Odyssey Health, Inc. 10-Q

Item 1. Financial Statements Odyssey Health, Inc. Condensed Consolidated Balance Sheets (Unaudited) As of January 31, As of July 31, 2024 2023 Assets Current assets: Cash $ 166,140 $ 36,865 Research and development rebate due from the Australian government 22,625 276,566 Prepaid expenses and other current assets 70,715 92,457 Total current assets 259,480 405,888 Intangible assets, net of accumulated amortization of $ 0 and $ 5,376 – 49,905 Investment 13,790,403 – Total assets $ 14,049,883 $ 455,793 Liabilities and Stockholders' Deficit Current liabilities: Accounts payable $ 1,265,579 $ 1,797,656 Accrued wages 1,352,478 1,402,348 Accrued interest 151,250 142,032 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 $ 149,529 and $ 280,340 1,385,138 2,019,660 Total current liabilities 5,379,471 6,611,722 Commitments and contingencies (Note 12) – – 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, 94,433,050 and 79,067,879 shares issued and outstanding 94,434 79,068 Additional paid-in-capital 55,997,277 53,862,378 Accumulated deficit ( 47,421,299 ) ( 60,097,375 ) Total stockholders' equity (deficit) 8,670,412 ( 6,155,929 ) Total liabilities and stockholders' equity deficit $ 14,049,883 $ 455,793 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Odyssey Health, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended January 31, Six Months Ended January 31, 2024 2023 2024 2023 In-process research and development expense $ – $ 170,000 $ – $ 170,000 Research and development expense 42,765 3,889 65,766 358,104 Stock-based compensation 677,391 659,777 1,000,188 1,439,667 General and administrative expense 437,274 652,826 938,716 1,596,525 Loss from operations ( 1,157,430 ) ( 1,486,492 ) ( 2,004,670 ) ( 3,564,296 ) Gain on sale of asset 15,900,687 – 16,400,687 – Investment revaluation ( 1,332,980 ) – ( 1,332,980 ) – Interest expense ( 141,601 ) ( 194,191 ) ( 332,462 ) ( 265,493 ) Other income, net 8,890 8,955 8,956 8,481 Net income (loss) 13,277,566 ( 1,671,728 ) 12,739,531 ( 3,821,308 ) Deemed dividend ( 63,455 ) – ( 63,455 ) – Net income (loss) attributable to common stockholders $ 13,214,111 $ ( 1,671,728 ) $ 12,676,076 $ ( 3,821,308 ) Basic net income (loss) per share $ 0.14 $ ( 0.02 ) $ 0.14 $ ( 0.05 ) Diluted net income (loss) per share $ 0.12 $ ( 0.02 ) $ 0.12 $ ( 0.05 ) Shares used for basic net income (loss) per share 91,975,356 81,784,549 89,879,237 81,616,937 Shares used for diluted net income (loss) per share 114,056,382 81,784,549 112,043,228 81,616,937 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Odyssey Health, Inc. Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) Common Stock Additional Paid-In Accumulated Total Equity 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 in debt financing 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 ) Stock-based compensation – – 677,391 – 677,391 Conversion of RSUs 1,500,000 1,500 ( 1,500 ) – – Common stock issued in debt financing 11,098,989 11,100 912,828 – 923,928 Common stock issued in equity financings 100,000 100 9,700 – 9,800 Deemed dividend – – 63,455 ( 63,455 ) – Net income – – – 13,277,566 13,277,566 Balances, January 31, 2024 94,433,050 $ 94,434 $ 55,997,277 $ ( 47,421,299 ) $ 8,670,412 Common Stock 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 reserved 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 ) Stock-based compensation – – 659,846 – 659,846 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 financings 1,100,000 1,100 199,220 – 200,320 Common stock issued in conversion of debt 1,500,000 1,500 298,500 – 300,000 Common stock issued in option purchase agreement 1,000,000 1,000 169,000 – 170,000 Net loss – – – ( 1,671,728 ) ( 1,671,728 ) Balances, January 31, 2023 75,807,879 $ 75,808 $ 52,556,673 $ ( 57,999,262 ) $ ( 5,366,781 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Odyssey Health, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended January 31, 2024 2023 Cash flows from operating activities: Net income (loss) $ 12,739,531 $ ( 3,821,308 ) Adjustments to reconcile net income (loss) to net cash flows used in operating activities: Amortization 1,538 1,508 Stock-based compensation 1,000,119 1,828,536 Gain on sale of asset ( 16,400,687 ) – Investment revaluation 1,332,980 – Financing costs paid via issuance of common stock 8,750 – Amortization of beneficial conversion feature, debt discount and closing costs 219,258 246,122 In-process research and development – 170,000 Changes in operating assets and liabilities: Decrease (increase) in prepaid expenses and other current assets 21,742 ( 7,479 ) Decrease in research and development rebate due 253,941 83,497 Increase (decrease) in accounts payable ( 206,404 ) 164,452 Increase (decrease) in accrued wages ( 49,870 ) 128,483 Increase in accrued interest 111,660 17,587 Net cash used in operating activities ( 967,442 ) ( 1,188,602 ) Cash flows from investing activities: Cash proceeds from sale of assets 1,000,000 – Purchase of intellectual property – ( 8,038 ) Net cash provided by (used in) investing activities 1,000,000 ( 8,038 ) Cash flows from financing activities: Proceeds from notes payable 350,000 830,400 Principal payments made on notes payable ( 274,896 ) ( 35,000 ) Interest payments made on notes payable ( 34,007 ) – Financing closing costs paid with cash – ( 76,532 ) Proceeds from equity financing 55,620 441,030 Net cash provided by financing activities 96,717 1,159,898 Increase (decrease) in cash and cash equivalents 129,275 ( 36,742 ) Cash and cash equivalents: Beginning of period 36,865 72,534 End of period $ 166,140 $ 35,792 Supplemental disclosure of cash information: Cash paid for interest $ 34,007 $ – Supplemental disclosure of non-cash information: Common stock issued to settle notes payable 993,872 300,000 Increase in principal of notes payable 60,000 165,000 Shares issued for exercised warrants 1,610 – Shares returned to treasury 100 8,800 Deemed dividend 63,455 – Original issue discount on debt – 69,600 Stock issued in exchange for closing costs – 13,443 Warrants issued in connection with debt financing 28,448 345,135 Common stock issued in option purchase agreement – 170,000 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Odyssey Health, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. Basis of Presentation, Nature of Operations and Going Concern Basis of Presentation The accompanying condensed consolidated financial information of Odyssey Health, Inc. and our wholly-owned subsidiary Odyssey Group International Australia, Pty Ltd, (“Odyssey”) 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 unless otherwise noted, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The financial information as of July 31, 2023, is derived from our 2023 Annual Report on Form 10-K. The financial statements included herein should be read in conjunction with the 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 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 six months ended January 31, 2024, from those disclosed in our Annual Report on Form 10-K for the year ended July 31, 2023. 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 two different technologies in research and development; the CardioMap® heart monitoring and screening device, and the Save a Life choking rescue device. On October 4, 2023, we entered into an Asset Sale Agreement (the “Agreement”) with Oragenics, Inc. (“Oragenics”). The closing of the Agreement was completed on December 28, 2023, Pursuant to the Agreement, we sold and assigned certain assets and certain liabilities related to the treatment of brain related illnesses and diseases (the “Assets”) to Oragenics in exchange for (i) $1,000,000 in cash; (ii) 8,000,000 shares of convertible Series F Preferred Stock; and (iii) the assumption by Oragenics of $325,672 of our accounts payable. 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. We are not currently selling or marketing any products, as our products require further 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. 7 Going Concern We did not recognize any revenues for the year ended July 31, 2023, or the six months ended January 31, 2024, and we had an accumulated deficit of $ 47,421,299 as of January 31, 2024. For the foreseeable future, we expect to experience continuing operating losses and negative cash flows from operations. Cash available at January 31, 2024, of $ 166,140 may not provide enough working capital to meet our current operating expenses through March 22, 2025. The operating deficit indicates substantial doubt about our ability to continue as a going concern. Our continued existence depends on the success of our efforts to raise additional capital necessary to meet our obligations as they come due and to obtain sufficient capital to execute our business plan. We may obtain capital primarily through issuances of debt or equity or entering into collaborative arrangements with corporate partners. There can be no assurance that we will be successful in completing additional financing or collaboration transactions or, if financing is available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we may be required to further scale down or perhaps even cease operations. The issuance of additional equity securities could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, would increase our liabilities and future cash commitments. Our financial statements do not include adjustments that might result from the outcome of this uncertainty. If we are unable to raise additional capital by March 22, 2025, we will adjust our business plan. 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 Pronouncement 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 early adopted ASU 2020-06 for our fiscal year ending July 31, 2024. The adoption of ASU 2020-06 did not have any effect on our financial position, results of operations or cash flows except for the calculation of diluted earnings per share. ASU 2023-09 In December 2023, the FASB issued ASU 2023-09, Income Taxes, which enhances the transparency of income tax disclosures by expanding annual disclosure requirements related to the rate reconciliation and income taxes paid. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted. We are currently evaluating this ASU to determine its impact on our disclosures. 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 January 31, Six Months Ended January 31, 2024 2023 2024 2023 Amortization expense $ 594 $ 754 $ 1,538 $ 1,508 All intangible assets were sold in the second quarter of fiscal 2024. See Note 4. 8 Note 4. Asset Sale Agreement with Oragenics, Inc. On October 4, 2023, we entered into an Asset Sale Agreement (the “Agreement”) with Oragenics, which closed on December 28, 2023. Pursuant to the Agreement, we sold and assigned certain assets and certain liabilities related to the treatment of brain related illnesses and diseases (the “Assets”) to Oragenics in exchange for (i) $1,000,000 in cash; (ii) 8,000,000 shares of convertible Series F preferred stock; and (iii) the assumption of $325,672 of our accounts payable. The total value of consideration received was $16,400,687. The 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 Agreement on October 4, 2023, and received the additional $ 500,000 on December 11, 2023, upon our stockholder approval for the sale of the Assets. Following the closing of the Agreement on December 28, 2023, we received 8,000,000 shares of Series F preferred stock. Upon receipt, 511,308 shares of the Series F preferred stock, which represented 19.9% of the then outstanding shares of Oragenics common stock, converted into 511,308 shares of Oragenics restricted common stock. The Oragenics restricted common stock becomes freely tradeable on June 28, 2024, subject to Rule 144 restrictions and limitations that limit us to being allowed to sell no more than an amount equal to the greater of (i) 1% of the total shares of Oragenics common stock outstanding or (ii) the average of the previous four-week trading volume during each quarterly period. Prior to closing, we were required to obtain the consent of Mast Hill Fund, L.P (“Mast Hill”) to consummate the closing of the Agreement. As part of the consent, we entered into a pledge agreement with Mast Hill granting a security interest in 154,545 of the total preferred shares, and collectively with all of the common shares or other securities into which the preferred shares are converted or exchanged into common shares, until the Mast Hill debt is paid. The remaining shares of convertible Series F preferred stock will convert upon Oragenics shareholder approval and upon certain listing and change in control criteria being achieved. In addition, at our option, we are allowed to convert additional shares of the Series F preferred stock as long as we do not own a total of more than 19.9% of the then outstanding Oragenics common stock. Investment Valuation The common stock of Oragenics is valued quarterly based on their common stock price as reported by the NYSE American stock exchange reduced by an implied discount calculated using the Black-Scholes pricing model. The Series F preferred stock is carried at cost and reviewed at least annually or more often is there are indications of impairment. Cost was determined utilizing the Black-Scholes pricing model inputs of (i) expected volatility of 79.4% , (ii) risk free interest rate of 5.6% , (ii) expected life of six months , and (iv) an implied discount rate of 25% for the known restrictions on the sale and conversion of the Series F preferred stock. See also Note 5. 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 six months ended January 31, 2024 or the year ended July 31, 2023. The carrying values of cash, prepaid expenses, 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 January 31, 2024. Our financial instruments that are carried at fair value consist of our common stock of Oragenics as follows: Schedule of financial instruments carried at fair value January 31, 2024 Equity-method investment Level 1 Level 2 Level 3 Total Oragenics common stock $ – $ 834,966 $ – $ 834,966 Valuation of Oragenics Common Stock Our 511,308 shares of Oragenics common stock were valued at $1.63 per share based a discount to the closing stock price of Oragenics common stock which was $2.30 per share at January 31, 2024 as quoted on the NYSE American. The discount was determined using a Black-Scholes pricing model with the following assumptions: Schedule of assumptions Expected stock price volatility 113.97% Risk free interest rate 5.29% Expected life .41 Expected dividend yield – Implied discount 29% There were no financial instruments carried at fair value at July 31, 2023. 10 Contingent Liabilities At January 31, 2024 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 as of both January 31, 2024 and July 31, 2023, since it is not yet probable that we will file for FDA clearance. We also had contingent consideration at January 31, 2024 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 as of both January 31, 2024 and July 31, 2023, 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 accompanying Condensed 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 January 31, 2024 July 31, 2023 Carrying value $ 1,634,667 $ 2,425,000 Fair value $ 1,634,667 $ 2,425,000 Note 6. Debt LGH Investments, LLC On December 30, 2023, we entered into Amendment No. 7 (the “Amendment”) to the Convertible Promissory Note (the “Note”) to the Securities Purchase Agreement dated April 5, 2021, with LGH Investments, LLC (“LGH”). Pursuant to the Amendment, the maturity date of the note was extended to June 30, 2024. As consideration, $60,000 was added to the principal amount outstanding. In addition, Section (3)(d)(ii) was redefined to allow us to prepay the Note at any time by providing LGH notice of our intent to prepay the outstanding amounts due under the Note. Once we provide notice of our intent to prepay, then LGH shall have the sole option to convert any amounts due under the Note for 30 days prior to us making payment. If LGH does not elect to make a conversion within the 30 days, we ll tender the full amount in the prepayment notice by paying 110% of the total outstanding balance including all principal, defaults and interest to LGH within 5 calendar days. If LGH has previously provided a notice of conversion to us, we may not prepay any of the amount included in such notice. All other terms and conditions remain the same. On August 28, 2023, we paid LGH $ 30,000 of principal on this Note, and on December 15, 2023, we paid LGH $ 50,000 of principal on this note. Following this amendment and these payments, at January 31, 2024 there was $ 1,035,000 of principal and $ 132,595 of accrued interest outstanding compared to $ 1,055,000 of principal and $ 89,781 of accrued interest at July 31, 2023. 11 ClearThink Capital Partners, LLC On December 20, 2023, ClearThink Capital Partners, LLC (“ClearThink”) exercised their option to convert their convertible note payable of $ 175,000 plus $ 20,000 interest into 975,000 shares of common stock at $0.20 per share. 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. All other terms and conditions remain the same. On January 31, 2024, 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, June 30, 2023, November 1, 2023, and January 31, 2024, with two directors and two officers. Pursuant to the Amendments, the maturity date of the Promissory Notes was extended to July 31, 2024 , and a waiver in the event of default was added and extended to the maturity date. All other terms and conditions remain the same. At January 31, 2024 and July 31, 2023, we had $ 16,875 and $ 16,058 , 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. 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 June 15, 2023, Mast Hill converted $ 40,250 of interest and $ 1,750 of fees into 560,000 shares of our common stock at $0.075 per share. 12 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. Due to the remaining 5,000,000 Mast Hill warrants containing a down-round provision, which was triggered prior to July 31, 2023, we issued an additional 12,444,445 warrants exercisable at $ 0.072 per share having a total value of $ 63,455 during the period ended January 31, 2024. The $63,455 was recorded as a deemed dividend in our Condensed Consolidated Statements of Operations for the period ended January 31, 2024. In addition, the exercise price of the 5,000,000 warrants was reduced to $0.072 per share from $0.20 per share. On September 13, 2023, we paid Mast Hill $ 100,000 in principal and $ 26,382 of interest totaling $ 126,382 . On October 6, 2023, we paid Mast Hill $ 44,896 of principal and $ 5,167 of interest totaling $ 50,000 . 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. 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 29, 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. On December 13, 2023, we paid Mast Hill $ 50,000 of principal and $ 2,458 of interest totaling $ 52,458 . On December 22, 2023, Mast Hill converted $ 46,833 together with $ 1,457 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 January 18, 2024, Mast Hill converted $ 44,266 together with $ 4,024 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 these repayments and conversions, at January 31, 2024, there was $ 499,667 of principal and $ 1,780 of 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. On December 29, 2023, the two accredited investors provided notice to convert their NPA. On January 26, 2024, we converted $ 500,000 principal plus accrued interest of $ 28,767 for a total of $ 528,767 into 7,343,989 shares of common stock at $0.072 per share. 13 Notes Payable The following notes payable were outstanding: Schedule of notes payable January 31, 2024 July 31, 2023 Convertible note issued to LGH due June 30, 2024, with a set interest amount of $84,000 through July 7, 2023, then an interest rate of 8.0% per annum of outstanding principal and convertible at $0.12 per share $ 1,035,000 $ 1,055,000 Promissory notes issued to officers and directors due July 31, 2024, with an interest rate of 8.0% per annum and convertible at $0.12 per share 100,000 125,000 Note purchase agreement issued to two accredited investors due August 15, 2024, with an interest rate of 12% per annum – 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 Mast Hill convertible promissory note due December 13, 2024, with an interest rate of 10% per annum and convertible at $0.072 per share 499,667 920,000 1,634,667 2,425,000 Unamortized beneficial conversion feature, debt discount and closing costs ( 149,529 ) ( 280,340 ) $ 1,485,138 $ 2,144,660 Note 7. Stock-Based Compensation 2021 Omnibus Stock Incentive Plan At January 31, 2024, 17,975,000 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 six months ended January 31, 2024, was as follows: Schedule of stock option activity Number of Weighted Average Options Exercise Price Options outstanding at July 31, 2023 11,795,000 $ 0.34 Options granted 3,775,000 0.10 Options expired or cancelled ( 750,000 ) 0.26 Options outstanding at January 31, 2024 14,820,000 $ 0.26 All 3,775,000 options granted during fiscal 2024 were granted outside of our 2021 Plan. 14 Criteria used for determining the Black-Scholes value of options granted during the six months ended January 31, 2024 were as follows: Schedule of black scholes value of options granted Expected stock price volatility 147 – 156 % Risk free interest rate 3.84 – 4.62 % Expected life of options (years) 5 – 10 Expected dividend yield – Restricted Stock Units (“RSUs”) RSU activity during the six months ended January 31, 2024 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 ( 3,055,554 ) 0.28 RSUs outstanding at January 31, 2024 – Warrants Warrant activity during the six months ended January 31, 2024 was as follows: Schedule of warrant activity Number of Warrants Weighted Average Exercise Price Warrants outstanding at July 31, 2023 14,558,607 $ 0.50 Warrants issued 12,444,445 0.07 Warrants exercised ( 2,000,000 ) 0.08 Warrants outstanding at January 31, 2024 25,003,052 $ 0.25 During the year ended July 31, 2023, we issued warrants which contained a down-round provision. The provision was triggered, resulting in the issuance of an additional 12,444,445 warrants during the period ended January 31, 2024. See Note 6 for additional information. Unrecognized Compensation Costs At January 31, 2024, we had unrecognized stock-based compensation of $ 278,680 , which will be recognized over the weighted average remaining vesting period of 0.22 years. 15 Note 8. Research and Development Rebate 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 Three Months Ended January 31, Six Months Ended January 31, 2024 2023 2024 2023 Research and development expense offset $ 41,044 $ 592 $ 53,578 $ 323,263 Note 9. Earnings Per Share Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and stock awards. Schedule of earnings per share Three Months Ended January 31, Six Months Ended January 31, 2024 2023 2024 2023 Net income attributable to common stockholders used for basic earnings (loss) per share $ 13,214,111 $ ( 1,671,728 ) $ 12,676,076 $ ( 3,821,308 ) Add back convertible debt interest 52,946 – 111,659 – Add back convertible debt amortization 87,597 – 219,259 – Plus: deemed dividend 63,455 – 63,455 – Net income attributable to common stockholders used for diluted earnings (loss) per share calculations $ 13,418,109 $ ( 1,671,728 ) $ 13,070,449 $ ( 3,821,308 ) Weighted average outstanding shares of common stock used for basic earnings (loss) per share 91,975,356 81,784,549 89,879,237 81,616,937 Dilutive effect of convertible debt 17,668,458 – 17,668,458 – Dilutive effect of warrants 4,249,826 – 4,249,826 – Dilutive effect of stock options 162,742 – 245,707 – Common stock and common stock equivalents used for diluted earnings (loss) per share 114,056,382 81,784,549 112,043,228 81,616,937 Earnings Per Share Basic $ 0.14 $ ( 0.02 ) $ 0.14 $ ( 0.05 ) Diluted $ 0.12 $ ( 0.02 ) $ 0.12 $ ( 0.05 ) The following anti-dilutive securities were excluded from the calculations of diluted net loss per share: Schedule of anti-dilutive securities Three Months Ended January 31, Six Months Ended January 31, 2024 2023 2024 2023 Options to purchase common stock 14,045,000 10,120,000 13,795,000 10,120,000 Shares issuable upon conversion of convertible notes and related accrued interest – 14,428,333 – 14,428,333 Warrants to purchase common stock 7,558,607 13,558,607 7,558,607 13,558,607 Unvested restricted stock units – 3,822,222 – 3,822,222 Total potentially dilutive securities 21,603,607 41,929,162 21,153,607 41,929,162 16 Note 10. Common Stock Lincoln Park Lincoln Park Capital Fund, LLC (“LPC”) purchased 600,000 shares at an average price of $.098 per share for total proceeds to us of $ 55,620 during the six months ended January 31, 2024, pursuant to the LPC Purchase Agreement. At December 31, 2023, the LPC Purchase Agreement expired. 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. During the first six months of 2024, Mast Hill converted a total of $ 225,437 of principal, $ 16,013 of accrued interest and $ 8,750 of fees into 3,197,000 shares of our common stock. See Note 6. Return of Shares On August 24, 2023, ClearThink voluntarily returned 100,000 shares of our common stock following their inadvertent sale of shares of our common stock exceeding predetermined limits. Convertible Notes 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. On December 29, 2023, ClearThink exercised their option to convert their convertible note payable of $ 175,000 plus $ 20,000 interest into 975,000 shares of common stock at $0.20 per share. Accredited Investors Note Purchase Agreement On December 29, 2023, the accredited investors provided notice to convert their notes. On January 26, 2024, we converted a total of $ 500,000 of principal plus accrued interest of $ 28,767 for a total of $ 528,767 into 7,343,989 shares of our common stock at $0.072 per share. No amounts remained outstanding pursuant to this note purchase agreement at January 31, 2024. 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 Condensed Consolidated Balance Sheets: Schedule of related party payables January 31, 2024 July 31, 2023 Joseph M. Redmond, CEO $ 21 $ 668 Christine Farrell, CFO 1,726 1,633 $ 1,747 $ 2,301 17 The amount of unpaid salary and bonus due to our officers was included in accrued wages within the accompanying Condensed Consolidated Balance Sheets and was as follows: Schedule of accrued wages January 31, 2024 July 31, 2023 Joseph M. Redmond, CEO $ 944,969 $ 935,831 Christine Farrell, CFO 262,848 257,771 $ 1,207,817 $ 1,193,602 Promissory Notes See Note 6 for a discussion of promissory notes payable to officers and directors. Note 12. Commitments and Contingencies We are a party to a 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 us alleging the existence of an agreement between the VDH Chief Executive Officer, William McCullough and our Chief Executive Officer, Michael Redmond, to pursue a merger of the two companies. VDH alleges as part of these negotiations VDH agreed to suspend all negotiations with all other suitors in order to pursue the merger with us. VDH alleges that we, along with Hainey, represented that we would provide capital as consideration for VDH’s undertaking and to continue its growth and expansion. VDH alleges Hainey provided VDH with $ 20,000 . VDH contends they relied upon Hainey’s and our representations to their detriment as they incurred substantial expense exhausting all of the $ 20,000 . We have retained Tarro & Marotti Law Firm, LLC of Warwick, Rhode Island. On February 8, 2024, a motion to dismiss was entered in the Kent County Superior Court of Rhode Island and a notice of hearing will be held on July, 8, 2024 in the Kent County Superior Court. We believe the motion to dismiss will be granted and no monetary award will be awarded to the plaintiff. Note 13. Subsequent Events Promissory Note On February 13, 2024, we entered into a six-month promissory note for $50,000, with Jonathan Lutz, an accredited investor, with an interest rate of 10% per annum and due August 11, 2024, convertible into Oragenics common shares held by the Company at $2.50 per share. Mast Hill Amendment On March 13, 2024, we entered into Amendment No. 2 to the Securities Purchase Agreement dated December 13, 2022, with Mast Hill. Pursuant to the Amendment, the parties agreed to move the $200,000 amortization payment due March 13, 2024 to September 13, 2024, and the maturity date to December 13, 2024. On March 14, 2024, Mast Hill exercised a cashless warrant for 2,778,778 shares of our common stock at an exercise price of $0.072 per share, which resulted in the issuance of 1,926,713 shares of our common stock. Following this exercise, Mast Hill had warrants exercisable for 14,666,667 shares of our common stock at $0.072 per share. 18