Odyssey Health, Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Financial statements of Odyssey Health, Inc. Report of Independent Registered Public Accounting Firm (PCAOB ID 76 ) F-1 Consolidated Balance Sheets as of July 31, 2023 and 2022 F-3 Consolidated Statements of Operations for the Years Ended July 31, 2023 and 2022 F-4 Consolidated Statements of Stockholders’ Deficit for the Years Ended July 31, 2023 and 2022 F-5 Consolidated Statements of Cash Flows for the Years Ended July 31, 2023 and 2022 F-6 Notes to Consolidated Financial Statements F-7 46 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 consolidated balance sheets of Odyssey Health, Inc. (the “Company”) as of July 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ deficit and cash flows, for each of the two years in the period ended July 31, 2023, 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, 2023 and 2022 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 30, 2023 F- 2 Odyssey Health, Inc. and Subsidiaries Consolidated Balance Sheets July 31, 2023 2022 Assets Current assets: Cash $ 36,865 $ 72,534 Research and development rebate due from the Australian government 276,566 366,475 Prepaid expenses and other current assets 92,457 87,408 Total current assets 405,888 526,417 Intangible assets, net 49,905 43,260 Total assets $ 455,793 $ 569,677 Liabilities and Stockholders' Deficit Current liabilities: Accounts payable $ 1,797,656 $ 1,549,568 Accrued wages 1,402,348 896,700 Accrued interest 142,032 110,063 Asset purchase liability 1,125,026 1,125,026 Notes payable, officers and directors 125,000 125,000 Notes payable, net of unamortized beneficial conversion feature, debt discount and closing costs of $ 280,340 and $ 48,063 2,019,660 1,406,937 Total current liabilities 6,611,722 5,213,294 Fair value, 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 79,067,879 and 77,860,563 issued and outstanding 79,068 77,861 Additional paid-in capital 53,862,378 49,456,476 Accumulated deficit ( 60,097,375 ) ( 54,177,954 ) Total stockholders’ deficit ( 6,155,929 ) ( 4,643,617 ) Total liabilities and stockholders’ deficit $ 455,793 $ 569,677 The accompanying notes are an integral part of these consolidated financial statements. F- 3 Odyssey Health, Inc. and Subsidiaries Consolidated Statements of Operations Fiscal Year Ended July 31, 2023 2022 In-process research and development $ 170,000 $ – Research and development 201,329 1,317,024 Stock-based compensation 2,820,311 3,870,465 General and administrative 2,122,375 2,919,091 Loss from operations ( 5,314,015 ) ( 8,106,580 ) Interest expense ( 614,083 ) ( 836,294 ) Other income, net 8,677 498,743 Net loss $ ( 5,919,421 ) $ ( 8,444,131 ) Basic net loss per share $ ( 0.07 ) $ ( 0.09 ) Diluted net loss per share $ ( 0.07 ) $ ( 0.09 ) Shares used for basic net loss per share 82,677,354 88,995,280 Shares used for diluted net loss per share 82,677,354 88,995,280 The accompanying notes are an integral part of these consolidated financial statements. F- 4 Odyssey Health, Inc. and Subsidiaries Consolidated Statements of Stockholders’ Deficit Common Stock Additional Paid-In Accumulated Total Stockholders’ Shares Dollars Capital Deficit Deficit 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 8,653,970 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 ) Stock-based compensation 2,300,000 2,300 2,818,011 – 2,820,311 Common stock issued in debt financing 213,725 213 13,230 – 13,443 Warrants issued in debt financing – – 345,135 – 345,135 Common stock issued in equity financing 3,633,591 3,634 576,586 – 580,220 Common stock issued in conversion of debt 2,860,000 2,860 475,140 – 478,000 Common stock issued in option purchase agreement 1,000,000 1,000 169,000 – 170,000 Return of shares to treasury ( 8,800,000 ) ( 8,800 ) 8,800 – – Net loss – – – ( 5,919,421 ) ( 5,919,421 ) Balances July 31, 2023 79,067,879 $ 79,068 $ 53,862,378 $ ( 60,097,375 ) $ ( 6,155,929 ) The accompanying notes are an integral part of these consolidated financial statements. F- 5 Odyssey Health, Inc. and Subsidiaries Consolidated Statements of Cash Flows Fiscal Year Ended July 31, 2023 2022 Cash flows from operating activities Net loss $ ( 5,919,421 ) $ ( 8,444,131 ) Adjustments to reconcile net loss to net cash used in operating activities: Amortization 3,416 2,374 Stock issued for services and stock-based compensation 2,820,311 3,870,465 Amortization of beneficial conversion feature, debt discount and closing costs 532,434 687,429 Stock issued for in-process research and development 170,000 – Financing costs paid with stock 1,750 68,718 Changes in operating assets and liabilities: Increase in prepaid expenses and other current assets ( 5,049 ) ( 33,873 ) Decrease (increase) research and development rebate due from Australian government 89,909 ( 366,475 ) Increase in accounts payable 248,088 324,785 Increase in accrued wages 505,648 637,213 Increase in accrued interest 78,219 77,712 Net cash used in operating activities ( 1,474,696 ) ( 3,175,783 ) Cash flows from investing activities Purchased intellectual property ( 10,061 ) ( 45,220 ) Cash flows from financing activities Proceeds from borrowings on notes 903,868 375,000 Principal payments made on notes payable ( 35,000 ) ( 107,269 ) Proceeds from equity financing 580,220 2,469,222 Net cash provided by financing activities 1,449,088 2,736,953 Net change in cash ( 35,669 ) ( 484,050 ) Cash, beginning of year 72,534 556,584 Cash, end of year $ 36,865 $ 72,534 Supplemental disclosure of cash flow information Cash paid for interest $ – $ 954 Noncash Investing and Financing Activities Common stock issued for conversion of notes payable and accrued interest $ 478,000 $ – Common stock issued for debt financing commitment shares – 68,718 Common stock issued in exchange for closing costs 13,443 – Warrants issued in connection with financings 345,135 – Original issue discount on debt 98,048 – Beneficial conversion feature recognized – 200,100 Accounts payable converted into common stock – 20,000 Increase in principal of notes payable 406,132 225,000 Common stock issued for Prevacus milestone – 1,000 Shares returned to treasury 8,800 23,530 The accompanying notes are an integral part of these consolidated financial statements. F- 6 Odyssey Health, Inc. Notes to Consolidated 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, 2023 (“fiscal 2023”) or 2022 (“fiscal 2022”) and we had an accumulated deficit of $ 60,097,375 as of July 31, 2023. For the foreseeable future, we expect to experience continuing operating losses and negative cash flows from operations. Cash available at July 31, 2023 of $ 36,865 will not provide enough working capital to meet our current operating expenses through the first quarter of fiscal 2024. The operating deficit and cash balance at July 31, 2023 indicate 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 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. We are continually adjusting our business plan to reflect our current liquidity expectations. Due to the unknown and volatile nature of the stock price and trading volume of our common stock, it is difficult to predict the timing and amount of availability pursuant to our equity line of credit with Lincoln Park Capital Fund, LLC (“LPC”). Due to the limitations in the equity line of credit, we will need to do one or more of the following during fiscal 2024; secure additional debt financing, secure additional equity financing, secure a strategic partner, reduce our operating expenditures, or seek bankruptcy protection. Given our recurring losses, negative cash flow, and accumulated deficit, 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 (collectively, the “Company”). 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. Research and development rebate due from the Australian government We receive a 43.5% rebate at the end of each fiscal year from the Australian government on all research and development performed in Australia. We record the rebate as expenses are incurred as an offset to research and development. Prepaid expenses and other current assets Prepaid expenses and other current assets consist of loans and advances receivable and prepaid insurance. At July 31, 2023 there were no impairment concerns. Property and equipment, net As of July 31, 2022, all property and equipment was fully depreciated. Depreciation was recorded on a straight-line basis over the estimated useful lives of the assets. We recognized depreciation expense of $ 0 and $ 414 , respectively, in fiscal 2023 and 2022. Intangible assets, net Intangible assets consist of costs related to a patent for our ONP-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 $ 3,416 and $ 2,374 , respectively, in fiscal 2023 and 2022. F- 8 Future amortization of intangible assets is as follows: Schedule of future amortization expense assets Fiscal 2024 $ 3,708 Fiscal 2025 3,685 Fiscal 2026 3,685 Fiscal 2027 3,685 Fiscal 2028 3,685 Thereafter 31,457 Total $ 49,905 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 year. 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 years 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, 2023 2022 Options to purchase common stock 11,795,000 6,645,000 Equivalent shares of convertible notes into common stock 25,547,822 7,303,333 Warrants to purchase common stock 14,558,607 7,558,607 Unvested restricted stock units 3,055,554 2,189,695 Total potentially dilutive securities 54,956,983 23,696,635 F- 9 Stock-based compensation We recognize stock-based 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. 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. In-process research and development In-process research and development relates to the value of 1,000,000 shares of our common stock with a value of $ 0.17 per share issued to Prevacus in connection with the November 2022 Option Agreement (Note 8). Research and development Research and development costs are expensed in the period when incurred. 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, 2023 or 2022. We recognize interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense. F- 10 Note 3. New Accounting Pronouncements 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. 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 (ONP-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. F- 11 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 Consolidated 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 achievement of the milestone related to the first dosing in a Phase I Clinical Trial 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. Note 5. Fair Value, Commitments and Contingent Liabilities 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, 2023 or 2022. The carrying values of cash, prepaid expenses and other, accounts payable and accrued wages approximate their fair value due to their short maturities. No changes were made to our valuation techniques during the fiscal year ended July 31, 2023. F- 12 Contingent Liabilities At July 31, 2023 and 2022, 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, 2023 and 2022 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 remaining 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, 2023 2022 Carrying value $ 2,425,000 $ 1,580,000 Fair value $ 2,425,000 $ 1,580,000 Non-Financial Assets Non-financial assets, such as 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 2023 or 2022. Note 6. Debt Promissory Note On September 21, 2022, we entered into a promissory note for $ 30,000 with a consultant for investor relations services with an interest rate of 8 % per annum and a due date of December 31, 2022. On December 30, 2022, this promissory note was amended to extend the maturity date to January 31, 2023. On January 31, 2023, the note was extended to June 30, 2023. As consideration, the consultant was granted a five-year stock option for 50,000 shares of common stock at $0.17 per share. All other terms and conditions remained the same. On June 9, 2023, we amended this promissory note in order to convert the loan into 300,000 shares of our common stock with a value of $ 36,000 . LGH Investments, LLC 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 (“LGH”). Pursuant to Amendment No. 3, the maturity date of the note was extended to December 31, 2022. As consideration, $ 115,000 was added to the principal amount outstanding and is being amortized as interest expense over the remaining term of the Note. All other terms and conditions remain the same. F- 13 On November 10, 2022, LGH provided notice to convert $ 300,000 of their outstanding convertible note into 1,500,000 shares of our common stock at $0.20 per share. On December 29, 2022, we entered into Amendment No. 4 to the Convertible Promissory Note to the Securities Purchase Agreement dated April 5, 2021, with LGH. Pursuant to the Amendment No. 4, the maturity date of the note was extended to March 31, 2023 . As consideration, we paid $ 35,000 towards the principal amount outstanding and $ 50,000 was added to the principal amount outstanding. All other terms and conditions remain the same. On March 31, 2023, we entered into Amendment No. 5 to the Convertible Promissory Note to the Securities Purchase Agreement dated April 5, 2021, with LGH. Pursuant to the Amendment No. 5, the maturity date of the note was extended to June 30, 2023 . As consideration, $ 20,000 was added to the principal amount outstanding. All other terms and conditions remain the same. Subsequent to Amendment No. 5 and the conversion, $ 1,030,000 remained outstanding on the convertible note. On July 6, 2023, we entered into Amendment No. 6 to the Convertible Promissory Note to the Securities Purchase Agreement dated April 5, 2021, with LGH. Pursuant to the Amendment No. 6, the maturity date of the note was extended to December 31, 2023 . As consideration, $ 25,000 was added to the principal amount outstanding and interest shall be charged on the unpaid Principal Amount at the rate of 8 % per annum from July 6, 2023. All other terms and conditions remain the same. Subsequent to Amendment No. 6 , $ 1,055,000 remained outstanding on the convertible note. Tysadco Partners, LLC/ClearThink Capital Partners, LLC On March 14, 2023, we entered into a Second Amendment to the Convertible Promissory Note (the “Second Amendment”) to the Securities Purchase Agreement dated August 29, 2021, with Tysadco Partners, LLC (“Tysadco”). Pursuant to the Second Amendment, the maturity date of the note was extended to December 31, 2023 . As consideration, the conversion price was amended to $ 0.20 per share from $ 0.30 per share and, upon execution, we converted $ 100,000 of the note into 500,000 shares of our common stock. Subsequent to this conversion, $ 175,000 remained outstanding on the note. In addition, Tysadco assigned this note to ClearThink Capital Partners, LLC. Directors and Officers Promissory Notes On December 21, 2021, and December 22, 2021, we entered into a total of five Promissory Notes (the “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 . The Promissory Notes bear interest at 8 % per annum and were originally due March 31, 2022. On June 30, 2023, we entered into five Promissory Note Amendments (the “Amendments”) to the Promissory Notes entered into December 21, 2021 and December 22, 2021, and as amended April 20, 2022, June 3, 2022, September 30, 2022, December 30, 2023 and March 31, 2023 with three directors and two officers. Pursuant to the Amendments, the maturity date of the Promissory Notes were extended to October 31, 2023 , and the note holder may convert the note prior to maturity at a conversion price of $ 0.12 per share. All other terms and conditions remain the same. At July 31, 2023 and 2022, we had $ 16,058 and $ 6,063 , respectively, of accrued interest related to these Promissory Notes. Mast Hill Fund L.P. On December 13, 2022, we entered into a Securities Purchase Agreement (the “SPA”) with Mast Hill Fund, L.P. (“Mast Hill”). Pursuant to the SPA, we sold Mast Hill (i) an $ 870,000 face value, one-year, 10 % per annum Promissory Note convertible into shares of our common stock at $ 0.12 per share, (ii) a five-year share purchase warrant entitling Mast Hill to acquire 2,000,000 shares of our common stock at $0.20 per share (the “Warrant”), and (iii) a five-year warrant for 4,000,000 shares of our common stock at $0.20 per share issuable in the event of default. Net proceeds after original discount, fees, and expenses, was $ 723,868 . Pursuant to our agreement with Mast Hill, we were required to notify Mast Hill of any draws on the LPC equity line of credit and at their request remit 30 % of the proceeds. In connection with the Mast Hill agreement, we issued Carter Terry & Company, Inc. 213,725 shares of our common stock valued at $ 13,443 . F- 14 On June 13, 2023, we entered into Amendment No. 1 to the SPA dated December 13, 2022. Pursuant to the Amendment, we (i) increased the principal balance by $ 50,000 to a total of $ 920,000 to be amortized over the life of the note, (ii) issued a five-year common stock purchase warrant to Mast Hill Fund L.P. for the purchase of 1,000,000 shares of our common stock at $ 0.20 per share with a fair value of $ 28,448 , (iii) extended the maturity dated to June 13, 2024 , (iv) extended the amortization payments, and (v) changed the terms of the repayment from proceeds from other sources. 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. Accredited Investors Note Purchase Agreement On July 7, 2023, we received a $ 150,000 advance from an accredited investor related to a $ 500,000 Note Purchase Agreement (the “NPA”) entered into with two accredited investors on August 15, 2023, at which time the remaining $ 350,000 of the $ 500,000 was received. See Note 13. Notes Payable Outstanding Schedule of Notes Payable July 31, July 31, 2023 2022 Convertible note issued to LGH due December 31, 2023, with a set interest amount of $84,000 through July 7, 2023, then an interest rate of 8.0% per annum of the then outstanding principal of $1,055,000 and convertible at $0.12 per share $ 1,055,000 $ 1,180,000 Promissory notes issued to officers and directors due October 31, 2023, with an interest rate of 8.0% per annum (see Note 10) 125,000 125,000 Note purchase agreement issued to an accredited investor due August 15, 2024, with an interest rate of 12% per annum 150,000 – ClearThink convertible promissory note payable due December 31, 2023, with a set interest amount of $20,000 and convertible at $0.20 per share 175,000 275,000 Mast Hill convertible promissory note due June 13, 2024, with an interest rate of 10% per annum and convertible at $0.12 per share 920,000 – 2,425,000 1,580,000 Unamortized beneficial conversion feature, debt discount and closing costs ( 280,340 ) ( 48,063 ) $ 2,144,660 $ 1,531,937 F- 15 Note 7. Stock-Based Compensation 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, 2023, no shares remained available for future issuances and 19,475,000 shares of our common stock were reserved for issuance for awards outstanding pursuant to the 2021 Plan. Awards covering a total of 2,545,000 shares were granted outside of the 2021 Plan in fiscal 2023, all of which were outstanding at July 31, 2023. Grants to Directors, Officers and Named Executive Officers Pursuant to the 2021 Plan On September 14, 2021, three independent Board members each received 500,000 RSUs with a value of $ 0.45 per share. In addition, Mr. Richardson received an initial equity grant of 500,000 RSUs with a value of $ 0.73 per share upon joining the Board on May 6, 2021. All of the RSUs vested monthly over a 12-month period from the date of grant. During fiscal 2023, we recognized $ 795,951 of stock-based compensation related to these awards as a component of General and administrative. On May 19, 2022, the Board granted options exercisable for 500,000 shares of our common stock to each of our four independent directors, 750,000 to Mr. Redmond and 600,000 to Ms. Farrell. All of these awards vested 50% in one year and 50% in two years 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. During fiscal 2023 and 2022, we recognized $ 524,362 and $ 148,238 , respectively, of stock-based compensation related to these awards as a component of General and administrative. On October 14,2022, The Board granted Ms. Farrell, granted options exercisable for 500,000 shares of our common stock vesting upon a listing to a higher exchange. The exercise price is $0.318 and the options have a 10 year expiration. During fiscal 2023, we recognized $120,735 of stock-based compensation related to these awards as a component of General and administrative. On January 12, 2023, three independent Board members each received 500,000 RSUs with a value of $ 0.30 per share. All of the RSUs vest 100% on January 12, 2024. During fiscal 2023, we recognized $ 243,750 of stock-based compensation related to these awards as a component of General and administrative. In January 2023, one independent director retired and voluntarily forfeited all vested and unvested equity awards, which resulted in a reversal of stock-based compensation of $ 68,497 in fiscal 2023. On January 12, 2023, Mr. Redmond and Ms. Farrell, our two executive officers, each received 500,000 RSUs with a value of $0.30 per share. 100,000 shares vested immediately, and 400,000 vest on December 31, 2023. During fiscal 2023, we recognized $201,816 of stock-based compensation related to these awards as a component of General and administrative. During fiscal 2023, we recognized total $866,784 of RSU stock-based compensation as a component of General and administrative. Stock Options Stock option activity during fiscal 2023 was as follows: Schedule of stock option activity Number of Options Weighted Average Exercise Price Options outstanding at July 31, 2022 6,645,000 $ 0.46 Options granted 6,500,000 0.22 Options canceled or expired ( 1,350,000 ) ( 0.38 ) Options outstanding at July 31, 2023 11,795,000 $ 0.34 F- 16 Criteria used for determining the Black-Scholes value of options granted were as follows: Schedule of assumptions Year Ended July 31, 2023 2022 Expected stock price volatility 140 % - 151 % 137 % - 149 % Risk free interest rate 2.73 % - 4.25 % 1.17 % - 3.02 % Expected life of options (years) 3.0 – 10.0 3.0 – 10.0 Expected dividend yield – – Restricted Stock Units (“RSUs”) RSU activity during fiscal 2023 was as follows: Schedule of RSU activity Number of RSUs Weighted Average Grant Date Fair Value RSUs outstanding at July 31, 2022 2,189,695 $ 0.23 RSUs issued 2,800,000 0.30 RSUs vested ( 934,141 ) 0.60 RSUs forfeited ( 1,000,000 ) ( 1.10 ) RSUs outstanding at July 31, 2023 3,055,554 $ 0.28 Warrants Warrant activity during fiscal 2023 was as follows: Schedule of warrant activity Number of Warrants Weighted Average Exercise Price Warrants outstanding at July 31, 2022 7,558,607 $ 0.69 Warrants issued 7,000,000 0.20 Warrants outstanding at July 31, 2023 14,558,607 $ 0.46 Unrecognized Stock-Based Compensation Costs At July 31, 2023, we had total unrecognized stock-based compensation of $ 1,116,020 , which will be recognized over the weighted average remaining vesting period of .74 years. F- 17 Note 8. Common Stock Return of shares 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. In September and October 2022, two shareholders returned at total of 8,800,000 shares of our common stock valued at $ 8,800 to treasury. Common Stock Issued for Services 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 for a total value of $ 1,590,000 which was expensed as a component of General and administrative. 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 valued at $ 0.37 per share for a total value of $ 16,650 which was expensed as a component of General and administrative. 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 valued at $ 0.23 per share for a total value of $ 115,000 which was expensed as a component of General and administrative. 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 ONP-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 valued at $ 0.20 per share for a total value of $ 40,000 which was expensed as a component of General and administrative. In September and October 2022 and March 2023, in connection with entering into consulting agreements, we issued consultants 2,300,000 restricted shares of our common stock valued at an average price of $ 0.19 per share for a total value of $ 433,800 which was expensed as a component of General and administrative. F- 18 Reverse Split At our annual stockholder meeting held on January 12, 2023, 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 in a range of not less than two shares and not more than 200 shares at any time on or before December 31, 2023. 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 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. 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 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. F- 19 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, 2023, 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. 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 $ 0.41 $ 250,000 $ 10,000,000 January 2021 200,000 0.18 35,080 9,964,920 February 2021 330,106 0.63 206,798 9,758,122 March 2021 1,020,798 0.96 979,597 8,778,525 August 2021 600,000 0.40 237,940 8,540,585 September 2021 374,482 0.35 129,096 8,411,489 February 2022 100,000 0.52 51,500 8,359,989 March 2022 100,000 0.49 48,700 8,311,289 July 2022 421,119 0.19 81,556 8,229,733 August 2022 233,591 0.17 39,610 8,190,124 September 2022 200,000 0.15 29,000 8,161,124 October 2022 700,000 0.25 172,100 7,989,024 November 2022 800,000 0.19 154,320 7,834,704 December 2022 300,000 0.15 46,000 7,788,704 February 2023 600,000 0.11 66,750 7,721,953 March 2023 500,000 0.10 48,520 7,673,434 April 2023 200,000 0.08 16,420 7,657,014 June 2023 100,000 0.08 7,500 7,649,514 7,382,518 $ 2,600,487 See Note 13 for information regarding subsequent sales to LPC. F- 20 LGH In connection with an amendment to the LGH Note, dated February 1, 2022, 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 (the “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. Prevacus Option Agreement On November 21, 2022, we entered into an Option to Purchase Intellectual Property Agreement (the “Option Agreement”) with Prevacus, Inc., which expired May 20, 2023. We had the option to purchase and acquire from Prevacus, free and clear of all encumbrances, 100% of Prevacus’ right, title, and interest in the worldwide and USPTO Patents to ONP-001 and one Enantiomer. As consideration, we issued Prevacus 1,000,000 shares of our common stock at $ 0.17 per share for a total value of $ 170,000 which was expensed as In-process research and development in fiscal 2023. The compensation that would have been paid to Prevacus for 100% of ONP-001 was 2,000,000 shares of our common stock and the consideration for the enantiomer would have been 1,000,000 shares of our common stock. The total purchase price would have been net of any equity paid to purchase the Option. Common Stock Issued in Connection with Debt Financings As discussed above in Note 6, we issued the following shares of our common stock in connection with debt financings during fiscal 2023 and 2022: · 200,000 shares in connection with Tysadco convertible debt financing with a fair value of $ 17,718 ; · 100,000 shares in connection with LGH convertible debt amendment with a fair value of $ 51,000 ; · 213,725 shares with a value of $ 13,443 issued to Carter Terry & Company, Inc. in connection with Mast Hill Fund, L.P. financing; · 1,500,000 shares upon the conversion by LGH of $ 300,000 of their outstanding convertible note; · 500,000 shares upon the conversion by ClearThink of $ 100,000 of their outstanding convertible note, · 300,000 shares upon the conversion by a consultant of $ 36,000 of their outstanding convertible note, and · 560,000 shares upon the conversion by Mast Hill of $ 40,250 accrued interest and $ 1,750 fees. F- 21 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 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, 2023 2022 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, 2023 2022 Current deferred $ 485,300 $ 885,400 Increase in valuation allowance ( 485,300 ) ( 885,400 ) Total $ – $ – Our net deferred tax asset was as follows: Schedule of deferred tax assets and liabilities July 31, 2023 2022 Deferred tax asset $ 2,960,400 $ 2,475,100 Valuation allowance ( 2,960,400 ) ( 2,475,100 ) Net deferred tax asset $ – $ – As of July 31, 2023, we had $ 13,745,873 of federal net operating loss carry forwards. These carry forwards, if not used, will begin to expire in 2039. 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- 22 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 2022 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, 2023, 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 Consolidated Balance Sheets: Schedule of related party payables July 31, 2023 2022 Joseph M. Redmond, CEO $ 668 $ 2,642 Christine Farrell, CFO 1,633 745 $ 2,301 $ 3,387 The amount of unpaid salary and bonus due to our officers was included in Accrued wages on our Consolidated Balance Sheets and was as follows: Schedule of accrued wages July 31, 2023 2022 Joseph M. Redmond, CEO $ 935,831 $ 696,154 Christine Farrell, CFO 257,771 124,617 $ 1,193,602 $ 820,771 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. See Note 6 for a discussion of $ 25,000 Promissory Notes payable to each of two officers and three directors. See Note 7 for a discussion of RSUs and stock option grants to each of our four directors, two officers and Dr. VanLandingham. F- 23 Related Party Transaction 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 $ 37,872 , and $ 295,845 was expensed to General and administrative in fiscal 2023 and 2022, respectively. As of July 31, 2023, $ 11,138 remained to be expensed in future periods. In March, May and December 2021, November and December 2022 and January 2023, we entered into loans with Prevacus Inc. for a total of $25,192. The loans have an annual interest rate of 3% per annum. At July 31, 2023, accrued interest totaled $930 and to date the loans had not been repaid and continue to accrue interest. At July 31, 2023, we have advanced Dr. VanLandingham $ 35,700 , 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 were used to progress the Phase I human clinical trials for drug candidate ONP-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 due from Australian Government We incurred expenses related to our Phase I clinical trial of our concussion drug device combination that are eligible for the Australian research and development rebate which were recorded as an offset to research and development expense as follows: Schedule of research and development rebate For the year ended July 31, 2023 2022 Research and development expense offset $ 261,738 $ 538,135 Note 13. Subsequent Events LPC Subsequent to July 31, 2023 and through October 30, 2023, we sold 500,000 shares of our common stock to LPC for total proceeds of $45,820. As of October 30, 2023, LPC had purchased a total of 7,882,518 shares of our common stock for total proceeds of $2,646,306 and the remaining purchase availability was $7,603,694 and the remaining shares available were 11,388,846. Mast Hill On August 7, 2023, pursuant to the SPA, Mast Hill converted a portion of their warrant exercisable for 2,000,000 shares of our common stock into 1,610,390 shares of our common stock at an exercise price of $0.075 per share. Following this conversion, 389,610 shares remained available pursuant to this warrant. F- 24 Note Purchase Agreement On August 15, 2023, we entered into a $500,000 Note Purchase Agreement (the “NPA”) with two accredited investors. Pursuant to the terms and conditions as set forth in the NPA (i) the note is due and payable in full on or after the later of August 15, 2024 or completion of a Senior Exchange Listing of, or a Spinout (“Spinco”) of, our ONP Technology, (ii) interest shall accrue at a rate of 12% per annum, (iii) the note is convertible at our option into shares of Spinco common stock at a price that is 70% of Spinco’s IPO price, and (iv) Common Stock Purchase Warrants which permit each investor to acquire a number of shares of common stock of Spinco equal to 200% of such investor’s original face amount of the loan divided by the IPO price of Spinco. LGH Promissory Note On August 28, 2023, we paid LGH $30,000 of principal on their outstanding promissory note due December 31, 2023. Following this payment, $1,025,000 of principal remained outstanding. Mast Hill Promissory Note On September 13, 2023 we paid Mast Hill $100,000 of principal and $26,382 of interest on their outstanding promissory note due June 13, 2024. Following this payment, $820,000 of principal and no accrued interest remained due. On October 9, 2023, Mast Hill converted $47,653 together with $637 interest, and $1,750 for fees totaling $50,040 into 417,000 shares of common stock at a conversion price of $0.12 per share. Following this conversion, $727,451 of principal remained outstanding. Oragenics, Inc. On October 4, 2023, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Oragenics, Inc. (“Oragenics” the “Purchaser”). Pursuant to the Purchase Agreement, the we have agreed to sell and assign, certain assets and certain liabilities related to a segment of Odyssey’s business focused on developing medical products that treat brain related illnesses and diseases (the “Purchased Assets”) to Oragenics in exchange for (i) $1,000,000 in cash and 8,000,000 shares of convertible Series F Preferred Stock (“Series F Preferred Stock”), on and subject to the terms and conditions set forth therein (such transaction, the “Odyssey Asset Purchase”). The Purchased Assets include drug candidates for treating mild traumatic brain injury (mTBI), also known as concussion, and for treating Niemann Pick Disease Type C (NPC), as well as our proprietary powder formulation and its nasal delivery device. We received $500,000 upon the execution of the Purchase Agreement on October 4, 2023 and will receive the additional $500,000 upon the earlier of (a) the closing of the Purchase Agreement (the “Closing”), (b) within three (3) business days after the date that the Company has obtained the its stockholders’ approval approving the Odyssey Asset Purchase and (c) immediately upon the Purchasers’ wrongful termination of the Purchase Agreement in breach of the Purchase Agreement. The closing of the Asset Purchase is expected to be at the end of the fourth calendar quarter of 2023, subject to the satisfaction of customary closing conditions, which include: (1) we shall have obtained all required consents to the Odyssey Asset Purchase; (2) We shall have obtained shareholder approval to the Asset Purchase; (3) the Oragenics’ shareholders shall have approved (a) the increase in the its authorized Common Stock from 4,166,666 to 350,000,000 and (b) the conversion of the Series F Preferred Stock into Common Stock; (4) no material adverse change shall have occurred to the Purchased Assets; (5) Oragenics must have at least $5,000,000 in cash at Closing; and (6) Oragenics must have completed its due diligence of the Purchased Assets to its satisfaction. At the Closing, Oragenics will issue 8,000,000 shares of convertible Series F Preferred Stock to Odyssey, 1,592,000 of which will automatically convert into 1,592,0000 shares of Oragenics common stock, resulting in Odyssey holding 19.9% of Oragenics common stock. As of October 27, 2023, Oragenics common stock traded at $3.37 per share. At this price, the 8,000,000 shares of convertible Series F Preferred Stock would be valued at $27 million and the 19.9% 1,592,000 shares of Oragenics common stock would be valued at $5.4 million. The remaining 6,408,000 shares of convertible Series F Preferred Stock will convert upon certain listing and change in control criteria being achieved. OTCQB On October 4, 2023, we uplisted to the OTCQB Market. Resignation of Director and Employment Matters On October 5, 2023, John Gandolfo resigned as a director of the Company. On October 19, 2023, Mr. Gandolfo converted his convertible promissory note plus accrued interest into 238,792 shares of our common stock at an exercise price of $0.12 per share. On October 26, 2023, Dr. VanLandingham separated his employment from the Company as Technical Lead and was engaged on a contractual basis to continue working on the ONP-002 concussion drug clinical research and development. At October 26, 2023, the Company owed Dr. VanLandingham $31,838 and his incentive stock options will continue to vest as long as he remains a consultant. F- 25 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.