Odyssey Health, Inc. 10-K

Item 5. Market for the Registrant’s Common Stock, Related Shareholder Matters, and Issuer Purchases of Equity Securities Market Information Our stock trades on the OTC Markets OTCQB) under the symbol “ODYY”. The following table sets forth the bid prices quoted for our common stock during each quarter, as reported by the OTCQB in the current fiscal year. The following quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions. High Low Fiscal Year Ended July 31, 2020 Fourth Quarter $ 3.50 $ 0.37 Third Quarter 8.00 0.75 Second Quarter 2.06 1.35 First Quarter 1.35 1.35 Transfer Agent The Company’s transfer agent is Empire Stock Transfer, 1859 Whitney Mesa Drive, Henderson, Nevada 89014 (702) 818-5898. Holders of our Common Stock As of November 13, 2020, 90,570,202 shares of our common stock were outstanding and held approximately 124 stockholders of record. Dividends We have never paid dividends with respect to our common stock and cannot provide any assurance that we will declare or pay cash dividends on our common stock. Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant. Our board of directors expects to retain future earnings (if any) to finance our growth. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Securities Authorized for Issuance Under Equity Compensation Plans We did not have any equity compensation plans approved by shareholders at July 31, 2020. We had the following equity awards outstanding pursuant to plans not approved by shareholders at July 31, 2020: · stock options exercisable for 15 million shares of our common stock at $0.25 per share, all of which were canceled in September 2020; · stock options exercisable for 650,000 shares of our common stock at an average weighted price of $1.40 per share; · warrants exercisable for 44,500 shares of our common stock at $1.00 per share; and · 1,750,000 restricted stock units. No awards were available for issuance pursuant to any equity compensation plan at July 31, 2020. 24 Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None. Item 6. Selected Financial Data See financial statements. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical fact, included in this report regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management are forward-looking statements. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that the expectations underlying our forward-looking statements are reasonable, these expectations may prove to be incorrect, and all of these statements are subject to risks and uncertainties. Therefore, you should not place undue reliance on our forward-looking statements. We have included important risks and uncertainties in the cautionary statements included in this report, particularly the section titled “Risk Factors” incorporated by reference herein. We believe these risks and uncertainties could cause actual results or events to differ materially from the forward-looking statements that we make. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections or expectations prove incorrect, actual results, performance or financial condition may vary materially and adversely from those anticipated, estimated or expected. Our forward-looking statements do not reflect the potential impact of future acquisitions, mergers, dispositions, joint ventures or investments that we may make. We do not assume any obligation to update any of the forward-looking statements contained herein, whether as a result of new information, future events or otherwise, except as required by law. In the light of these risks and uncertainties, the forward-looking events and circumstances discussed in this report may not occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements. Overview The corporate mission is to create or acquire distinct assets, intellectual property, and technologies with an emphasis on acquisition targets that generate positive cash flow. Our business model is to develop or acquire medical related products, engage third parties to manufacture such products and then distribute the products through various distribution channels, including third parties. The Company has made significant investments in three different life saving technologies; the CardioMap® heart monitoring and screening device, the Save a Life choking rescue device and a unique neurosteroid drug compound intended to treat rare brain disorders. We intend to acquire other technologies and assets and plan to be a trans-disciplinary product development company involved in the discovery, development and commercialization of products and technologies that may be applied over various medical markets. We intend to license, improve and/or develop our products and identify and select distribution channels. We intend to establish agreements with distributors to get products to market quickly as well as to undertake and engage in our own direct marketing efforts. We will determine the most effective method of distribution for each unique product that we include in our portfolio. We intend to engage third party research and development firms who specialize in the creation of our products to assist us in the development of our own products We intend to apply for trademarks and patents once we have developed proprietary products. 25 We are not currently selling or marketing any products, as our products are in late stage development and Food and Drug Administration ("FDA") clearance or approval to market the product will be required in order to sell in the United States. About CardioMap® The CardioMap® System will be an internet service based on the new development of Dispersion Mapping Method in ECG analysis for the early, non-invasive testing of a heart disease (“CHD”). The heart monitoring system is intended to provide high quality 3-D visualization and diagnosis of the heart using advanced signal analysis. The product is being designed for use in a professional setting or in remote settings including in-home use. Once FDA cleared, CardioMap® could provide a better level of diagnosis with its improved sensitivity levels that can detect early warning signs that would normally be invisible with standard ECG devices. The system can dramatically cut the costs associated with the detection of ischemic heart disease and will prove to be an invaluable testing device for cardiologists, physicians, clinics, hospitals, the fitness industry, sports teams, emergency facilities and general public. CardioMap® was developed by VE Science Technology LLC, from whom we have purchased the product rights. In order to sell, market and distribute the CardioMap® product, clearance from the FDA is required. Such clearance has not been obtained at this time. Product Development Plan: Concept Engineering Model Prototype Clinical Trial FDA Submission Complete Complete In Process; Testing TBD TBD This product development plan is an estimate and is subject to change based on funding, technical risks and regulatory approvals. About Save-a-Life® The Save a Life® (“SAL”) choking rescue device is in development and being designed to be a safe, and easy to use device for removing a lodged mass or bolus from the throat of a choking victim. The device includes a pump for creating a vacuum chamber, which is connected seamlessly with a replaceable/disposable mouthpiece. In an emergency the SAL may be easily inserted into the victim’s mouth, which depresses the tongue providing a clear application. By pressing a button on the device, the device will deliver the appropriate amount of instantaneous vacuum to dislodge the mass or bolus in the throat without harm or damage to the victim. The application will be instantly effective as the device is operational and effective in a matter of seconds. In order to sell, market and distribute the Save-a-Life product, clearance from the FDA is required. Such clearance has not been obtained at this time. The Development Plan for commercializing the Save-a-Life is below. Product Development Plan Concept Engineering Model Prototype Clinical Trial FDA Submission Complete Complete – in testing phase TBD TBD TBD Product development plan are estimates only and are subject to change based on funding, technical risks and regulatory approvals. 26 About the neurosteroid PRV-001 The Prevacus neurosteroid, PRV-001 will seek to improve function and lifespan in pediatric disorders where de-myelination and cell death is widespread in the cortex and cerebellum regions of the brain. The new chemical entity is designed to work through gene amplification to simultaneously remove intra-neuronal debris while promoting antioxidant capacity and myelin repair/cell proliferation. Disorders like Nieman Pick Type C disease are multi-faceted in their pathology and require a treatment that can work at many levels to stop progression. The chemical compound for the neurosteroid being developed has completed initial safety tests in mice. Preclinical efficacy studies show improvements in cognitive function and neuromotor performance. In order to sell the PRV-001 neurosteroid, further development and clinical studies are required. PRV-001 will also require approval by the FDA in order to be sold in the United States. Product Development Plan Pre-clinical Animal Studies Phase 1a Phase 1b Phase 2 Phase 3 FDA Submission Safety study complete TBD TBD TBD TBD TBD This product development plan is an estimate and is subject to change based on funding, technical risks and regulatory approvals. We have an accumulated deficit of $28,850,728 as of July 31, 2020. For the foreseeable future, we expect to experience continuing operating losses and negative cash flows from operations as our management executes our current business plan. The cash available at July 31, 2020, of $62,952, may not provide enough working capital to meet our current operating expenses through November 13, 2021, as we continue to accrue overhead expenses. We will need to raise additional capital through a debt financing or equity offering to meet our operating and capital needs. There can be no assurance, however, that we will be successful in our fundraising efforts or that additional funds will be available on acceptable terms, if at all. Recent Funding In August 2020, we entered into two funding arrangements. One with Labrys Fund, LP, which provided the Company $315,000 of cash in exchange for a $350,000 promissory note and 420,000 shares of the Company’s common stock. The second arrangement was with Lincoln Park Capital Fund, LLC (“Lincoln Park”) pursuant to which Lincoln Park agreed to purchase up to $10,250,000 worth of the Company’s common stock over a 36-month period in exchange for 793,802 shares of the Company’s common stock with a value of $250,000. Lincoln Park made an initial purchase of 602,422 shares of the Company’s common stock for $250,000. For additional information, see Note 12. Subsequent Events included in Item 8. of this Form 10-K. If we are unable to raise additional capital by November 13, 2021, we will adjust our current business plan. Due to our lack of additional committed capital, recurring losses, negative cash flow and accumulated deficit, there is substantial doubt about the Company’s ability to continue as a going concern. Going Concern Substantial doubt exists as to our ability to continue as a going concern based on the fact that we do not have adequate working capital to finance our day-to-day operations. The Company did not have any revenues for the years ended July 31, 2020 and 2019. The Company’s operating deficit of $28,850,728 as of July 31, 2020 indicates substantial uncertainty about the Company’s ability to continue as a going concern. Management’s plans include engaging in further research and development and raising additional capital in the short term to fund such activities through sales of its common stock. Management’s ability to implement its plans and continue as a going concern may be dependent upon raising additional capital. Our continued existence depends on the success of our efforts to raise additional capital necessary to meet our obligations as they come due and to obtain sufficient capital to execute our business plan. We may obtain capital primarily through issuances of debt or equity or entering into collaborative arrangements with corporate partners. There can be no assurance that we will be successful in completing additional financing or collaboration transactions or, if financing is available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we may be required to further scale down or perhaps even cease the operation of our business. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. Our financial statements do not include adjustments that might result from the outcome of this uncertainty. 27 Critical Accounting Policies and Estimates There are no critical accounting policies or estimates reflected in the accompanying financial statements. Reference is made to the Company’s significant (but not critical) accounting policies set forth in Note 2 to the accompanying financial statements. Results of Operations The Company does not currently sell or market any products and did not have any sales in the fiscal years ended July 31, 2020 or 2019. The Company will commence actively marketing products after the products and drugs in development have been FDA cleared or approved, but there can be no assurance, however, that we will be successful in obtaining FDA clearance or approval for our products. Costs of Goods Sold Cost of goods sold will consist primarily of amounts paid to third-party manufacturers for the products we purchase for resale. The Company did not have sales for the fiscal years ended July 31, 2020 or 2019 and, accordingly, there were no cost of goods sold. Gross Profit and Gross Margin For the fiscal years ended July 31, 2020 and 2019, the Company had no gross profit or gross margin. Operating Expenses Our operating expenses consist primarily of general and administrative expenses, which include salaries, stock-based compensation expense and legal and professional fees associated with the costs for services or employees in finance, accounting, sales, administrative activities and the formation and compliance of a public company. Overall operating expenses in fiscal 2020 decreased $19,512,050, or 83.5%, from fiscal 2019 primarily due to the expensing of $22,991,163 of in-process research and development in fiscal 2019 that resulted from the acquisitions of the CardioMap®, Save a Life and Prevacus patents, offset by a $1,208,292 increase in board expense and a $1,997,916 increase in legal and professional fees in fiscal 2020 compared to fiscal 2019. Interest expense Interest expense was $502,192 and $70,691 for the years ended July 31, 2020 and 2019, respectively. The increase in interest expense in fiscal 2020 compared to fiscal 2019 was attributable to an increase in the average outstanding balance of notes payable and the amortization of debt discounts. Net Loss Net loss decreased $19,080,549, or 81.4, in fiscal 2020 compared to fiscal 2019, primarily as a result of the decrease in operating expenses, partially offset by the increase in interest expense as discussed above. 28 Cash Flows The following table sets forth the primary sources and uses of cash and cash equivalents: Year Ended Year Ended 2020 2019 Net cash used in operating activities $ (649,143 ) $ (104,837 ) Net cash provided by financing activities 545,000 271,542 Liquidity and Capital Resources To date we have financed our operations primarily through debt financing and limited sales of our common stock. In 2019 and 2020, we increased our borrowings on notes payable to fund operations. As of July 31, 2020, and 2019, the notes have a balance of $225,973 and $784,913. As of July 31, 2020, we had cash of $62,952. At July 31, 2019, the Company had a note payable that was subject to conversion upon an equity financing in the Company. On June 3, 2020, pursuant to the convertible debt agreements dated January 4, 2017, , the debt holder, Vivakor Inc. and the Company agreed to convert all existing debt and accrued interest into restricted common stock of the Company at $1.00 per share. The debt, including accrued interest, of $809,578 was converted into 809,578 shares of our common stock. As of July 31, 2020, the Company had 11 additional convertible debt notes outstanding with a balance of $225,973, which includes accrued interest totaling $14,742. The notes bear interest at 7.0% annually and the entire outstanding principal amount, together with accrued interest shall become due and payable on the date that is one year from the date of issuance, unless before such date, is converted into shares of capital stock of the Company. At the option of the holder, the principal amount of the notes and any accrued interest may be converted into shares of common stock at a conversion price of $1.00 per share, or at a 10% discount to the closing price on the day of conversion, but not lower than $0.80 per share. At maturity, and subject to a trickle out agreement, the Company shall have the right to either pay off the notes and any interest accrued or convert the notes and any accrued interest into shares of common stock. The debt holders were issued common stock warrants equal to 10% of the notes with a price of $1.50 per share with a one-year term from the investment date. The investors are sophisticated and represented in writing that they were each an accredited investor and acquired the securities for their own account for investment purposes. The Company does not have any other relationship with the investors in the notes. Because the conversion features met the criteria for characterization as beneficial conversion features, a portion of the proceeds, including warrants, totaling $430,430 from the issuance of the notes, was accounted for as attributable to the conversion feature. The intrinsic value of certain convertible debt notes issued exceeded the proceeds in the amount of $345,000; however, the amount of the debt discount is limited to the investment. Each of the warrants and beneficial conversion features are being amortized over the one-year term from issuance. On May 8, 2020, the Company received loan proceeds in the amount of $50,000 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act, provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. The Company used the proceeds for purposes consistent with the PPP. 29 Our ability to continue to access capital could be affected adversely by various factors, including general market and other economic conditions, interest rates, the perception of our potential future earnings and cash distributions, any unwillingness on the part of lenders to make loans to us and any deterioration in the financial position of lenders that might make them unable to meet their obligations to us. If these conditions continue and we cannot raise funds through a public or private debt financing, or an equity offering, our ability to grow our business may be negatively affected. In such case, our Company may need to suspend the creation of new products until market conditions improve. Inflation Inflation generally will cause suppliers to increase their rates. In connection with such rate increases, we may or may not be able to increase our pricing to consumers. Inflation could cause both our investment and cost of goods sold to increase, thereby lowering our return on investment and depressing our gross margins. Inflation did not have a material impact on our business and results of operations during the years being reported on. Off Balance Sheet Arrangements Our company has no material off balance sheet arrangements. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are an emerging growth company and are not required to provide information under this item. 30