ORAGENICS INC

Notes to Consolidated Financial Statements

1. Basis of Presentation

The Company

Oragenics, Inc. (formerly known as Oragen, Inc.) (the “Company” or “we”) was incorporated in November 1996. Commencing in December 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”).

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) including the assumption of a going concern basis which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

Going Concern Consideration

In light of our recurring losses, accumulated deficit and negative cash flow, the report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2024 contained an explanatory paragraph raising substantial doubt about our ability to continue as a going concern.

We have incurred losses and negative cash flows from operations since inception. To date, we have not generated significant revenues from operations. We incurred a net loss of $10.6 million and used cash of $8.6 million in our operating activities during the year ended December 31, 2024. As of December 31, 2024, we had an accumulated deficit of $216.8 million.

Historically, our major sources of cash have been comprised of proceeds from various public and private offerings of our common stock and preferred stock, warrant exercises, income earned on grants and interest income. For the fiscal year ended December 2024, we raised $7.65 million in gross proceeds from private placements and sales of our common stock. We expect to incur substantial expenditures to further develop our concussion drug. We believe the working capital at December 31, 2024 will be sufficient to meet our business objectives through the first quarter of 2025. In February 2025, we raised $2.75 million through the sale of common stock through our At-the-Market Sales Agreement (“ATM”) (see Note 7). In March 2025 we entered into a Purchase Agreement with a single investor pursuant to which raised approximately $2.5 million (see Note 7). As a result of this financing, we believe our working capital at the time of this filing to be sufficient to meet our business objectives through the third quarter of 2025.

These matters, when considered in the aggregate, raise substantial doubt about our ability to continue as a going concern for a reasonable period of time, which is defined as within one year after the date that our consolidated financial statements are issued.

Our ability to continue operations after our current cash resources are exhausted depends on our 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 our focus and direction of our research and development programs, competitive and technical advances, or other developments.

Additional financing will be required to continue operations after we exhaust our current cash resources and to continue our long-term plans for clinical trials and new product development. There can be no assurance that any such financing can be realized or, if realized, what the terms thereof may be, or that any amount that we are able to raise will be adequate to support our working capital requirements until we achieve profitable operations.

We intend to seek additional funding through sublicensing arrangements, joint ventures or partnerships, sales of rights to technology, government grants and public or private financings and may receive funding through the exercise of outstanding warrants. Our future success depends on our ability to raise capital and ultimately generate revenue and attain profitability. We 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 or, if available, will be on terms acceptable to us. If we issue additional securities to raise funds, these securities may have rights, preferences, or privileges senior to those of our common stock, and our current shareholders may experience dilution. If we are unable to obtain funds when needed or on acceptable terms, we may be required to curtail our current development programs, cut operating costs and forego future development and other opportunities.

2. Significant Accounting Policies

Basis of Consolidation

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

New Accounting Standards

ASU 2022-03

In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-03, which states that a contractual restriction on the sale of an equity security is not considered in measuring fair value. Furthermore, it requires an entity to disclose the fair value of equity securities subject to contractual sale restrictions, the nature and remaining duration of the restrictions and the circumstances that could cause a lapse in the restrictions. ASU 2022-03 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023. The adoption of ASU 2022-03 effective January 1, 2024 did not have any effect on our financial statements.

ASU 2023-07

In November 2023, the FASB issued ASU No. 2023-07, which provides amendments to reportable segment disclosure requirements requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. The new segment disclosures are effective for fiscal years beginning after December 15, 2023*,* and interim periods within fiscal years beginning after December 15, 2024*.*

ASU 2023-09

In December 2023, the FASB issued ASU 2023-09 related to improvements to income tax disclosures. The amendments in this update require enhanced jurisdictional and other disaggregated disclosures for the effective tax rate reconciliation and income taxes paid. The amendments in this update are effective for fiscal years beginning after December 15, 2024. We plan to adopt this pronouncement and make the necessary updates to our disclosures for the year ending December 31, 2025, and, aside from these disclosure changes, we do not expect the amendments to have a material effect on our financial statements.

ASU 2024-03

In November 2024, the FASB issued ASU 2024-03 related to the disaggregation of certain income statement expenses. The amendments in this update require public entities to disclose incremental information related to purchases of inventory, team member compensation and depreciation, which will provide investors the ability to better understand entity expenses and make their own judgements about entity performance. The amendments in this update are effective for fiscal years beginning after December 15, 2026. We plan to adopt this pronouncement and make the necessary updates to our disclosures for the year ending December 31, 2027, and, aside from these disclosure changes, we do not expect the amendments to have a material effect on our financial statements.

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures. There are certain critical estimates that we believe require significant judgment in the preparation of our financial statements. We consider an accounting estimate to be critical if:

Our critical accounting policies and estimates include accounting for stock-based awards and accounting for business combinations or asset purchases as described below.

Cash and Cash Equivalents

Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Our cash and cash equivalents are deposited in a financial institution and consist of demand deposits and overnight repurchase agreements and at times deposits are in excess of federally insured limits.

Business Segments

The Company operates in one reportable segment, which includes all activities related to advancing the development of our concussion drug, ONP-002. The determination of a single reportable segment is consistent with the consolidated financial information regularly provided to our chief operating decision maker (CODM). In 2024, our CODM was our President, Mr. Micheal Redmond. On December 16, 2024 our CODM became, and is presently, our Chief Financial Officer and Interim Chief Executive Officer, who reviews and evaluates consolidated net loss for purposes of assessing performance, making operating decisions, allocating resources and planning and forecasting for future periods. The measure of segment assets is reported on the balance sheet as total assets. During the twelve-month periods ended December 31, 2024, and 2023 there was no segment revenue. The accounting policies for the development of our concussion drug are the same as those described in the summary of significant accounting policies.

Stock-Based Awards

Generally, all forms of stock-based awards, including stock option grants and warrants, are measured at fair value on the grant date typically using a Black-Scholes Option Pricing Model, which requires us to make certain assumptions and estimates related to the risk-free interest rate, expected stock price volatility, expected life of the award and expected dividends.

The expense resulting from stock-based awards is recognized in Research and development or General and administrative in our Consolidated Statements of Operations, depending on the nature of the services provided, on a straight-line basis over the requisite service period. To the extent the stock-based awards do not vest at the grant date they are subject to forfeiture.

For performance-based awards, we record share-based compensation expense only when the performance-based milestone is deemed probable of achievement. We utilize both quantitative and qualitative criteria to judge whether milestones are probable of achievement.

For awards with market-based performance conditions, we recognize the grant-date fair value of the award over the derived service period regardless of whether the underlying performance condition is met.

We account for forfeitures of stock-based awards as a component of stock-based compensation expense as the forfeitures occur.

Impairment of Long-Lived Assets

We periodically review our long-lived assets for impairment and reduce the carrying value to fair value whenever events or changes in circumstances indicate that the carrying value may not be recoverable. There wereno impairment losses recorded during the years ended December 31, 2024 and 2023.

Research and Development Expenses

Research and development consist of expenses incurred in connection with the discovery and development of our product candidates and are expensed as incurred on our Consolidated Statements of Operations. Prepayments and upfront payments to third-party vendors for work to be completed in the future are recorded as a prepaid expense on our Consolidated Balance Sheet.

Income Tax

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in operations in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts expected to be realized by the use of a valuation allowance. Based on our historical operating losses, a valuation allowance has been recognized for all deferred tax assets.

Under US GAAP, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, US GAAP provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition.

Concentrations

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents. We maintain cash accounts in commercial banks, which may, at times, exceed federally insured limits. We have not experienced any losses in such accounts. We believe we are not exposed to any significant credit risk on cash and cash equivalents. As of December 31, 2024 and 2023, the uninsured portion of this balance was $0.6 million and $3.1 million, respectively.

Grant Revenue

Grant revenue in 2023 was derived from a small business innovation research grant in the amount of $250,000 (“Computer-aided Design for Improved Lantibiotics”) that was completed in September 2023. We recognized grant revenue as reimbursable grant costs were incurred up to the pre-approved award limits within the budget period. The costs associated with these reimbursements were reflected as a component of Research and development in the accompanying Consolidated Statements of Operations.

3. Property and Equipment, net

In September 2023, we terminated our lease for the building where some of our research and development activities for our lantibiotic program were undertaken. As a result, all our property and equipment assets were disposed of as of December 31, 2023. Depreciation and amortization expense was $27,391 in 2023 and we hadno depreciation and amortization expense in 2024.

4. Accounts Payable and Accrued Expenses

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

5. Short-Term Notes Payable

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

6. Prepaid Expenses - Current and Long-Term

7. Shareholders’ Equity

Common Stock

We currently have 350,000,000 authorized shares of common stock and 50,000,000 shares of authorized preferred stock. On December 31, 2024 and 2023 respectively we had 12,570,100 and 3,080,693 shares of common shares issued and 7,488,692 and 16,966,692 preferred shares issued and outstanding.

At-The-Market Sales Agreement with Dawson James

On October 11, 2024, we entered into an At-the-Market Sales Agreement (the “ATM Agreement”) with Dawson James Securities Inc. (“Dawson James”) pursuant to which are allowed to issue and sell, from time to time, shares of our common stock (the “Shares”) by any method permitted by law as an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, including, without limitation, sales made directly on or through the NYSE American (the “Offering”). Dawson James will use its commercially reasonable efforts to sell the Shares requested by us to be sold, consistent with their normal trading and sales practices. We have no obligation to sell any of the Shares. We may instruct Dawson James not to sell the Shares if the sales cannot be effected at or above the price designated by us and we may suspend sales pursuant to the ATM Agreement at any time.

We will pay Dawson James a commission of up to 3.0% of the gross proceeds from the sale of Shares under the ATM Agreement. We will also reimburse Dawson James for the fees and disbursements of its counsel 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.

Any sales of Shares under the ATM Agreement will be made pursuant to our Registration Statement on Form S-3 (File No. 333-269225), which allows the sale of up to $10,000,000 of Shares. We will be required to file a prospectus supplement in the event we determine to offer more than $10,000,000 of Shares.

As of December 31, 2024 there have been no shares sold under the ATM Agreement.

Subsequent to December 31, 2024, on February 5, 2025, we sold 7.8 million shares of our common stock pursuant to the ATM for gross proceeds of $2.75 million before subtracting commission and legal expenses.

At-The-Market Sales Agreement with Ascendiant Capital Markets, LLC

On August 8, 2024, we entered into an At-The-Market Issuance Sales Agreement (the “Sales Agreement”) with Ascendiant Capital Markets, LLC, as sales agent (“Ascendiant Capital”), pursuant to which we could offer and sell up to $10.0 million in shares of our common stock at-the-market. On October 9, 2024, we terminated the Sales Agreement with Ascendiant Capital. There were no shares sold under the Sales Agreement with Ascendiant Capital.

Public Offering of Common Stock

On March 1, 2024, we 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, we granted the underwriters an option exercisable for 45 days for the purchase of up to an additional 210,000 shares of our common stock solely for the purpose of covering over-allotments, none of which were not exercised. We also issued warrants to the underwriters exercisable August 25, 2024, and expiring on February 27, 2029, to purchase up to 5% of the shares sold at an exercise price of $1.875 per share. The gross proceeds of this offering were $2.1 million before underwriting discounts and commissions and other expenses paid by us were deducted.

Placement Agency Agreement with Dawson James Securities Inc.

On June 25, 2024, we entered into a placement agency agreement (the “Placement Agency Agreement”) with Dawson James Securities Inc. (“Dawson James”) pursuant to which we engaged Dawson James as the placement agent for a registered public offering of 1,100,000 shares of our common stock for $1.00 per share. We paid Dawson James a placement agent fee of 7.00% of the gross proceeds from this offering and reimbursed them for certain out of pocket expenses not to exceed $75,000, including legal fees. In addition, we issued Dawson James warrants to purchase 55,000 shares of our common stock, which represented 5% of the aggregate number of securities sold in this offering, with an exercise price of $1.25 per share and exercisable for five years from the date of the closing of this offering. The warrants became initially exercisable six months from the closing of this offering.

This offering resulted in gross proceeds of $1.1 million before subtracting placement agent fees and legal expense.

Second Placement Agency Agreement with Dawson James Securities Inc.

On September 4, 2024, we entered into a second placement agency agreement (the “Second Placement Agency Agreement”) with Dawson James pursuant to which we engaged Dawson James as the placement agent for a registered public offering of 8,106,584 shares of our common stock at $0.55 per share or pre-funded warrants to purchase shares of our common stock (“Pre-Funded Warrants”) in lieu thereof at $0.549 per Pre-Funded Warrant, which is equal to the offering price per share of the common stock less the $0.001 per share exercise price of each Pre-Funded Warrant. In connection with this offering, we entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor to purchase the common stock and Pre-Funded Warrants.

The Pre-Funded Warrants are immediately exercisable and terminate when exercised in full.

We sold 3,078,378 shares of our common stock and Pre-Funded Warrants to purchase 5,028,206 shares of our common stock pursuant to this offering. This 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.

As of the date of this filing all of the Pre-Funded Warrants have been exercised.

We paid a placement agent fee equal to 7.00% of the gross proceeds from the sale of the common stock and Pre-Funded Warrants in this Offering and reimburse the Placement Agent for certain out-of-pocket expenses not to exceed $125,000, including legal fees. In addition, we issued the Placement Agent warrants to purchase up to 405,329 shares of our common stock, which represented 5% of the aggregate number of securities sold in the Offering, with an exercise price of $0.6875 per share and exercisable commencing 6 months from the closing of the offering and for five years thereafter.

Debt Raise

On March 13, 2025, the Company entered into and consummated a note securities purchase agreement (the “Purchase Agreement”) with a single investor (the “Purchaser”) pursuant to which the Company sold, in a private placement (the “Offering”), to the Purchaser a promissory note with an aggregate principal amount of $3,000,000 (the “Note”) and 1,000,000 shares of Series G Mirroring Preferred Stock of the Company (the “Series G Preferred Stock”). The aggregate net proceeds to the Company are expected to be approximately $2,250,000 million, after deducting placement agent fees of $175,000 and legal expenses of $75,000.

The Note was issued with an original issue discount of 20%. No interest accrues on the Note unless and until an Event of Default (as defined in the Note) has occurred, upon which interest shall accrue at a rate of twenty percent (20.0%) per annum and shall be computed on the basis of a three hundred sixty (360)-day year and twelve (12) thirty (30)-day months and shall be payable on the maturity date. The Note matures upon the earlier of 120 days from the issuance date or the closing of any subsequent offering by the Company with net proceeds equal to or in excess of all amounts due under the Note. The Note contain certain Events of Default, including (i) the Company’s failure to pay any amount of principal, interest, redemption price or other amounts due under the Notes or any other transaction document, (ii) any default under, redemption of, or acceleration prior to maturity of any indebtedness of the Company, as such term is defined in the transaction documents, (iii) bankruptcy of the Company or its subsidiaries, (iv) a final judgement or judgements for the payment of money in excess of $250,000, which is not discharged or stayed pending appeal within 60 days, and (v) any breach or failure to comply with any provision of the Note or any other transaction document. Upon the occurrence of any Event of Default and at any time thereafter, the Purchaser shall have the right to exercise all of the remedies under the Note. The Note also provide for redemption upon a change of control, as such term is defined under the Notes and mandatory redemption upon the receipt of net proceeds from any offering of equity or debt by the Company.

In connection with the Offering, the Company filed a Certificate of Designation with the Secretary of State for the State of Florida (the “Certificate of Designation”) designating 1,000,000 shares out of the authorized but unissued shares of its preferred stock as Series G Preferred Stock. The following is a summary of the principal terms of the Series G Preferred Stock.

The rights and preferences of the Series G Preferred Stock are set forth in the Certificate of Designation filed with Secretary of State for the State of Florida, a copy of which is attached hereto as Exhibit 3.9. The Series G Preferred Stock has no voting rights, except as required by applicable law and except that each share of Series G Preferred Stock shall entitle the holder thereof to 1,000 votes per each share of Series G Preferred Stock solely and exclusively with respect to the Reverse Split Proposal, the Amendment Proposal and any Adjournment Proposal (as defined below), voting together with the Common Stock as a single class. The Purchaser has agreed to vote all of Purchaser’s shares of Series G Mirroring Preferred Stock on any proposal presented to the shareholders of the Corporation for purposes of approving the Reverse Split Proposal, the Amendment Proposal and the Adjournment Proposal and has agreed that such shares of Series G Mirroring Preferred Stock, shall, to the extent voted in favor of such proposals, be automatically and without further action of the Purchaser voted in the same proportions as shares of Common Stock (excluding any shares of Common Stock that are not voted) are voted on the Reverse Split Proposal, the Amendment Proposal and the Adjournment Proposal, as applicable. For the avoidance of doubt, and for illustrative purposes only, if 30% of the aggregate votes cast by Common Stock in connection with the Reverse Split Proposal are voted against such proposal and 70% of the aggregate votes cast by Common Stock are voted in favor thereof, then 30% of the votes cast by the shares of Series G Mirroring Preferred Stock voting in connection with the Reverse Split Proposal shall vote against the approval of the Reverse Split Proposal and 70% of such votes shall be cast in favor.

The Series G Preferred Stock shall rank junior to the Series F Preferred Stock. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value for each share of Series G Mirroring Preferred Stock before any distribution or payment shall be made to the holders of Common Stock but after any other class of stock than ranks senior to the Series G Mirroring Preferred Stock, including the Series F Preferred Stock, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. Each share of Series G Mirroring Preferred Stock shall have no par value and a stated value equal to $0.10.

Upon effectiveness of either the Reverse Split Proposal or the Proposal to Increase Authorized Shares, each share of Series G Preferred Stock shall be automatically transferred to the Company and cancelled for no consideration with no action on behalf of the holders of Series G Preferred Stock. Such shares shall resume the status of authorized but unissued preferred stock and will no longer be designated as Series G Mirroring Preferred Stock.

There is no established trading market for any of the Series G Preferred Stock, and we do not expect a market to develop. We do not intend to apply for a listing for any of the Series G Preferred Stock on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Series G Preferred Stock will be limited.

The foregoing descriptions of the Certificate of Designation, the Purchase Agreement, the Note, the Lock-Up Agreements and the Placement Agency Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Purchase Agreement, Notes, the Lock-Up Agreement and the Placement Agency Agreement, forms of which are attached hereto as Exhibits 3.9, 10.25, 10.26, 10.27 and 10.29, respectively and are each incorporated by reference herein.

The Company intends to use the net proceeds from the Offering for working capital and other general corporate purposes. Dawson James Securities, Inc. served as the placement agent in the Offering, pursuant to the terms of a placement agent agreement dated February 26, 2024. The Note and Series G Preferred Stock sold in the Offering were issued in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Act”), and Regulation D promulgated thereunder and, have not been registered under the Act, or applicable state securities laws. Accordingly, the Note and Series G Preferred Stock may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Act and such applicable state securities laws.

Warrants

Outstanding and exercisable warrants as of December 31, 2024 are presented below:

We also had 1,139,705 pre-funded warrants outstanding at December 31, 2024 that were exercised in January of 2025.

All outstanding warrants are classified as equity on our Consolidated Balance Sheets.

8. Stock-Based Compensation

2021 Incentive Plan

The 2021 Incentive Plan authorizes the grant of stock options (incentive and non-statutory), stock appreciation rights and restricted stock covering a total of 3,166,167 shares of our common stock. Options are granted at the fair value of our common stock on the date of grant and generally vest either immediately or over a period of up tothree years from the date of grant and expire 10 years from the date of grant. As of December 31, 2024,993,753 shares of our common stock were reserved for issuance related to the 2021 Incentive Plan, and 2,032,914 shares remained available for awards.

Recipients of stock awards under our 2021 Incentive Plan become the owner of record of the stock immediately upon grant, which may be subject to certain restrictions. The balance of unvested restricted stock will be forfeited and automatically transferred back to us at no cost upon the termination of the recipient’s employment. Upon vesting of restricted stock that is made to recipients who are employees, the recipient has the option to settle minimum withholding taxes by electing to have us withhold otherwise deliverable shares having a fair value equal to the required tax obligations (“net-settlement”). The net-settlement shares are then immediately cancelled and retired and reduce the shares available for issuance under the 2021 Incentive Plan.

We use the Black-Scholes Pricing Option Pricing Model to estimate the fair value of stock-based awards on the date of grant. The assumptions employed in the calculation of the fair value of share-based compensation expense were calculated as follows for all years presented:

Assumptions used to estimate the fair value of stock options granted were as follows:

Total stock-based compensation related to stock options was $516,049 and $550,083 for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, there was $21,154 of unrecognized stock-based compensation related to stock options, which is expected to be recognized over a weighted average period of less than one year.

Stock option activity for the year ended December 31, 2024 was as follows:

Certain other information regarding our stock-based awards was as follows:

Restricted stock activity was as follows for the year ended December 31, 2024:

The fair value of restricted stock vested in 2024 was $20,220, and stock-based compensation expense related to restricted stock was $5,055. As of December 31, 2024, there wasno unrecognized stock-based compensation related to non-vested restricted stock.

9. Retirement Plan

We have a defined contribution Simple Individual Retirement Arrangement plan which covers all employees and provides for a Company match of up to 3% of all employee compensation contributions to the plan. Total matching contributions for the years ended December 31, 2024 and 2023 were $27,325 and $20,045 respectively.

10. Income Taxes

The components of the provision for income taxes for the years ended December 31, 2024 and 2023 are as follows:

At December 31, 2024 and 2023, the Company had temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective income tax bases, as measured by enacted state and federal tax rates, as follows:

The following is a reconciliation of tax computed at the statutory federal rate to the income tax expense (benefit) in the statements of operations for the years ended December 31, 2024 and 2023:

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the levels of historical taxable income and projections of future taxable income over which the deferred tax assets are deductible, the Company believes that it is more likely than not that it will not be able to realize the benefits of these deductible differences.

Accordingly, a valuation allowance of $48,366,736 and $46,958,449 has been provided in the accompanying consolidated financial statements as of December 31, 2024 and 2023, respectively. The December 31, 2024 and December 31, 2023 net change in valuation allowance related to deferred tax assets was an increase of $1,408,287 and $5,791,558, respectively, primarily relating to the capitalization of research and development costs and net operating loss carryforwards.

At December 31, 2024, the Company has federal and state tax net operating loss carryforwards of $159,358,389 and $142,594,207, respectively. The State of Pennsylvania tax net operating loss carryforwards will expire through 2036. Federal and Florida tax net operating loss carryforwards generated prior to December 31, 2017 will expire through 2037 and are not subject to taxable income limitations. Federal and Florida tax net operating loss carryforwards generated subsequent to December 31, 2017, do not expire but may be subject to taxable income limitation pursuant to the Tax Cuts and Jobs Act that was enacted on December 22, 2017. The Company also has federal research and development tax credit carryforwards of $4,041,694 of which are included as an uncertain tax position. The federal tax credit carryforward will expire beginning in 2021 and continuing through 2043 unless utilized.

Utilization of net operating loss carryforwards and research and development credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or, could occur in the future in accordance with Section 382 of the Internal Revenue Code of 1986 (“IRC Section 382”) and with Section 383 of the Internal Revenue Code of 1986, as well as similar state provisions. These ownership changes may limit the amount of net operating loss carryforwards and research and development credit carryforwards that can be utilized annually to offset future taxable income and taxes, respectively. In general, an ownership change, as defined by IRC Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. The Company has completed several financings since its inception which may result in a change in ownership as defined by IRC Section 382, or could result in a change in control in the future.

For the years ended December 31, 2024 and 2023, the Company incurred $0 and $0, respectively, of additional unrecognized tax benefits that related to research and development credits. The entire amount of this unrecognized tax benefit, if recognized, would result in an increase to the deferred tax asset valuation allowance, and would not have an impact on the effective tax rate.

The Company files its income tax returns in the U.S. federal jurisdiction and in Florida and Pennsylvania. With few exceptions, the Company is no longer subject to federal or state income tax examinations by tax authorities for years before 2016.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Included in the balance at December 31, 2024 and 2023, are $4,041,694 and $4,169,354, respectively, of tax positions for which there is uncertainty about the validity of certain credits. The disallowance of the credits would impact the amount of gross deferred tax assets reflected in the accompanying footnotes.

During the years 2024 and 2023 the Company did not recognize any interest and penalties. Due to the potential offset of the Company’s operating loss carryforward for any future activity, the amount attributed to interest and penalties would be immaterial.

11. Commitments and Contingencies

Ladenburg Thalmann Litigation

On December 7, 2022, we 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”). We terminated the Engagement Letter as of August 15, 2023. Ladenburg sent us 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 tur purchase of assets from Odyssey Health, Inc. We strongly disagree 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, we 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 August of 2025. We believe Ladenburg’s claims are unlikely to prevail and we intend to defend the claims vigorously. It is possible, however, that there could be an unfavorable outcome or resolution of the claims asserted, which could negatively and materially impact our business, consolidated financial position and results of operations. Litigation is inherently uncertain and there can be no assurance that we will prevail. We do not include an estimate of legal fees and other related defense costs in its estimate of loss contingencies.

12. Subsequent Events

ATM Financing

In February 2025, we raised $2.75 million through the sale of common stock through our ATM with Dawson James. See Note 7 for additional information.

Debt Raise

On March 13, 2025, the Company entered into and consummated a note securities purchase agreement (the “Purchase Agreement”) with a single investor (the “Purchaser”) pursuant to which the Company sold, in a private placement (the “Offering”), to the Purchaser a promissory note with an aggregate principal amount of $3,000,000 (the “Note”) and 1,000,000 shares of Series G Mirroring Preferred Stock of the Company (the “Series G Preferred Stock”). The aggregate net proceeds to the Company are expected to be approximately $2,250,000 million, after deducting placement agent fees of $175,000 and legal expenses of $75,000.

The Note was issued with an original issue discount of 20%. No interest accrues on the Note unless and until an Event of Default (as defined in the Note) has occurred, upon which interest shall accrue at a rate of twenty percent (20.0%) per annum and shall be computed on the basis of a three hundred sixty (360)-day year and twelve (12) thirty (30)-day months and shall be payable on the maturity date. The Note matures upon the earlier of 120 days from the issuance date or the closing of any subsequent offering by the Company with net proceeds equal to or in excess of all amounts due under the Note. The Note contain certain Events of Default, including (i) the Company’s failure to pay any amount of principal, interest, redemption price or other amounts due under the Notes or any other transaction document, (ii) any default under, redemption of, or acceleration prior to maturity of any indebtedness of the Company, as such term is defined in the transaction documents, (iii) bankruptcy of the Company or its subsidiaries, (iv) a final judgement or judgements for the payment of money in excess of $250,000, which is not discharged or stayed pending appeal within 60 days, and (v) any breach or failure to comply with any provision of the Note or any other transaction document. Upon the occurrence of any Event of Default and at any time thereafter, the Purchaser shall have the right to exercise all of the remedies under the Note. The Note also provide for redemption upon a change of control, as such term is defined under the Notes and mandatory redemption upon the receipt of net proceeds from any offering of equity or debt by the Company.

In connection with the Offering, the Company filed a Certificate of Designation with the Secretary of State for the State of Florida (the “Certificate of Designation”) designating 1,000,000 shares out of the authorized but unissued shares of its preferred stock as Series G Preferred Stock. The following is a summary of the principal terms of the Series G Preferred Stock.

The rights and preferences of the Series G Preferred Stock are set forth in the Certificate of Designation filed with Secretary of State for the State of Florida, a copy of which is attached hereto as Exhibit 3.9. The Series G Preferred Stock has no voting rights, except as required by applicable law and except that each share of Series G Preferred Stock shall entitle the holder thereof to 1,000 votes per each share of Series G Preferred Stock solely and exclusively with respect to the Reverse Split Proposal, the Amendment Proposal and any Adjournment Proposal (as defined below), voting together with the Common Stock as a single class. The Purchaser has agreed to vote all of Purchaser’s shares of Series G Mirroring Preferred Stock on any proposal presented to the shareholders of the Corporation for purposes of approving the Reverse Split Proposal, the Amendment Proposal and the Adjournment Proposal and has agreed that such shares of Series G Mirroring Preferred Stock, shall, to the extent voted in favor of such proposals, be automatically and without further action of the Purchaser voted in the same proportions as shares of Common Stock (excluding any shares of Common Stock that are not voted) are voted on the Reverse Split Proposal, the Amendment Proposal and the Adjournment Proposal, as applicable. For the avoidance of doubt, and for illustrative purposes only, if 30% of the aggregate votes cast by Common Stock in connection with the Reverse Split Proposal are voted against such proposal and 70% of the aggregate votes cast by Common Stock are voted in favor thereof, then 30% of the votes cast by the shares of Series G Mirroring Preferred Stock voting in connection with the Reverse Split Proposal shall vote against the approval of the Reverse Split Proposal and 70% of such votes shall be cast in favor.

The Series G Preferred Stock shall rank junior to the Series F Preferred Stock. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value for each share of Series G Mirroring Preferred Stock before any distribution or payment shall be made to the holders of Common Stock but after any other class of stock than ranks senior to the Series G Mirroring Preferred Stock, including the Series F Preferred Stock, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. Each share of Series G Mirroring Preferred Stock shall have no par value and a stated value equal to $0.10.

Upon effectiveness of either the Reverse Split Proposal or the Proposal to Increase Authorized Shares, each share of Series G Preferred Stock shall be automatically transferred to the Company and cancelled for no consideration with no action on behalf of the holders of Series G Preferred Stock. Such shares shall resume the status of authorized but unissued preferred stock and will no longer be designated as Series G Mirroring Preferred Stock.

There is no established trading market for any of the Series G Preferred Stock, and we do not expect a market to develop. We do not intend to apply for a listing for any of the Series G Preferred Stock on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Series G Preferred Stock will be limited.

The foregoing descriptions of the Certificate of Designation, the Purchase Agreement, the Note, the Lock-Up Agreements and the Placement Agency Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Purchase Agreement, Notes, the Lock-Up Agreement and the Placement Agency Agreement, forms of which are attached hereto as Exhibits 3.9, 10.25, 10.26, 10.27 and 10.29, respectively and are each incorporated by reference herein.

The Company intends to use the net proceeds from the Offering for working capital and other general corporate purposes. Dawson James Securities, Inc. served as the placement agent in the Offering, pursuant to the terms of a placement agent agreement dated February 26, 2024. The Note and Series G Preferred Stock sold in the Offering were issued in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Act”), and Regulation D promulgated thereunder and, have not been registered under the Act, or applicable state securities laws. Accordingly, the Note and Series G Preferred Stock may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Act and such applicable state securities laws.

EXHIBIT INDEX