ORAGENICS INC

Notes to Consolidated Financial Statements

Note 1. Basis of Presentation and Nature of Operations

Basis of Presentation

The accompanying condensed consolidated financial information of Oragenics, Inc. and its wholly-owned subsidiary Noachis Terra Inc. is unaudited and has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany balances and transactions have been eliminated. However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods. The consolidated financial information as of December 31, 2024 is derived from our 2024 Annual Report on Form 10-K. The consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2024 Annual Report on Form 10-K filed with the SEC on March 14, 2025. The consolidated results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Significant Accounting Policies

Our significant accounting policies have not changed during the three months ended March 31, 2025 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Nature of Operations

We are a development-stage company dedicated to the research and development of nasal delivery pharmaceutical medications in neurology and fighting infectious diseases. We currently 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”).

Going Concern

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 $2.2 million and used cash of $2.1 million in our operating activities during the three months ended March 31, 2025 and, as of March 31, 2025, we had an accumulated deficit of $219 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. During the first quarter of 2025, we raised $2.6 million in net proceeds from private placements and sales of our common stock and $2.2 million from the issuance of debt, net of issuance costs.

We expect to incur substantial expenditures to further develop our concussion drug. We believe the working capital at March 31, 2025 will 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.

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.

Note 2. New Accounting Pronouncements

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.

Note 3. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

Note 4. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

Note 5. Short-Term Notes Payable

On March 13, 2025, we issued a $3.0 million promissory note (the “Note”) to a single investor at an original issue discount of 17%. Net proceeds to us were $2.25 million after placement agent fees of $175,000 and legal expenses of $98,437.

No interest accrues on the Note unless an event of default occurs, at which time interest will accrue at a rate of 20% per annum. The Note matures upon the earlier of July 14, 2025 or the closing of any subsequent offering by us with net proceeds equal to or in excess of all amounts due under the Note.

The Note contains certain Events of Default, including (i) our failure to pay any amount of principal, interest, redemption price or other amounts due under the Note or any other transaction document, (ii) any default under, redemption of, or acceleration prior to maturity of any indebtedness, as such term is defined in the transaction documents, (iii) bankruptcy, (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.

In connection with the issuance of the Note, we designated and issued 1,000,000 shares of our authorized but unissued shares of preferred stock as Series G Mirroring preferred stock. For a description of the principal terms of the Series G Mirroring preferred stock, see Note 8.

We intend to use the net proceeds from the Note for working capital and other general corporate purposes.

Short-term notes payable consisted of the following:

Note 6. Stock-Based Compensation

2021 Equity Incentive Plan

Our 2021 Equity Incentive Plan (the “2021 Plan”) authorizes the grant of stock options (incentive and non-statutory), stock appreciation rights and restricted stock covering a total of 3,166,667 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 March 31, 2025,769,888 shares were reserved for issuance related to the 2021 Plan and 2,257,279 shares of our common stock remain available for awards.

Stock Option Activity

Stock option activity was as follows:

The canceled or expired options of 223,865 relate to the forfeiture of stock options.

Unrecognized Stock-Based Compensation Costs

As of March 31, 2025, unrecognized stock-based compensation was $13,780, which will be recognized over an average expected recognition period of.47 years.

Note 7. Warrants

Outstanding and exercisable warrants as of March 31, 2025 are presented below:

Note 8. Shareholders’ Equity

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”). Dawson James uses its commercially reasonable efforts to sell the Shares requested by us to be sold, consistent with their normal trading and sales practices. 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 pay Dawson James a commission of up to 3.0% of the gross proceeds from the sale of Shares under the ATM.

In February 2025, we sold 7.8 million shares pursuant to the ATM Agreement for net proceeds of $2.6 million after commissions and legal expenses totaling $0.11 million.

Series A Convertible Preferred Stock

On May 10, 2017, and on July 25, 2017, we issued 12,000,000 shares of convertible preferred stock designated as Series A Convertible preferred stock for an original purchase price and initial liquidation preference of $3.0 million. Each share of Series A Convertible preferred stock was issued for $0.25 per share. On March 9, 2018 and August 26, 2022, holders of a total of 6,583,000 shares of our Series A Convertible preferred stock converted their shares to common stock. In addition, in December 2024, the holders of the remaining 5,417,000 shares of our Series A Convertible preferred stock converted their shares into 9,028 shares of our common stock and, as a result of such conversions, no shares of Series A preferred stock remained outstanding at March 31, 2025 or December 31, 2024.

Series B Convertible Preferred Stock

On November 8, 2017, we issued 6,600,000 shares of convertible preferred stock designated as Series B Convertible preferred stock with an aggregate purchase price and initial liquidation preference of $3.3 million. Each share of Series B Convertible Preferred Stock was issued for $0.50 per share. On August 26, 2022, one holder of Series B Convertible preferred stock converted 1,950,000 shares to common stock. In addition, on December 2024, the remaining 4,050,000 shares of Series B Convertible preferred stock were converted into 13,500 shares of our common stock and, as a result of such conversions, no shares of Series B Convertible preferred stock remained outstanding at March 31, 2025 or December 31, 2024.

Series F Convertible Preferred Stock

In December 2023, we issued 8,000,000 shares of our Series F Convertible preferred stock in connection with our purchase of assets from Odyssey Health, Inc. (“Odyssey”) (see Note 9). The Series F Convertible preferred stock is convertible on a one-for-one basis into our common stock to the extent that Odyssey would not hold more than 19.9% of our outstanding common stock following the conversion. Upon issuance,511,308 shares of Series F Convertible preferred stock were converted to 511,308 shares of our common stock and 7,488,692 shares of Series F Convertible preferred stock remained outstanding at March 31, 2025 and December 31, 2024.

Series G Mirroring Preferred Stock

In March 2025, in connection with our issuance of a $3.0 million promissory note (see Note 5), we designated and issued 1,000,000 shares of our authorized but unissued shares of preferred stock as Series G Mirroring preferred stock, no par value and a stated value of $0.10 per share. On May 2, 2025, upon our shareholders’ approval, at our annual shareholders meeting, of a proposal authorizing the Company’s Board of Directors, in its discretion at any time within one year after shareholder approval is obtained, to effect a reverse stock split of then-outstanding shares of the Company’s common stock, at a ratio of not less than one-for-five (1:5) and not greater than one-for-sixty (1:60), with the exact ratio to be determined by the Company’s Board and included in a public announcement (the “Reverse Split Proposal”), in accordance with the Certificate of Designation creating the Series G Mirroring Preferred Stock, all of the shares of Series G Mirroring Preferred Stock were transferred to the Company and cancelled and such shares have resumed the status of authorized but unissued shares of preferred stock and are no longer designated as Series G Preferred Stock.

Following is a summary of the principal terms of the Series G Mirroring Preferred stock:

Dividends

No dividends shall be paid on shares of the Series G Mirroring preferred stock.

Voting Rights

The Series G Mirroring preferred stock has no voting rights, except that each share entitles the holder thereof to 1,000 votes per share solely and exclusively with respect to the Reverse Split Proposal, the Amendment Proposal and any Adjournment Proposal (as such terms are defined in the Certificate of Designation creating the Series G Mirroring preferred stock) being voted on at our upcoming Annual Meeting, voting together with our common stock as a single class. The holder agreed to vote all 1,000,000 shares of Series G Mirroring preferred stock on any proposal presented to the shareholders 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 holder voted in the same proportions as shares of our common stock are voted on the Reverse Split Proposal, the Amendment Proposal and the Adjournment Proposal, as applicable.

Liquidation

The Series G Mirroring preferred stock ranked junior to the Series F preferred stock. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the holder was entitled to receive, out of the assets of the Corporation, an amount equal to the Stated Value for each share of Series G Mirroring preferred stock before any distribution or payment could be made to the holders of common stock but after any other class of stock than ranked senior to the Series G Mirroring preferred stock, including the Series F preferred stock.

Cancellation

Upon the approval of either the Reverse Split Proposal or the Proposal to Increase Authorized Shares, both of which were approved by the Company’s shareholders on May 2, 2025, each share of Series G preferred stock was automatically transferred to us and cancelled for no consideration with no action on behalf of the holders of Series G preferred stock, and such shares resumed the status of authorized but unissued preferred stock and no longer are designated as Series G Mirroring preferred stock.

Preemptive Rights

No holder of Series G Mirroring preferred stock has any preemptive rights to purchase or subscribe for our common stock or any of our other securities.

Trading Market

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

Note 9. Acquisition of Concussion Assets

On December 28, 2023, we entered into an Asset Purchase Agreement with Odyssey Health, Inc. to purchase their intellectual property assets for their neurology products ONP-001 and ONP-002.

The aggregate purchase price of the transaction was $10,273,506 as follows:

We evaluated the transaction and determined that it should be accounted for as an asset purchase. Furthermore, it was determined that the assets acquired were in-process research and development and, accordingly, the entire purchase price was recorded as a component of Research and development expense in the fourth quarter of 2023.

Note 10. Net Loss Per Share

Basic and diluted net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding for the period. Potentially dilutive common stock and common stock equivalents, including stock options and warrants are excluded as they would be antidilutive.

The following anti-dilutive securities were excluded from the calculations of diluted net loss per share:

Note 11. Commitments and Contingencies

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 our 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, 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, which is still pending. Meanwhile, the FINRA action continues and is set to be heard in August 2025. We believe Ladenburg’s claims are unlikely to prevail and intend to defend vigorously against such claims. 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 our estimate of loss contingencies.