Odyssey Health, Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS Financial statements of Odyssey Health, Inc. Report of Independent Registered Public Accounting Firm (PCAOB ID 76 ) F-1 Balance Sheets as of July 31, 2022 and 2021 F-3 Statements of Operations for the Years Ended July 31, 2022 and 2021 F-4 Statements of Stockholders’ Equity (Deficit) for the Years Ended July 31, 2022 and 2021 F-5 Statements of Cash flows for the Years Ended July 31, 2022 and 2021 F-6 Notes to Financial Statements F-7 41 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Odyssey Health, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Odyssey Health, Inc. (the “Company”) as of July 31, 2022 and 2021, the related statements of operations, stockholders’ equity (deficit) and cash flows, for each of the two years in the period ended July 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended July 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred losses and negative cash flows from operations since inception and is currently dependent on the stockholders and lenders to fund its operating activities. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F- 1 Stock based compensation As discussed in Note 7 to the financial statements, the Company entered into certain transactions which included the issuance of options or warrants for goods and services which were valued using a pricing model. We identified the valuation and accounting treatment of these issuances to be a critical audit matter because determining the fair value and related accounting treatment of these issuances involves a high degree of auditor judgment and an increased extent of effort to evaluate the Company’s conclusions. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the conclusions associated with the valuation and accounting treatment for these issuances involved the following procedures, among others: · We obtained management’s pricing model for the various issuances and tested the significant inputs of the pricing model used to determine the fair value these items. · We reviewed the underlying agreements supporting these issuances and agreed the terms of the issuances to the pricing model used by management. · We recomputed management’s fair value estimate using a similar pricing model to ensure the output was consistent with management’s pricing model output. /s/ Turner, Stone & Company, L.L.P. We have served as the Company’s auditor since 2020. Dallas, Texas October 31, 2022 F- 2 Odyssey Health, Inc. and Subsidiaries Consolidated Balance Sheets July 31, 2022 2021 Assets Current assets: Cash $ 72,534 $ 556,584 Prepaid expenses and other current assets 453,883 53,535 Total current assets 526,417 610,119 Property and equipment, net – 414 Intangible assets, net 43,260 – Total assets $ 569,677 $ 610,533 Liabilities and Stockholders' Deficit Current liabilities: Accounts payable $ 1,549,568 $ 1,224,783 Accrued wages 896,700 259,487 Accrued Interest 110,063 32,351 Asset purchase liability 1,125,026 1,125,026 Note payable, directors and officers 125,000 – Notes payable, net of unamortized beneficial conversion feature, debt discount and closing costs of $ 48,063 and $ 351,030 1,406,937 736,240 Total current liabilities 5,213,294 3,377,887 Commitments and contingencies (Note 5) – – Stockholders' deficit: Preferred stock, $ .001 par value; 100,000,000 shares authorized, no shares issued or outstanding – – Common stock, $ .001 par value; 500,000,000 shares authorized with 77,860,563 and 87,191,168 issued and outstanding 77,861 87,191 Additional paid-in capital 49,456,476 42,879,278 Accumulated deficit ( 54,177,954 ) ( 45,733,823 ) Total stockholders’ deficit ( 4,643,617 ) ( 2,767,354 ) Total liabilities and stockholders’ deficit $ 569,677 $ 610,533 The accompanying notes are an integral part of these financial statements F- 3 Odyssey Health, Inc. and Subsidiaries Consolidated Statements of Operations Fiscal Year Ended July 31, 2022 2021 General and administrative expense 6,789,556 4,788,119 Research and development 1,317,024 1,632,593 In-process research and development – 9,440,000 Loss from operations ( 8,106,580 ) ( 15,860,712 ) Interest expense ( 836,294 ) ( 1,072,383 ) Other income, net 498,743 50,000 Net loss and comprehensive loss $ ( 8,444,131 ) $ ( 16,883,095 ) Basic net loss per share $ ( 0.09 ) $ ( 0.18 ) Diluted net loss per share $ ( 0.09 ) $ ( 0.18 ) Shares used for basic net loss per share 88,995,280 93,734,074 Shares used for diluted net loss per share 88,995,280 93,734,074 The accompanying notes are an integral part of these financial statements F- 4 Odyssey Health, Inc. and Subsidiaries Consolidated Statements of Stockholders’ Equity (Deficit) Common Stock Paid-In Accumulated Total Stockholders’ Shares Dollars Capital Deficit Deficit Balances July 31, 2020 88,559,978 $ 88,560 $ 28,110,689 $ ( 28,850,728 ) $ ( 651,478 ) Common stock issued for compensation and services 5,965,000 5,965 240,285 – 246,250 Conversion of convertible notes debt financing 1,233,228 1,233 542,617 – 543,850 Stock-based compensation – – 1,759,963 – 1,759,963 Common stock issued in connection with debt financing 820,000 820 321,545 – 322,365 Common stock issued in equity financing 4,932,962 4,933 2,976,042 – 2,980,975 Warrants and beneficial conversion feature issued with debt and equity – – 653,836 – 653,836 Common stock issued in asset purchase agreement 6,000,000 6,000 8,254,000 – 8,260,000 Return of shares to treasury ( 20,320,000 ) ( 20,320 ) 20,300 – ( 20 ) Net loss – – – ( 16,883,095 ) ( 16,883,095 ) Balances July 31, 2021 87,191,168 87,191 42,879,278 ( 45,733,823 ) ( 2,767,354 ) Common stock issued for compensation and services 4,245,000 4,245 1,777,405 – 1,781,650 Common stock issued in connection with Prevacus milestone 1,000,000 1,000 ( 1,000 ) – – Stock-based compensation – – 2,088,815 – 2,088,815 Common stock issued in connection with debt financing 300,000 300 68,418 – 68,718 Common stock issued in equity financing 8,653,973 8,655 2,460,567 – 2,469,222 Beneficial conversion feature issued with debt – – 159,463 – 159,463 Return of shares to treasury ( 23,529,578 ) ( 23,530 ) 23,530 – – Net loss – – – ( 8,444,131 ) ( 8,444,131 ) Balances July 31, 2022 77,860,563 $ 77,861 $ 49,456,476 $ ( 54,177,954 ) $ ( 4,643,617 ) The accompanying notes are an integral part of these financial statements F- 5 Odyssey Health, Inc. and Subsidiaries Consolidated Statements of Cash Flows Fiscal Year Ended July 31, 2022 2021 Cash flows from operating activities Net loss $ ( 8,444,131 ) $ ( 16,883,095 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 2,374 5,552 Stock issued for services and stock-based compensation 3,870,465 2,006,193 Amortization of beneficial conversion feature, debt discount and closing costs 687,429 858,942 Stock issued for in-process research and development – 8,260,000 Financing costs paid with stock 68,718 169,000 Gain on forgiveness of long-term debt – ( 50,000 ) Changes in operating assets and liabilities: (Increase)/decrease in prepaid expenses ( 400,348 ) ( 16,869 ) Increase in accounts payable 324,785 1,000,396 Increase (decrease) in accrued wages 637,213 47,785 Increase in accrued interest 77,712 53,959 Increase in asset purchase liability – 1,125,026 Net cash used in operating activities ( 3,175,783 ) ( 3,423,111 ) Cash flows from investing activities Intellectual Property ( 45,220 ) – Cash flows from financing activities Proceeds from notes payable 375,000 1,565,000 Financing closing costs paid with cash – ( 169,000 ) Principal payments made on notes payable ( 107,269 ) ( 415,232 ) Proceeds from equity financing 2,469,222 2,935,975 Net cash provided by financing activities 2,736,953 3,916,743 Net change in cash ( 484,050 ) 493,632 Cash, beginning of year 556,584 62,952 Cash, end of year $ 72,534 $ 556,584 Supplemental disclosure of cash flow information Cash paid for interest $ 954 $ 34,345 Noncash Investing and Financing Activities Common stock issued for conversion of notes payable and related accrued interest – 543,850 Common stock issued for debt financing commitment shares 68,718 322,365 Warrants issued in connection with financings – 634,056 Original issue discount on debt – 100,000 Beneficial conversion feature recognized 200,100 19,780 Accounts payable converted into common stock 20,000 45,000 Increase in principal of notes payable 225,000 – Common stock issued for Prevacus milestone 1,000 – Shares returned to treasury 23,530 20,300 The accompanying notes are an integral part of these financial statements F- 6 Odyssey Health, Inc. Notes to Financial Statements Note 1. Nature of Operations and Going Concern Our corporate mission is to create or acquire distinct assets, intellectual property, and technologies with an emphasis on acquisition targets that have clinical utility and will 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. We have 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 concussions and 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 plan 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 will 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 and we will apply for trademarks and patents once we have developed proprietary products. We are not currently selling or marketing any products, as our products are in development and Food and Drug Administration ("FDA") clearance or approval to market our products will be required to sell in the United States. In addition, it would require additional European union or country specific clearance or approvals to sell internationally. We did not recognize any revenues for the years ended July 31, 2022 (“fiscal 2022”) or 2021 (“fiscal 2021”) and we had an accumulated deficit of $ 54,177,954 as of July 31, 2022. For the foreseeable future, we expect to experience continuing operating losses and negative cash flows from operations. Cash available at July 31, 2022 of $ 72,534 may not provide enough working capital to meet our current operating expenses through October 28, 2023. We follow the provisions of Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”), Topic 205-40, “Presentation of Financial Statements — Going Concern”, or ASC 205-40, which requires management to assess the Company’s ability to continue as a going concern for one year after the date the consolidated financial statements are issued. Based on our available cash as of July 31, 2022, management has concluded that substantial doubt exists about our ability to continue as a going concern for one year from the date these financial statements are issued. We expect to seek additional funding to sustain its future operations and while we have successfully raised capital in the past, the ability to raise capital in future periods is not assured. The consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The operating deficit raises substantial doubt about our ability to continue as a going concern. 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 operations. The issuance of additional equity securities could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, would increase our liabilities and future cash commitments. Our financial statements do not include adjustments that might result from the outcome of this uncertainty. As COVID-19 pandemic continues to severely impact the U.S. and global economy, our business may be impacted in a variety of ways. Political, legal or regulatory actions as a result of the COVID-19 pandemic in jurisdictions where we may plan to manufacture, source or distribute products have created supply disruptions which could affect our plans, and may cause additional supply disruptions or shortages in the future. We cannot currently predict the frequency, duration or scope of these governmental actions and supply disruptions. If we are unable to raise additional capital by October 28, 2023, we will adjust our current business plan. Due to the unknown and volatile nature of the stock price and trading volume of our common stock, is it is difficult to predict the timing and amount of availability pursuant to our equity line of credit with LPC (Note 8). Given our recurring losses, negative cash flow, accumulated deficit, and the impact of COVID-19, there is substantial doubt about our ability to continue as a going concern. F- 7 Note 2. Summary of Significant Accounting Policies Basis of Consolidation The consolidated financial statements include the accounts of Odyssey Health, Inc. and our wholly-owned subsidiary Odyssey Group International Australia, Pty Ltd. All intercompany balances and transactions have been eliminated. Use of estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) generally requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Basis of accounting We measure all of our assets and liabilities on the historical cost basis of accounting unless otherwise required by GAAP. Prepaid expenses and other current assets Prepaid expenses and other current assets consist of the Australian research and development and GST tax rebates, loans and advances receivable and prepaid insurance. At July 31, 2022 there were no impairment concerns. Property and equipment, net Property and equipment is stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets. We recognized depreciation expense of $ 414 and $ 552 , respectively, in fiscal 2022 and 2021. At July 31, 2022, our property and equipment were fully depreciated. Intangible assets, net Intangible assets consist of costs related to a patent for our PRV-002 drug device combination are analyzed for potential impairment at least annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable and exceeds the fair value, which is the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the intangible assets. We recognized amortization expense of $ 1,960 and $ 5,000 , respectively, in fiscal 2022 and 2021. Future amortization of intangible assets is as follows: Schedule of future amortization expense assets Fiscal 2023 $ 3,015 Fiscal 2024 3,015 Fiscal 2025 3,015 Fiscal 2026 3,015 Fiscal 2027 3,015 Thereafter 28,185 Total $ 43,260 F- 8 Beneficial conversion feature of convertible notes payable The Beneficial Conversion Feature (“BCF”) of a convertible note (Note 6) is normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below market value or in-the-money when issued. We record a BCF related to the issuance of a convertible note when issued. Beneficial conversion features that are contingent upon the occurrence of a future event are recorded upon the occurrence of the event. The BCF of a convertible note is a reduction of the carrying amount of the convertible note equal to the intrinsic value of the conversion feature, both of which are credited to additional paid-in-capital and such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense. Net loss per share Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed giving effect to all potentially dilutive common stock and common stock equivalents, including stock options, convertible notes, RSUs and warrants. Basic and diluted net loss per share were the same for all periods presented as we were in a loss position for all periods. The following securities were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive: Schedule of antidilutive shares Fiscal Year Ended July 31, 2022 2021 Options to purchase common stock 6,645,000 300,000 Equivalent shares of convertible notes into common stock 7,303,333 1,134,000 Warrants to purchase common stock 7,558,607 4,739,834 Unvested restricted stock units 2,189,695 2,678,181 Total potentially dilutive securities 23,696,635 8,852,015 Stock-based compensation We recognize compensation expense for all restricted stock and stock option awards made to employees, directors and independent contractors. The fair value of stock option awards (Note 7) is estimated at the grant date using the Black-Scholes option-pricing model, and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. We have elected to recognize compensation expense for all options with graded vesting on a straight-line basis over the vesting period of the entire option. The determination of fair value using the Black-Scholes pricing model is affected by our stock price, as well as by assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk free interest rate, expected dividends and projected stock option exercise behaviors. We estimate volatility based on historical volatility of our common stock, and estimate the expected term based on several criteria, including the vesting period of the grant and the term of the award. We estimate stock option exercise behavior based on assumptions regarding future exercise activity of unexercised, outstanding options. The fair value of stock awards is determined based on the fair value of our common stock on the date of grant. F- 9 Fair value measurements The carrying values of cash, prepaid expenses and other current assets, accounts payable and accrued wages approximate their estimated fair values because of the short-term nature of these instruments. Research and development expense Research and development costs are expensed in the period when incurred. In-process research and development In-process research and development relates to acquired research and development for a product that is not yet being sold and is expensed upon purchase. We recognized in-process research and development expense of $ 9,440,000 in fiscal 2021 (Note 4). Income taxes Income taxes are accounted for based upon an asset and liability approach. Accordingly, deferred tax assets and liabilities arise from the difference between the tax basis of an asset or liability and its reported amount in the financial statements. Deferred tax amounts are determined using the tax rates expected to be in effect when the taxes will actually be paid or refunds received, as provided under currently enacted tax law. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable, respectively, for the period plus or minus the change in deferred tax assets and liabilities during the period. Accounting guidance requires the recognition of a financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant tax authority. We believe our income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves or related accruals for interest and penalties have been recorded at July 31, 2022 or 2021. We recognize interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense. Note 3. New Accounting Pronouncements ASU 2019-12 In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Income Taxes (Topic 740),” which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption of the amendments is permitted, including adoption in any interim period for which financial statements have not yet been issued. The adoption of ASU 2019-12 effective August 1, 2021, on a prospective basis did not have a material effect on our financial position, results of operations, or cash flows. ASU 2020-06 In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40),” which simplifies the accounting for convertible instruments, reduces complexity for preparers and practitioners and improves the decision usefulness and relevance of the information provided to financial statement users. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. We have not yet determined the impact of adopting this standard on our financial position, results of operations or cash flows. F- 10 Note 4. Asset Purchase Agreement and Asset Purchase Liability On January 7, 2021, we entered into an Asset Purchase Agreement (the “APA”) with Prevacus, Inc. (“Prevacus”), pursuant to which we purchased the assets and all of the rights, interests and intellectual property in a certain drug program (PRV-002) for treating mild brain trauma (concussion) and the delivery device (collectively, the “Asset”) in exchange for (i) 7,000,000 shares of our common stock plus (ii) the Milestone Consideration. Prevacus is a related party, as we are party to a Joint Venture and Intellectual Property Purchase Agreement entered into in June 2019 and its President, Dr. Jacob VanLandingham, is an employee. The Milestone Consideration (“Milestone”) may be earned by Prevacus as follows: (i) 2,000,000 shares of our Common Stock when the United States Patents are revived in our name by the U.S. Patent and Trademark Office and any international patents that have lapsed also revived in our name by the respective country’s patent offices. The value of shares issued were not to exceed $6.0 million based on the price of our common stock on the date the payment would have been due. This milestone will not be met as the relevant patents lapsed; (ii) 1,000,000 shares of our common stock upon successful first dosing in a Phase I Clinical Trial for the Asset. This milestone was met in March 2022; (iii) 2,000,000 shares of our common stock upon the grant and issuance to us of a Patent for the Asset from the U.S. Patent and Trademark Office, the value of which shall not exceed $10.0 million based on the price of our common stock on the date the payment is due; (iv) 1,000,000 shares of our common stock upon our receipt of net proceeds of at least $1.0 million in a Non-Dilutive Financing relating directly to the development of the Asset within one year after the Closing Date or, in the event of any Non-Dilutive Financing submitted prior to the one-year anniversary of the Closing Date, the milestone will stay effective until the second year anniversary of the Closing Date. This milestone will not be met as the one-year deadline lapsed; (v) 2,000,000 shares of our common stock if we sell the Asset to a Third Party resulting in net proceeds to us of at least $50.0 million after a Phase IB Clinical Trial for which we are the sponsor is complete, but prior to completion of a Phase II Clinical Trial. The value of the 2,000,000 shares related to this milestone shall not exceed $25.0 million based on the price of our common stock on the date the payment is due; (vi) 4,000,000 shares of our common stock upon the successful completion of a Phase II Clinical Trial for the Asset that leads to (I) our sale of the Asset to a Third Party resulting in net proceeds to us of at least $50.0 million; or (II) the administration of the first dose in a Phase III Clinical Trial for the Asset for which we are, or one of our affiliates or licensees is the sponsor; and (vii) 2,000,000 shares of our common stock after the first dosing in a Phase II Clinical Trial and the successful completion of a Phase 1B human clinical trial. All Milestone payments shall only be paid once, upon the initial achievement of the particular Milestone event. We, at our sole and absolute discretion, shall determine if any Milestone event has occurred. To extent the related milestones are not achieved, the above-mentioned Milestone payments will terminate and cease to exist, and we will no longer be liable thereunder, if said Milestone is not completed within four years after the Closing Date. See Note 5 for additional information. On March 1, 2021 (the “Closing Date”), our APA with Prevacus closed and we issued 6,000,000 shares of our common stock valued at $1.18 per share for the stock granted on the date of acquisition for $ 7,080,000 . We withheld 1,000,000 shares of our common stock valued at $1.18 per share, for $ 1,180,000 , in exchange for our payment of certain liabilities of Prevacus which was recorded as an Asset purchase liability on our Balance Sheets. Any remaining Asset purchase liability once all obligations have been paid will be satisfied with the release of shares of our common stock at $1.18 per share. In addition, 1,000,000 shares of our common stock valued at $1.18 per share for $ 1,180,000 was recorded as a component of Additional Paid in Capital for the probability of earning the Milestone Consideration of first dosing in a Phase I Clinical Trial. This milestone was met in March 2022. We determined that, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 730 Research and Development (ASC 730-10-25-2(c)) and pursuant to ASC 730-10-25-2(c), intangibles purchased from others for use in particular research and development projects and that have no alternative future use in research and development or otherwise, represent costs of research and development as acquired, and therefore are expensed when incurred. Accordingly, On March 1, 2021, the date of acquisition, we expensed $ 9,440,000 as In-process research and development. F- 11 Note 5. Fair Value The fair value of financial assets and liabilities are determined utilizing a three-level framework as follows: Level 1 – Observable inputs, such as unadjusted quoted prices in active markets, for substantially identical assets and liabilities. Level 2 – Observable inputs other than quoted prices within Level 1 for similar assets and liabilities. These include quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. If the asset or liability has a specified or contractual term, the input must be observable for substantially the full term of the asset or liability. Level 3 – Unobservable inputs that are supported by little or no market activity, generally requiring a significant amount of judgment by management. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Further, although we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. We did not have any transfers of assets or liabilities measured at fair value on a recurring basis to or from Level 1, Level 2 or Level 3 during the fiscal years ended July 31, 2022 or 2021. No changes were made to our valuation techniques during the fiscal year ended July 31, 2022. Contingent Liabilities At July 31, 2022 and 2021, we had contingent consideration related to the acquisition of intellectual property, know-how and patents for an anti-choking, life-saving medical device in fiscal 2019. According to the agreement, we will make a one-time cash payment totaling $250,000 upon FDA clearance of the device. The fair value of the contingent consideration is reviewed quarterly and determined based on the current status of the project (Level 3). We determined the value was zero at both periods since it is not yet probable that we will file for FDA clearance. We also had contingent consideration at July 31, 2022 and 2021 related to milestones in our Asset Purchase Agreement with Prevacus, Inc. The fair value of the contingent consideration is reviewed quarterly and determined based on the current status of the project (Level 3). Based on these reviews, the fair value of the contingent consideration was determined to be zero at both periods as it is not yet probable that any of the milestones will be met. See Note 4 for additional information. Fixed-Rate Debt We have fixed-rate debt that is reported on our Balance Sheets at carrying value less unamortized debt discount and closing costs. The fair value of our fixed rate debt was calculated using a discounted cash flow methodology with estimated current interest rates based on similar risk profile and duration (Level 2). The carrying value, excluding unamortized debt discount and debt issuance costs, and the fair value of our fixed-rate long-term debt was as follows: Schedule of fixed-rate debt July 31, 2022 2021 Carrying value $ 1,580,000 $ 1,087,270 Fair value $ 1,580,000 $ 1,094,212 Non-Financial Assets Non-financial assets, such as Property and equipment and Intangible assets, are measured at fair value on a non-recurring basis when events or circumstances indicate that an impairment may have occurred. If we determine these assets to be impaired, they are reported at fair value as calculated during the period. No non-financial assets were recorded at fair value during fiscal 2022 or 2021. F- 12 Note 6. Debt Promissory Notes On December 21, 2021, and December 22, 2021, we entered into a total of five Promissory Notes (the “Notes”) with three of our directors and two officers. Mr. Joseph Michael Redmond, President and Chief Executive Officer, Ms. Christine M. Farrell, Chief Financial Officer, Mr. Jerome H. Casey, Director, Mr. John P. Gandolfo, Director, and Mr. Ricky W. Richardson, Director, each loaned us $ 25,000 for total proceeds of $ 125,000 . The Notes bear interest at 8 % per annum and were originally due March 31, 2022. In April 2022, the maturity date of the Notes was extended to May 31, 2022, in May 2022, it was extended to September 30, 2022, and, in September 2022, the maturity date was extended to December 31, 2022 . At July 31, 2022, the recorded $ 6,063 of interest expense and accrued interest on these notes. Tysadco Partners On August 29, 2021, we entered into a Securities Purchase Agreement (the “SPA”) with Tysadco Partners (“Tysadco”) pursuant to which we entered into a $ 250,000 face value convertible promissory note which bears interest at a one-time rate of 8.0 % applied to the face value and was originally due March 1, 2022 . We received $ 250,000 net cash from the issuance of the promissory note and issued 200,000 shares of common stock with a relative fair value of $ 17,718 which is being expensed over the life of the note as a component of interest expense. The conversion rate of the note is $ 0.30 for a total of 983,333 shares of our common stock if converted in full, including interest. On March 31, 2022, the SPA was amended to extend the maturity date to March 1, 2023 , and, as consideration, $ 25,000 was added to the principal. LGH Investments, LLC April 2021 Promissory Note On April 5, 2021, we entered into a Securities Purchase Agreement with LGH Investments, LLC (“LGH”) pursuant to which we entered into a $ 1,050,000 face value convertible promissory note (the “Note”) which bears interest at a one-time rate of 8.0 % applied to the face value of the Note. On February 15, 2022, we entered into Amendment No. 1 (the “Amendment”) to the Note with an effective date of February 1, 2022 . Pursuant to the Amendment, the maturity date of the Note was extended from February 5, 2022 to May 31, 2022 . As consideration, $ 200,000 was added to the principal amount outstanding, we issued 100,000 shares of our common stock to LGH with a value of $ 51,000 and we will pay down principal and interest on the Note in the amount of the lesser of 10% or $ 250,000 of any future capital raises, investments, donations or financings unless the Note has been converted. The conversion rate of the Note at this time was $ 1.00 per share for a total of 1,336,000 shares of our common stock if converted in full, including interest. In June 2022, the maturity date of the LGH Note was extended to August 30, 2022 . As consideration, the Note conversion price changed to $ 0.20 per common share. The greater than 10% change in conversion price caused the extinguishment of debt and revalued the Note, resulting in a $ 200,100 beneficial conversion feature which is being amortized over the term of the Note. At July 31, 2022, $ 125,989 of this amount had been amortized as interest expense. At July, 31, 2022 we paid $ 70,000 towards the principal and at July 31, 2022 the balance was $ 1,180,000 . The conversion rate of the Note at this time was $ 0.20 per share for a total of 6,320,000 shares of our common stock if converted in full, including interest. The 2021 LGH Agreement included the issuance of a five-year share purchase warrant exercisable for 1,134,000 shares of our common stock at a price of $0.95 per share and 100,000 shares of our common stock. The value of the 1,134,000 warrants was $ 877,716 , of which $ 423,003 was allocated as debt discount and the value of the 100,000 shares of common stock was $ 85,000 of which $ 40,965 was allocated as the fair value of the common shares, for a total value of $ 463,968 which is being amortized over the life of the Note. F- 13 Labrys Fund, LP On August 14, 2020, we entered into a Securities Purchase Agreement (the “Labrys SPA”) with Labrys Fund, LP (“Labrys”), pursuant to which Labrys purchased a $ 350,000 (the “Principal Amount”) Self-Amortization Promissory Note (the “Note”) for $ 315,000 in cash with an original issuance discount of approximately 10%. The Note bore interest at 12% per year. In consideration for entering into the Labrys SPA, we issued 420,000 shares (the “Commitment Shares”) of our common stock with a value of $ 197,400 . 350,000 of the Commitment Shares (the “Second Commitment Shares”) were to be returned to us if the Note was fully repaid and satisfied on or prior to August 14, 2021 (the “Maturity Date”). The Note was fully repaid on August 4, 2021 and the shares were returned on August 6, 2021. We paid Alliance Global Partners, LLP (“A.G.P.”) as a placement agent a fee of $ 25,200 and other closing costs of $ 6,500 for total closing costs of $ 31,700 which were amortized over the one-year life of the Note. Conversion of Convertible Notes Payable On August 14, 2020, we converted a convertible promissory note with a face value of $ 100,000 and accrued interest of $ 7,000 into 214,000 shares of our common stock as calculated by the conversion price of the convertible promissory note of $0.50 per share. In February 2021, we settled a convertible promissory note with a face value of $ 20,000 and accrued interest of $ 1,400 with a cash payment totaling $21,400. In February, March and April 2021, upon maturity, we converted five convertible promissory notes with an aggregate face value of $ 230,000 and aggregate accrued interest of $ 16,100 into 298,165 shares of our common stock as calculated by the conversion price of the convertible promissory notes with a weighted average conversion rate of $0.83 per share. In May 2021, upon maturity, we converted four convertible promissory notes with an aggregate face value of $ 95,000 and accrued interest of $ 6,650 into 127,063 shares of our common stock as calculated by the conversion price of the convertible promissory notes of $0.80 per share. PPP Loan On February 11, 2021, we received notice that the SBA Paycheck Protection Program loan for $50,000 was forgiven. The $ 50,000 gain is reflected as Other income, net on our Statements of Operations for fiscal 2021. Notes Payable Outstanding Schedule of Notes Payable July 31, 2022 July 31, 2021 Note issued to Labrys due August 14, 2021 with an interest rate of 12% $ – $ 37,270 Convertible note issued to LGH due August 30, 2022 with a fixed interest rate of 8.0% over the term of the note (annual interest rate of 5.22%) and convertible at $0.20 per share 1,180,000 1,050,000 Promissory notes issued to officers and directors due December 31, 2022 with a fixed interest rate of 8.0% per annum (see Note 6) 125,000 – Tysadco convertible promissory note payable due March 1, 2023 with a fixed interest rate of 8.0% over the term of the note (annual interest rate of 5.09%) and convertible at $0.30 per share 275,000 – 1,580,000 1,087,270 Unamortized debt discount, closing costs and beneficial conversion feature ( 48,063 ) ( 351,030 ) $ 1,531,937 $ 736,240 F- 14 Note 7. Stock-Based Awards 2021 Omnibus Stock Incentive Plan At our annual stockholder meeting held September 14, 2021, the stockholders approved the Amended and Restated 2021 Omnibus Stock Incentive Plan (the “2021 Plan”). The purpose of the 2021 Plan is to enable us to recruit and retain highly qualified employees, directors and consultants and to provide incentives for productivity and the opportunity to share in our growth and value. Subject to certain adjustments, the maximum number of shares of common stock, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, cash or other stock-based awards that may be issued under the 2021 Plan is 20,000,000. At July 31, 2022, 13,355,000 shares remained available for future awards and 20,000,000 shares of our common stock were reserved for issuance pursuant to the 2021 Plan. Grants to Directors, Officers and Named Executive Officers At our annual meeting held on September 14, 2021, the stockholders approved the Amended and Restated 2021 Omnibus Stock Incentive Plan, which grants Board members who have been elected to receive 500,000 RSUs immediately following the Annual Meeting (other than Mr. Richardson who received an initial equity grant upon joining the Board in May 2021), that vest monthly over 12 months from the date of grant. Messrs.. Casey, Conroy and Gandolfo received 500,000 RSUs at $0.45 per share. At July 31, 2022, we recognized $592,500 as a component of General and administrative expense. On May 19, 2022, the Board granted 500,000 each to our four independent directors, Messrs. Casey, Conroy, Gandolfo and Richardson, 750,000 to Mr. Redmond, 600,000 to Ms. Farrell vesting 50% in one year and 50% in year two and 100,000 to Dr. VanLandingham vesting based upon milestones for a total of 3,450,000 options granted. The exercise price per share is $0.30 and the options have a 10 year expiration. At July 31, 2022, we recognized $ 155,033 as a component of General and administrative expense. Stock Options Stock option activity during fiscal 2022 was as follows: Schedule of stock option activity Number of Options Weighted Average Exercise Price Options outstanding at July 31, 2021 1,050,000 $ 1.22 Options granted 5,595,000 0.32 Options outstanding at July 31, 2022 6,645,000 0.46 Criteria used for determining the Black-Scholes value of options granted were as follows: Schedule of assumptions Year Ended July 31, 2022 2021 Expected stock price volatility 137 % - 149 % 155 % Risk free interest rate 1.17 % - 3.02 % 0.08 % Expected life of options (years) 3.0 – 10.0 3.0 Expected dividend yield – – Restricted Stock Units (“RSUs”) RSU activity during fiscal 2022 was as follows: Schedule of RSU activity Number of RSUs Weighted Average Grant Date Fair Value RSUs outstanding at July 31, 2021 4,396,819 $ 1.09 RSUs issued 1,500,000 0.45 RSUs vested ( 3,707,124 ) 0.37 RSUs outstanding at July 31, 2022 2,189,695 0.23 F- 15 Warrants Warrant activity during fiscal 2022 was as follows: Schedule of warrant activity Number of Warrants Weighted Average Exercise Price Warrants outstanding at July 31, 2021 4,739,834 $ 1.05 Warrants issued 4,304,607 0.57 Warrants canceled ( 1,485,834 ) ( 1.50 ) Warrants outstanding at July 31, 2022 7,558,607 0.69 Unrecognized Stock-Based Compensation Costs At July 31, 2022, we had total unrecognized stock-based compensation of $ 1,790,049 , which will be recognized over the weighted average remaining vesting period of 1.43 years. Note 8. Common Stock Treasury Shares In June 2021, Green Energy Alternatives, Inc. returned 5,300,000 shares of stock to our common stock treasury, as the company is no longer in business. In July 2021, Electromedica, LLC returned 15,000,000 shares of stock to our common stock treasury under a settlement and release agreement. On August 5, 2021, our loan with Labrys Fund, LP was repaid in full and, per the agreement, on August 6, 2021, 350,000 restricted stock shares were returned to treasury. On December 21, 2021, Vivakor, Inc., a shareholder, returned 3,309,578 shares of our common stock and the shares were returned to treasury. On December 29, 2021, Regal Growth, LLC, a shareholder, returned 5,000,000 shares of our common stock and the shares were returned to treasury. On February 2, 2022, LBL Professional Consulting, Inc., a shareholder, returned 7,500,000 shares of our common stock and the shares were returned to treasury. On July 27, 2022, PLC Investments, Inc., a shareholder, returned 7,370,000 shares of our common stock and the shares were returned to treasury. Common Stock Issued for Services In January 2021, we entered into three agreements for consulting services to be provided. We granted the consultants 540,000 shares of our common stock with a value of $ 88,000 which was expensed as a component of General and administrative expenses. On February 12, 2021, we entered into an agreement for consulting services to be provided through February 2022. We granted the consultant 75,000 shares of our common stock with a value of $ 93,750 which was expensed as a component of General and administrative expenses. On March 1, 2021, we entered into an agreement for consulting services to be provided through February 2022. We granted the consultant 25,000 shares of our common stock with a value of $ 29,500 which was expensed as a component of General and administrative expenses. F- 16 On February 9, 2022, in connection with an investor relations consulting agreement with Tysadco, we issued Tysadco 3,000,000 restricted shares of our common stock valued at $ 0.53 per share. The agreement includes a leak out provision until the shares have been sold. On May 8, 2022, we entered into a six month consulting agreement for investor relations services. We granted the investor relations firm 45,000 shares of our common stock with a value of $ 16,650 which was expensed as a component of General and administrative expenses. On May 19, 2022, we entered into a six month consulting agreement for investor relations services. We granted the investor relations firm 500,000 shares of our common stock with a value of $ 115,000 which was expensed as a component of General and administrative expenses. On June 10, 2022, in connection with our agreement with Prevacus entered into on March 1, 2021, we issued Prevacus 1,000,000 shares of our common stock upon the successful first dosing in our Phase I clinical trial related to our PRV-002 neurosteroid concussion treatment in the quarter ended April 30, 2022. On July 20, 2022, we entered into a consulting agreement for investor relations services. We granted the investor relations firm 200,000 shares of our common stock with a value of $ 40,000 which was expensed as a component of General and administrative expenses. Common Stock Issued for Compensation On July 31, 2021, Mr. Redmond received 5.3 million shares of common stock to replace the unissued shares per his November 28, 2018 amended employment agreement. We recognized $ 53,000 of compensation expense related to the 5.3 million shares granted, with a fair value of $0.01 per share, as a component of General and administrative expenses. Reverse Split At our 2021 annual stockholder meeting, which was held on September 14, 2021, the stockholders approved the proposal that granted the Board discretionary authority to amend our Certificate of Incorporation to effect a reverse stock split of the issued and outstanding shares of our common stock. As determined by our Board, such stock split could be effected at a time and choosing of the Board. The amendment did not change the number of authorized shares of common stock or preferred stock or the relative voting power of our stockholders. The number of authorized shares will not be reduced. The number of authorized but unissued shares of our common stock will materially increase and will be available for re-issuance. We reserve the right not to effect any reverse stock split if the Board does not deem it to be in the best interests of our stockholders and the Board’s decision as to whether and when to effect the reverse stock split will be based on a number of factors, including prevailing market conditions, existing and expected trading prices for our common stock, actual or forecasted results of operations, and the likely effect of such results on the market price of our common stock. Tysadco Partners On October 18, 2021, we entered into a Securities Purchase Agreement (the “SPA”) with Tysadco Partners (“Tysadco”) pursuant to which we received $ 250,000 in cash from Tysadco and Tysadco received (i) 1,500,000 restricted shares of our common stock, and (ii) 833,333 warrants exercisable at $ 0.50 per common share expiring in 5 five years. In June 2021, we sold 500,000 shares of our common stock at $ 0.59 per share along with a five-year share purchase warrant exercisable for 500,000 shares of our common stock at a price of $ 1.00 per share for total an aggregate purchase price of $ 295,000 to Tysadco, an accredited investor, which also provided certain consulting services to us. The purchase price was paid with $ 250,000 cash and the satisfaction of $ 45,000 of amounts due to Tysadco for its consulting services. F- 17 Lincoln Park Capital Fund October 2021 Securities Purchase Agreement On October 22, 2021, we entered into a Securities Purchase Agreement (the “SPA”) with Lincoln Park Capital Fund, LLC (“LPC”) pursuant to which we received $ 250,000 in cash from LPC and LPC received (i) 1,500,000 restricted shares of our common stock, and (ii) 833,333 warrants exercisable at $ 0.50 per common share expiring in 5 five years. August 2020 Securities Purchase Agreement On August 14, 2020, we entered into a Purchase Agreement (the “LPC Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park” or “LPC”). Pursuant to the LPC Purchase Agreement, we have the right, in our sole discretion, to sell to LPC up to $10,250,000 in shares of our common stock, from time to time over a 36-month period. In consideration for entering into the LPC Purchase Agreement, we issued 793,802 shares of our common stock to LPC. Upon entering into the LPC Purchase Agreement, we sold 602,422 shares of our common stock to LPC in an initial purchase for a total purchase price of $ 250,000 . Thereafter, and subject to the conditions of the LPC Purchase Agreement and RRA, on any business day and subject to certain customary conditions, we may direct LPC to purchase to up to 200,000 shares of our common stock (such purchases, “Regular Purchases”). The amount of a Regular Purchase may increase up to 100,000 shares of common stock under certain circumstances based on the market price of the common stock. There are no limits on the price per share that LPC may pay to purchase common stock under the LPC Purchase Agreement, provided that LPC’s committed obligation under any Regular Purchase shall not exceed $50,000 unless the median aggregate dollar value of the volume of shares of common stock during the 20 consecutive trading day period ending on the date of the applicable Regular Purchase equals or exceeds $100,000, in which case LPC’s committed obligation under such single Regular Purchase shall not exceed $500,000. In addition, if we have directed LPC to purchase the full amount of common stock available as a Regular Purchase on a given day, we may direct LPC to purchase additional amounts as “accelerated purchases” and “additional accelerated purchases” as set forth in the LPC Purchase Agreement. The purchase price of shares of our common stock will be based on the then prevailing market prices of such shares at the time of sale. The LPC Purchase Agreement limits our sale of shares of common stock to LPC, and LPC’s purchase or acquisition of common stock from us, to an amount of common stock that, when aggregated with all other shares of our common stock then beneficially owned by LPC would result in LPC having beneficial ownership, at any single point in time, of more than 4.99% of the then total outstanding shares of our common stock. The LPC Purchase Agreement contains customary representations, warranties, covenants, closing conditions and indemnification and termination provisions. LPC has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of our common stock. The LPC Purchase Agreement does not limit our ability to raise capital from other sources in our sole discretion; provided, however, that we shall not enter into any “Variable Rate Transaction” as defined in the LPC Purchase Agreement, including the issuance of any floating conversion rate or variable priced equity-like securities, but excluding any “At-the-Market” offering with a registered broker-dealer, until the later of (i) the 36-month anniversary of the date of the LPC Purchase Agreement, and (ii) the 36-month anniversary of the Commencement Date (if the Commencement has occurred), in either case irrespective of any earlier termination of the LPC Purchase Agreement. The LPC Purchase Agreement may be terminated by us at any time and at our discretion without any cost to us. In connection with the LPC transaction, we engaged A.G.P. as a placement agent to help raise capital. A.G.P. introduced us to LPC, for which we agreed to pay A.G.P. a fee of 8% of the amount of the funds received from LPC, which totaled $ 20,000 in the quarter ended October 31, 2020. A.G.P. will also receive a fee totaling 8% of any additional funds raised pursuant to the LPC Purchase Agreement. At July 31, 2021, we paid A.G.P. a total of $ 97,718 in connection with the 1,550,904 shares purchased from January 2021 through July 31, 2021 and at July 31, 2022, we have accrued $ 13,750 in Accounts payable related to this amount and no additional fees are required to be paid. In addition, and in consideration for the service provided in connection with Labrys and LPC, we granted warrants that were immediately exercisable for a total of 550,000 shares of our common stock at $ 0.50 per share to A.G.P. and two partners of A.G.P. The warrants had a value of $ 220,000 and expire August 6, 2024 . Of the $220,000, $91,667 was netted against the LPC equity transaction and $128,333 was recorded as debt closing costs related to the Labrys transaction and is being amortized over the one-year life of the note. F- 18 Shares purchased by LPC, including the initial purchase, are summarized below: Schedule of Shares purchased Purchase Date Number of Shares Purchased Average Purchase Price per Share Total Purchase Price Remaining Purchase Availability August 14, 2020 602,422 $ 0.410 $ 250,000 $ 10,000,000 January 2021 200,000 0.175 35,080 9,964,920 February 2021 330,106 0.626 206,798 9,758,122 March 2021 1,020,798 0.960 979,597 8,778,525 August 2021 600,000 0.397 237,940 8,540,585 September 2021 374,482 0.345 129,096 8,411,489 February 2022 100,000 0.515 51,500 8,359,989 March 2022 100,000 0.487 48,700 8,311,289 July 2022 421,119 0.194 81,556 8,229,733 3,748,927 0.539 $ 2,020,267 See Note 13 for information regarding subsequent sales to LPC. LGH In connection with an amendment to the LGH Note, we issued LGH 100,000 shares of our common stock with a value of $ 51,000 . See Note 6 for additional information. Private Placement On February 2, 2022, we entered into an agreement to raise money through a private investment in a public entity (“PIPE”). We offered up to 14,285,714 Units (the “Units”) at $ 0.35 per Unit (he “Offering”). Each Unit consisted of one share of our common stock (the “Shares”) and one-half of an accompanying warrant (the “Investor Warrants”). Each full warrant is exercisable for one share of our common stock at $ 0.70 per share. The Investor Warrants have a term of 5 five years and, in certain circumstances, may be exercised on a cashless basis. The Share and Investor Warrant comprising each Unit are immediately separable and were issued separately. The Offering was made on a “Minimum” basis, meaning a minimum amount of money must be raised. The minimum amount of $ 1,000,000 was raised effective April 14, 2022. Accordingly, we issued a total of 2,870,800 Units, consisting of 2,870,800 Shares and 1,435,400 Investor Warrants for gross proceeds to us of $ 1,004,780 . Net proceeds after deducting commissions and fees were $ 849,302 . On May 3, 2022, the second closing of the PIPE occurred, pursuant to which we issued 1,187,572 Units, consisting of 1,187,572 shares of our common stock at $ 0.25 per Unit and warrants to purchase 593,786 shares of our common stock for which we received $ 415,650 in gross proceeds. Net proceeds after deducting commissions and fees were $ 374,085 . As part of the second closing, we issued Laidlaw 608,755 warrants with an exercise price of $ 0.35 per share with a five-year cashless exercise. In connection with the Offering, we paid Laidlaw & Company (UK) Ltd. (“Laidlaw”), our introducing broker, 10% of the proceeds, or $ 100,478 in cash, as a finder fee. At the second closing of the Offering, we are obligated to issue Laidlaw warrants equal to 10% of the Shares sold in the Offering, including any common stock issued or issuable. The Warrants will have an exercise price equal to the lowest price per share of the share of common stock issued or issuable to investors in the offering and will expire in five years. The Laidlaw warrants will include cashless exercise provisions. We filed a Form S-1 on July 29, 2022 to register all shares issued and issuable pursuant to the PIPE and it became effective on August 9, 2022. F- 19 Note 9. Income Taxes We file income tax returns in the U.S. federal jurisdiction and the various states in which we operate. We registered with the Franchise Tax Board in the State of California in tax year 2020. Our tax returns are not currently under examination for any year. Our deferred tax assets consist of federal net operating loss carryforwards that expire through the year 2036 . The deferred tax assets are net of a 100% valuation allowance as it is more likely than not at this time that the deferred tax assets will not be realized within the carryforward period due to substantial uncertainty as to our ability to continue as a going concern (Note 1). The following table reconciles the U.S. federal statutory rate to our effective tax rate: Schedule of Effective Income Tax Rate Reconciliation For the year ended July 31, 2022 2021 US federal statutory rates 21 % 21 % Valuation allowance ( 21 )% ( 21 )% Effective tax rate 0 % 0 % Our tax provision (benefit) was as follows: Schedule of Components of Income Tax Expense (Benefit) For the year ended July 31, 2022 2021 Current deferred $ 885,400 $ 1,182,300 Increase in valuation allowance ( 885,400 ) ( 1,182,300 ) Total $ – $ – Our net deferred tax asset was as follows: Schedule of Deferred Tax Assets and Liabilities For the year ended July 31, 2022 2021 Deferred tax asset $ 2,475,100 $ 1,589,700 Valuation allowance ( 2,475,100 ) ( 1,589,700 ) Net deferred tax asset $ – $ – As of July 31, 2022, we had $ 11,434,941 of federal net operating loss carry forwards. These carry forwards, if not used, will begin to expire in 2038. Current or future ownership changes may severely limit the future realization of these net operating losses. We provide for a valuation allowance when it is more likely than not that they will not realize a portion of the deferred tax assets. We established a valuation allowance against our net deferred tax asset due to the uncertainty that enough taxable income will be generated in those taxing jurisdictions to utilize the assets. Therefore, we have not reflected any benefit from such deferred tax assets in the accompanying financial statements. F- 20 We reviewed the issuance of stock to certain senior executives who received stock in conjunction with becoming an officer and director. In this case, as an officer and director of a publicly-traded company, the sale of shares could be subject to the short-swing profits rules of Securities Exchange Act Section 16(b) and is subject to a substantial risk of forfeiture per IRC § 83 (c)(3)(A). Given that such stock is subject to a substantial risk of forfeiture, such stock is treated as nonvested stock under IRC § 83. As the stock received was nonvested stock, income inclusion is deferred until the year in which the stock vests unless the employee makes an affirmative election to include income in the year of receipt. We reviewed all income tax positions taken or that are expected to be taken for all open years and determined that our income tax positions are appropriately stated and supported for all open years. We are subject to U.S. federal income tax examinations by tax authorities for years after 2020 due to unexpired net operating loss carryforwards originating in and subsequent to that year. We may be subject to income tax examinations for the various taxing authorities which vary by jurisdiction. Our policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statements of operations. As of July 31, 2022, there were no unrecognized tax benefits, or any tax related interest or penalties. We do not have any examinations ongoing. Tax returns for the years 2014 onwards are subject to federal, state or local examinations. Note 10. Related Party Transactions Due to Officers The following amounts were due to our officers for reimbursement of expenses and were included in Accounts payable on our Balance Sheets: Schedule of related party payables July 31, 2022 2021 Joseph M. Redmond, CEO $ 2,642 $ 2,568 Christine Farrell, CFO 745 – $ 3,387 $ 2,568 The amount of unpaid salary and bonus due to our officers was included in Accrued wages on our Balance Sheets and was as follows: Schedule of accrued wages July 31, 2022 2021 Joseph M. Redmond, CEO $ 696,154 $ 183,846 Christine Farrell, CFO 124,617 – $ 820,771 $ 183,846 On January 31, 2022, the Compensation Committee and our full Board approved the 2021 bonus plan. Pursuant to the plan, Mr. Redmond received a $ 360,000 bonus and Ms. Farrell received a $ 40,000 bonus based upon meeting fund raising goals. The bonuses will be paid when funds are available and are included in the amounts disclosed in the above table. In December 2021, we entered into a total of five Promissory Notes with three of our directors and two officers. Mr. Joseph Michael Redmond, President and Chief Executive Officer, Ms. Christine M. Farrell, Chief Financial Officer, Mr. Jerome H. Casey, Director, Mr. John P. Gandolfo, Director, and Mr. Ricky W. Richardson, Director, each loaned us $25,000 for total proceeds of $125,000. At July 31, 2022, we recorded $6,063 of interest expense and accrued interest on these notes . See also Note 6 for a discussion of $ 25,000 Promissory Notes payable to each of two officers and three directors. See also Note 7 for a discussion of RSUs and stock option grants to each of our four directors, two officers and Dr. VanLandingham. F- 21 Related Party Transaction On November 7, 2017, Mr. Redmond entered into an employment agreement with us. As part of the employment agreement, Mr. Redmond was granted 25 million shares of common stock that vesting equally upon FDA submission of CardioMap, FDA approval for CardioMap and the raising of $2 million for further CardioMap development. Mr. Redmond could not sell the shares for two years or until we reached $10 million in revenues. Mr. Redmond was granted options for 15 million shares with an exercise price of $0.25 per share that vest equally upon our revenue reaching $5 million, $10, million and $15 million. The vesting accelerated based upon a change of control. None of these conditions were met and the options were canceled in September 2020. On February 16, 2018, the employment agreement was amended granting Mr. Redmond 10 million shares of common stock. No other provision of the employment contract was amended, and the amendment was explicit on that provision. On November 28, 2018, the employment agreement was again amended to include 4.7 million of the 10 million shares to be provided by us and 5.3 million to be provided by Green Energy Alternatives, LLC, which shares were returned to treasury in June 2021. No other provision of the employment contract was amended, and the amendment was explicit on that provision. On July 31, 2021, Mr. Redmond received 5.3 million shares of common stock to replace the unissued shares per his November 28, 2018 amended employment agreement. We recognized $53,000 of compensation expense related to the 5.3 million shares granted, with a fair value of $0.01 per share, during fiscal 2021. On March 1, 2021, as part of the Prevacus APA and Dr. VanLandingham’s employment agreement, Dr. VanLandingham was granted 1,000,000 stock options with a fair market value of $ 941,000 . 250,000 shares vested on signing of closing documents; 250,000 shares vest on Phase 1A first dosing of human, 250,000 shares vest on Phase 1B first dosing of human; and 250,000 shares vest upon us being accepted on NASDAQ. This amount is being expensed over the life of the awards and $ 295,845 and $ 596,145 was expensed to General and administrative expenses in fiscal 2022 and 2021, respectively. As of July 31, 2022, $ 49,010 remained to be expensed in future periods. In March and May 2021, we entered in a letter agreement loan with Prevacus Inc. for $2,500 and $5,000, respectively. The loans have an annual interest rate of 3% per annum and principal and interest were due in June 2021. At July 31, 2022, the loans had not been repaid and continue to accrue interest. At July 31, 2022, we have advanced Dr. VanLandingham $ 27,500 , which is being repaid through payroll deductions. Note 11. Donation Received On January 5, 2022, we received a donation in the amount of $ 500,000 in partnership with the Erase PTSD Now organization and the Glenn Greenberg and Linda Vester Foundation. These funds were recorded as Other income in our Statements of Operations and will be used to progress the Phase 1 human clinical trials for drug candidate PRV-002 for the treatment of concussion. It was contemplated, a royalty of one-half of one percent be paid to Erase PTSD Now in perpetuity. At this time there is no agreement in place and the parties may or may not enter into an agreement in the future. Note 12. Research and Development Rebate In fiscal 2022, we received research and development and GST rebates from the government of Australia in the amount of $ 264,209 for clinical work performed in Australia related to our Phase 1 human trial for safety and efficacy for the treatment of concussed individuals. In addition, as of July 31, 2022, we had accrued $ 366,475 in Prepaid expenses and other current assets to reflect the anticipated rebates for additional expenses incurred related to the clinical trial. The rebates were accounted for as an offset to Research and development expense. F- 22 Note 13. Subsequent Events On July 29, 2022 the Company filed Form S-1: General for Registration of Securities with the SEC, to register its shares from it PIPE for re-sale on the open market. The Form S-1 became effective August 9, 2022. In September and October 2022, two shareholders returned at total of 8,800,000 common stock shares to treasury and all rights, title and interest in the shares were relinquished. In September and October 2022, in connection with entering consulting agreements, we issued consultants 1,800,000 restricted shares of our common stock valued at an average price of $0.22 per share. On September 21, 2022, we entered into a promissory note for $30,000 with Jonathan Lutz, an accredited investor. The note bears an interest rate of 8% per annum and is due December 31, 2022. On September 29, 2022, we entered into Amendment No. 3 to the Convertible Promissory Note to the Securities Purchase Agreement dated April 5, 2021, with LGH Investments, LLC. Pursuant to the Amendment, the parties have agreed to extend the maturity date of the note to December 31, 2022. As consideration, $115,000 was added to the principal amount outstanding. All other terms and conditions remain the same. On September 30, 2022, we entered into five Promissory Note Amendments, to the Promissory Notes entered into December 21, 2021 and December 22, 2021 and as amended April 20, 2022, and June 3, 2022, with three directors and two officers. Pursuant to the Amendments, the parties have agreed to extend the maturity date of the Promissory Notes to December 31, 2022. All other terms and conditions remain the same. Subsequent to July 31, 2022 and through October 31, 2022, we sold an additional 1,133,591 shares of our common stock to LPC for total proceeds $240,710. Subsequent to July 31, 2022 and through October 31, 2022, we issued 3,250,000 stock options to consultants, employees and an officer at an average exercise price of $0.29 per share. The options have expirations dates of five and 10 years. F- 23 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.