Odyssey Health, Inc. 10-Q

Item 1. Financial Statements Odyssey Health, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited) October 31, July 31, 2023 2023 Assets Current assets: Cash $ 197,882 $ 36,865 Research and development rebate due from the Australian government 291,036 276,566 Prepaid expenses and other current assets 74,160 92,457 Total current assets 563,078 405,888 Intangible assets, net of accumulated amortization of $ 6,320 and $ 5,376 48,961 49,905 Total assets $ 612,039 $ 455,793 Liabilities and Stockholders' Deficit Current liabilities: Accounts payable $ 1,851,443 $ 1,797,656 Accrued wages 1,338,614 1,402,348 Accrued interest 164,904 142,032 Asset purchase liability 1,125,026 1,125,026 Notes payable, officers and directors 100,000 125,000 Notes payable, net of unamortized beneficial conversion feature, debt discount and closing costs of $ 177,126 and $ 280,340 2,250,325 2,019,660 Total current liabilities 6,830,312 6,611,722 Commitments and contingencies (Note 5) – – Stockholders' deficit: Preferred stock, $ 0.001 par value, 100,000,000 shares authorized, no shares issued or outstanding – – Common stock, $ 0.001 par value, 500,000,000 shares authorized, 81,734,061 and 79,067,879 shares issued and outstanding 81,734 79,068 Additional paid-in-capital 54,335,403 53,862,378 Accumulated deficit ( 60,635,410 ) ( 60,097,375 ) Total stockholders' deficit ( 6,218,273 ) ( 6,155,929 ) Total liabilities and stockholders' deficit $ 612,039 $ 455,793 The accompanying notes are an integral part of these consolidated financial statements. 3 Odyssey Health, Inc. and Subsidiaries Consolidated Statements of Operations (Unaudited) For the Three Months Ended October 31, 2023 2022 Research and development $ 23,001 $ 354,215 Stock-based compensation 322,798 779,890 General and administrative 501,440 943,699 Loss from operations ( 847,239 ) ( 2,077,804 ) Gain on sale of asset 500,000 – Interest expense ( 190,861 ) ( 71,302 ) Other income (expense), net 65 ( 474 ) Net loss $ ( 538,035 ) $ ( 2,149,580 ) Basic net loss per share $ ( 0.01 ) $ ( 0.03 ) Diluted net loss per share $ ( 0.01 ) $ ( 0.03 ) Shares used for basic net loss per share 81,022,472 80,891,387 Shares used for diluted net loss per share 81,022,472 80,891,387 The accompanying notes are an integral part of these consolidated financial statements. 4 Odyssey Health, Inc. and Subsidiaries Consolidated Statements of Stockholders’ Deficit (Unaudited) Additional Paid-In Accumulated Total Shares Dollars Capital Deficit Deficit Balances, July 31, 2023 79,067,879 $ 79,068 $ 53,862,378 $ ( 60,097,375 ) $ ( 6,155,929 ) Stock-based compensation – – 322,728 – 322,728 Common stock issued upon conversion of debt 655,792 656 78,039 – 78,695 Common stock issued in equity financings 500,000 500 45,320 – 45,820 Warrants exercised in connection with debt financing 1,610,390 1,610 ( 1,610 ) – – Warrants issued in debt financing – – 28,448 – 28,448 Return of shares ( 100,000 ) ( 100 ) 100 – – Net loss – – – ( 538,035 ) ( 538,035 ) Balances, October 31, 2023 81,734,061 $ 81,734 $ 54,335,403 $ ( 60,635,410 ) $ ( 6,218,273 ) Additional Paid-In Accumulated Total Shares Dollars Capital Deficit Deficit Balances, July 31, 2022 77,860,563 $ 77,861 $ 49,456,476 $ ( 54,177,954 ) $ ( 4,643,617 ) Stock-based compensation 1,800,000 1,800 1,166,890 – 1,168,690 Common stock issued in equity financings 1,133,591 1,134 239,576 – 240,710 Return of shares ( 8,800,000 ) ( 8,800 ) 8,800 – – Net loss – – – ( 2,149,580 ) ( 2,149,580 ) Balances, October 31, 2022 71,994,154 $ 71,995 $ 50,871,742 $ ( 56,327,534 ) $ ( 5,383,797 ) The accompanying notes are an integral part of these consolidated financial statements. 5 Odyssey Health, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended October 31, 2023 2022 Cash flows from operating activities: Net loss $ ( 538,035 ) $ ( 2,149,580 ) Adjustments to reconcile net loss to net cash flows used in operating activities: Amortization of intangible assets 944 754 Stock-based compensation 322,728 1,168,690 Financing costs paid via issuance of common stock 1,750 – Amortization of beneficial conversion feature, debt discount and closing costs 131,662 68,054 Changes in operating assets and liabilities: (Increase) decrease in prepaid expenses and other current assets 18,297 ( 472 ) Increase in research and development rebate due ( 14,470 ) ( 312,325 ) Increase in accounts payable 53,787 824,084 Increase (decrease) in accrued wages ( 63,734 ) 113,275 Increase in accrued interest 27,164 2,813 Net cash used in operating activities ( 59,907 ) ( 284,707 ) Cash flows from investing activities Purchase of intellectual property – ( 8,038 ) Net cash used in investing activities – ( 8,038 ) Cash flows from financing activities: Proceeds from notes payable 350,000 30,000 Principal and interest payments made on notes payable ( 174,896 ) – Proceeds from equity financing 45,820 240,710 Net cash provided by financing activities 220,924 270,710 Increase (decrease) in cash and cash equivalents 161,017 ( 22,035 ) Cash and cash equivalents: Beginning of period 36,865 72,534 End of period $ 197,882 $ 50,499 Supplemental disclosure of non-cash information: Increase in principal of notes payable $ – $ 115,000 Return of shares $ 100 $ 8,800 Shares issued for exercised warrants $ 1,610 $ – Debt principal, interest and fees converted to common stock $ 76,945 $ – Warrants issued in connection with debt financing $ 28,448 $ – The accompanying notes are an integral part of these consolidated financial statements. 6 Odyssey Health, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) Note 1. Basis of Presentation and Nature of Operations Basis of Presentation The accompanying consolidated financial information of Odyssey Health, Inc. and our wholly-owned subsidiary Odyssey Group International Australia, Pty Ltd, (collectively, the “Company”) is unaudited and has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). All intercompany balances and transactions have been eliminated. However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods. The consolidated financial information as of July 31, 2023 is derived from our 2023 Annual Report on Form 10-K. The consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2023 Annual Report on Form 10-K filed with the SEC on October 30, 2023. The consolidated results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year. Significant Accounting Policies Our significant accounting policies have not changed during the three months ended October 31, 2023 from those disclosed in our Annual Report on Form 10-K for the year ended July 31, 2023. OTCQB On October 4, 2023, we uplisted to the OTCQB Market. Nature of Operations 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. Currently no research and development activities are being incurred on the CardioMap® or the Save a Life devices. 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, we have agreed to sell and assign certain assets and certain liabilities related to a segment of our 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. $ 500,000 has been received, with $ 500,000 due the earlier of, stockholder approval of the sale of the asset or 90 days from the signing. The closing is expected to be at the end of the fourth calendar quarter of 2023, subject to the satisfaction of customary closing conditions. See Note 4. 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. 7 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. Going Concern We did not recognize any revenues for the year ended July 31, 2023, or the three months ended October 31, 2023, and we had an accumulated deficit of $ 60,635,410 as of October 31, 2023. For the foreseeable future, we expect to experience continuing operating losses and negative cash flows from operations. Cash available at October 31, 2023, of $ 197,882 will not provide enough working capital to meet our current operating expenses through the second quarter of fiscal 2024. The operating deficit and cash balance at October 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 consolidated 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. Note 2. New Accounting Pronouncements ASU 2020-06 In August 2020, the Financial Accounting Standards Board (“ FASB”) issued Accounting Standards Update (“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 consolidated financial position, results of operations or cash flows. 8 Note 3. Intangible Assets Intangible assets consisted of costs related to a patent for our concussion drug device combination. Amortization expense was as follows: Schedule of amortization expense Three Months Ended October 31, 2023 2022 Amortization expense $ 944 $ 754 Future amortization of intangible assets is as follows: Schedule of future amortization of intangible assets Remainder of fiscal 2024 $ 2,764 Fiscal 2025 3,685 Fiscal 2026 3,685 Fiscal 2027 3,685 Fiscal 2028 3,685 Thereafter 31,457 Total amortization expense $ 48,961 Note 4. Asset Purchase Agreement with Oragenics, Inc. On October 4, 2023, we entered into an Asset Purchase Agreement with Oragenics. Pursuant to the Purchase Agreement, we have agreed to sell and assign the Purchased Assets related to a segment of our business focused on developing medical products that treat brain related illnesses and diseases to Oragenics in exchange for (i) $ 1,000,000 in cash and 8,000,000 shares of convertible Series F Preferred Stock. 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 business days after the date that we have obtained our stockholders’ approval for the transaction or (c) immediately upon the Purchaser’s wrongful termination of the Purchase Agreement in breach of the Purchase Agreement. The closing 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 Purchase Agreement; (2) we shall have obtained stockholder approval to the Purchase Agreement; (3) the Oragenics’ shareholders shall have approved (a) the increase in authorized Common Stock from 4,166,666 to 350,000,000 shares, 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 us. A number equal to 19.9% of Oragenics shares of common stock outstanding will be automatically converted into common stock at that time. As of December 14, 2023, Oragenics common stock traded at $5.43 per share. The remaining shares of convertible Series F Preferred Stock will convert upon certain listing and change in control criteria being achieved. 9 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 three months ended October 31, 2023, or the year ended July 31, 2023. The carrying values of cash, prepaid expenses and other current assets, accounts payable and accrued wages approximate their fair value due to their short maturities. No changes were made to our valuation techniques during the quarter ended October 31, 2023. Contingent Liabilities At October 31, 2023 and July 31, 2023, 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 October 31, 2023 and July 31, 2023 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. Fixed-Rate Debt We have fixed-rate debt that is reported on our consolidated 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 were as follows: Schedule of fixed rate long term debt October 31, 2023 July 31, 2023 Carrying value $ 2,527,451 $ 2,425,000 Fair value $ 2,527,451 $ 2,425,000 10 Note 6. Debt 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. 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. 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. 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 October 19, 2023, John Gandolfo, former director, exercised his option to convert his convertible note of $ 25,000 plus $ 3,655 of accrued interest into 238,792 shares of common stock at $0.12 per share. On November 1, 2023, we entered into four 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, 2022, March 31, 2023 and June 30, 2023, with two directors and two officers. Pursuant to the Amendments, the maturity date of the Promissory Notes was extended to January 31, 2024 and the note holder may convert the note into shares of our common stock prior to maturity at a conversion price of $0.12 per share. All other terms and conditions remain the same. At October 31, 2023 and July 31, 2023, we had $ 14,859 and $ 16,058 , respectively, of accrued interest related to these Promissory Notes. 11 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 . 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. On August 7, 2023, Mast Hill converted their outstanding warrant exercisable for 2,000,000 shares in a cashless exercise. The conversion resulted in the purchase of 1,610,390 shares of our common stock at an exercise price of $0.075 per share. Following this conversion, no shares remained available pursuant to this warrant. On September 13, 2023, we paid Mast Hill $ 100,000 in principal and $ 26,382 in interest and on October 6, 2023, we paid Mast Hill $ 44,896 of principal and $ 5,167 of interest. On October 9, 2023, Mast Hill converted $ 47,653 of principal, $ 637 of accrued interest and $ 1,750 of fees into 417,000 shares of our common stock at $0.12 per share. Following these repayments and conversion, at October 31, 2023 there was $ 727,451 of principal outstanding and no accrued interest outstanding. 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 additional $ 350,000 was received. Pursuant to the terms and conditions of the NPA (i) the note is due and payable in full on or after the later of August 15, 2024 or upon 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 the investor’s 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. Notes Payable The following notes payable were outstanding: Schedule of notes payable October 31, 2023 July 31, 2023 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 $ 1,025,000 $ 1,055,000 Promissory notes issued to officers and directors due January 31, 2024, with an interest rate of 8.0% per annum 100,000 125,000 Note purchase agreement issued to two accredited investors due August 15, 2024, with an interest rate of 12% per annum 500,000 150,000 ClearThink convertible promissory note due December 31, 2023, with a set interest amount of $20,000 and convertible at $0.20 per share 175,000 175,000 Mast Hill convertible promissory note due June 13, 2024, with an interest rate of 10% per annum and convertible at $0.12 per share 727,451 920,000 2,527,451 2,425,000 Unamortized beneficial conversion feature, debt discount and closing costs ( 177,126 ) ( 280,340 ) $ 2,350,325 $ 2,144,660 12 Note 7. Stock-Based Compensation 2021 Omnibus Stock Incentive Plan At October 31, 2023, 19,475,000 shares of our common stock were reserved for issuance pursuant to the 2021 Plan and no shares remained available for future awards. Stock Options Stock option activity during the quarter ended October 31, 2023 was as follows: Schedule of stock option activity Number of Options Weighted Average Exercise Price Options outstanding at July 31, 2023 11,795,000 $ 0.34 Options granted 250,000 0.08 Options expired or cancelled ( 750,000 ) 0.26 Options outstanding at October 31, 2023 11,295,000 $ 0.34 Criteria used for determining the Black-Scholes value of options granted were as follows: Schedule of black scholes value of options granted Quarter Ended October 31, 2023 Expected stock price volatility 147 % Risk free interest rate 4.62 % Expected life of options (years) 5 Expected dividend yield – Restricted Stock Units (“RSUs”) RSU activity during the quarter ended October 31, 2023 was as follows: Schedule of RSU activity Number of RSUs Weighted Average Grant Date Fair Value RSUs outstanding at July 31, 2023 3,055,554 $ 0.28 RSUs vested ( 833,334 ) 0.25 RSUs outstanding at October 31, 2023 2,222,220 $ 0.29 Warrants Schedule of warrant activity Number of Warrants Weighted Average Exercise Price Warrants outstanding at July 31, 2023 14,558,607 $ 0.50 Warrants exercised ( 1,610,390 ) 0.08 Warrants cancelled ( 389,610 ) 0.20 Warrants outstanding at July 31, 2023 12,558,607 $ 0.50 13 Unrecognized Compensation Costs At October 31, 2023, we had unrecognized stock-based compensation of $ 693,073 , which will be recognized as a component of general and administrative expenses over the weighted average remaining vesting period of 0.31 years. Note 8. Net Loss Per Share Basic and diluted net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding for the period. Potentially dilutive common stock and common stock equivalents, including stock options, RSUs and warrants are excluded as they would be antidilutive. The following anti-dilutive securities were excluded from the calculations of diluted net loss per share: Schedule of anti-dilutive shares Three Months Ended October 31, 2023 2022 Options to purchase common stock 11,295,000 9,845,000 Shares issuable upon conversion of convertible notes and related accrued interest 21,564,456 7,878,333 Warrants to purchase common stock 12,558,607 7,558,607 Unvested restricted stock units 2,222,220 1,663,015 Total potentially dilutive securities 47,640,283 26,944,955 Note 9. Research and Development Rebate In the first quarter of fiscal 2024, we incurred $ 25,843 of expenses related to our Phase I clinical trial of our concussion drug device combination that are eligible for the Australian research and development rebate for a rebate due of $ 12,534 , which was recorded as an offset to research and development expense during the quarter ended October 31, 2023. Note 10. Common Stock Lincoln Park Lincoln Park Capital Fund, LLC (“LPC”) purchased 500,000 shares at an average price of $0.092 per share for total proceeds to us of $ 45,820 during the quarter ended October 31, 2023 pursuant to the LPC Purchase Agreement. As of October 31, 2023, there was $ 7,603,694 of remaining purchase availability and the remaining shares available were 11,388,846 related to the LPC Purchase Agreement. Mast Hill On August 7, 2023, Mast Hill converted their outstanding warrant exercisable for 2,000,000 shares in a cashless exercise. The conversion resulted in the purchase of 1,610,390 shares of our common stock at an exercise price of $0.075 per share. Following this conversion, no shares remained available pursuant to this warrant. On October 9, 2023, Mast Hill converted $ 42,653 together with $ 637 of interest and $ 1,750 of fees for a total of $ 50,040 being converted 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. Return of Shares On August 24, 2023, Tysadco voluntarily returned 100,000 shares of our common stock following their inadvertent sale of shares of our common stock exceeding predetermined limits. 14 Convertible Note Payable On October 19, 2023, John Gandolfo, former director, exercised his option to convert his convertible note of $ 25,000 plus $ 3,655 interest into 238,792 shares of common stock at $0.12 per share. Note 11. Related Party Transactions Due to Officers The following amounts were due to officers for reimbursement of expenses and were included in accounts payable within the accompanying consolidated balance sheets: Schedule of related party payables October 31, 2023 July 31, 2023 Joseph M. Redmond, CEO $ 1,828 $ 668 Christine Farrell, CFO 1,410 1,633 $ 3,238 $ 2,301 The amount of unpaid salary and bonus due to our officers was included in accrued wages within the accompanying consolidated balance sheets and was as follows: Schedule of accrued wages October 31, 2023 July 31, 2023 Joseph M. Redmond, CEO $ 946,493 $ 935,831 Christine Farrell, CFO 263,694 257,771 $ 1,210,187 $ 1,193,602 Promissory Notes See Note 6 for a discussion of promissory notes payable to each of two officers and three directors. Note 12. Subsequent Events Management is responsible for evaluating subsequent events and transactions through the date the consolidated financial statements are issued. This evaluation includes assessing events or transactions that may require adjustment to, or disclosure in, the consolidated financial statements. It is important to note that the financial statements do not reflect any adjustments to the carrying values of assets or liabilities that might result from the outcome of the subsequent events or transactions. However, appropriate disclosures will be made in subsequent filings, as necessary, to ensure that the consolidated financial statements remain accurate and complete. Management believes that subsequent events have been evaluated through the date of issuance of these consolidated financial statements. Promissory Notes On November 1, 2023, we entered into four 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, 2022 and March 31, 2023 with two directors and two officers. Pursuant to the Amendments, the maturity date of the Promissory Notes were extended to January 31, 2024 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. 15 Mast Hill On November 6, 2023, Mast Hill converted $42,710 together with $5,580 interest, and $1,750 for fees totaling $50,040 into 695,000 shares of common stock at a conversion price of $0.072 per share. On November 30, 2023, Mast Hill converted $43,975 together with $4,315 interest and $1,750 for fees totaling $50,040 into 695,000 shares of common stock at a conversion price of $0.072 per share. Following conversions, $640,767 of principal remained outstanding. On December 13, 2023, we paid Mast Hill $50,000 of principal and $2,458 of interest. Following conversions and payment, $590,767 of principal remained outstanding. LGH On December 15, 2023, we paid LGH $50,000 of principal. Following the payment, $975,000 of principal remained outstanding. Research and Development Rebate On November 23, 2023, we received a research and development rebate from the government of Australia in the amount of $309,245 for clinical work performed in Australia related to our Phase I human clinical trial during the fiscal year ended July 31, 2023. On November 24, 2023, we received a goods and service tax refund, which was accrued as part of our research and development rebate due from the Australian government, in the amount of $2,617 related to our Phase I human clinical trial during July, August and September 2023. Special Meeting of the Stockholders On December 7, 2023, at the special meeting held in New York, the stockholders of the Company approved the sale of the segment of our business focused on developing medical products that treat brain related illnesses and diseases to Oragenics. Pursuant to the agreement, on December 11, 2023, we received the second $500,000 non-refundable payment. Legal Proceedings As of the date of this filing, Odyssey Health, Inc. have been made a party to one lawsuit in Superior Court, Kent County in the State of Rhode Island entitled Robert Hainey v. Vdex Diabetes Holdings, Inc. et. al, Case No. KC-2023-0952. Robert Hainey, the plaintiff filed suit against defendants Vdex Diabetes Holdings Inc. and William McCullough. On December 9, 2023, defendant Vdex Diabetes Holdings Inc. (“VDH”) filed a Third Party Complaint against the Company alleging the existence of an agreement between the VDH Chief Executive Officer, William McCullough and the Company’s Chief Executive Officer Michael Redmond to pursue a merger of the two companies. VDH alleges as part of these negotiations VDH agree to suspend all negotiations with all other suitors in order to pursue the merger with Company. VDH alleges that the plaintiff, Hainey and the Company represented they would provide capital as consideration for VDH’s undertaking and to continue its growth and expansion. VDH alleges plaintiff, Hainey provided twenty thousand dollars ($20,000). VDH contend they relied upon the plaintiff, Hainey and the Company representations to their detriment as they incurred substantial expense exhausting all of the sum of twenty thousand dollars ($20,000). The Company is consulting with its attorneys to prepare their defense and potential counter-claims in their defense of this lawsuit as a third-party defendant. The Company intends to vigorously defend this action. 16