliminary injunction seeking to move the venue from FINRA to the federal court in Miami-Dade County. On May 3, 2024 the Magistrate Judge assigned to the case issued a Report and Recommendation denying the motion; although Ladenburg objected to the Report and Recommendation, Magistrate Judge’s Report and Recommendation, the District Court Judge adopted the Report and Recommendation, finalizing the Court’s denial of the requested injunctive relief. On May 9, 2024, the Company filed a motion to dismiss in the federal court action, which is still currently pending. Meanwhile, the FINRA action continues and is set to be heard in February of 2025. The Company believes Ladenburg’s claims are unlikely to prevail and intends to defend itself vigorously. It is possible, however, that there could be an unfavorable outcome or resolution of the claims asserted, which could negatively and materially impact the Company’s business, consolidated financial position and results of operations. Litigation is inherently uncertain and there can be no assurance that the Company will prevail. The Company does not include an estimate of legal fees and other related defense costs in its estimate of loss contingencies.