Odyssey Health, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This quarterly report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical fact, included in this report regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management are forward-looking statements. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that the expectations underlying our forward-looking statements are reasonable, these expectations may prove to be incorrect, and all of these statements are subject to risks and uncertainties. Therefore, you should not place undue reliance on our forward-looking statements. Many possible events or factors could affect our future financial results and performance and could cause actual results or performance to differ materially from those expressed, including those risks and uncertainties described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended July 31, 2024 (“2024 Annual Report”) and those described from time to time in our future reports filed with the Securities and Exchange Commission (the “SEC”). We believe these risks and uncertainties could cause actual results or events to differ materially from the forward-looking statements that we make. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections or expectations prove incorrect, actual results, performance or financial condition may vary materially and adversely from those anticipated, estimated or expected. Our forward-looking statements do not reflect the potential impact of future acquisitions, mergers, dispositions, joint ventures or investments that we may make. We do not assume any obligation to update any of the forward-looking statements contained herein, whether as a result of new information, future events or otherwise, except as required by law. In the light of these risks and uncertainties, the forward-looking events and circumstances discussed in this report may not occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements. Overview Our business model is to develop or acquire unique medical related products, engage third parties to develop and manufacture such products and then distribute the products through various distribution channels, including third parties. We have two different technologies in research and development stage; the CardioMap® heart monitoring and screening device, and the Save a Life choking rescue device. To date, none of our product candidates have received regulatory clearance or approval for commercial sale. We plan to license, improve, and develop our products and identify and select distribution channels. We intend to establish agreements with distributors to get products to market quickly and undertake and engage in direct marketing efforts as we move closer to regulatory approvals. We will determine the most effective distribution method for each unique product we include in our portfolio. We will engage third-party research and development firms that specialize in creating products to assist us in developing our own products, and we will apply for trademarks and patents once we have developed proprietary products. Recent Funding Accredited Investor Promissory Note On August 14, 2024, we entered into a $300,000 promissory note (the “Note”) with an accredited investor. The $300,000 was received on August 22, 2024. The Note has a one-year maturity, becoming due on August 22, 2025, and bears interest at the rate of 18% per annum. In addition, we issued the investor a warrant to purchase 300,000 shares of our common stock at $0.10 per share that expires August 14, 2029, with a fair value of $13,343. At October 31, 2024, $300,000 in principal and $11,539 in accrued interest remained outstanding. 16 Going Concern See Note 1 of Notes to Consolidated Financial Statements. Significant Accounting Policies and Use of Estimates During the three months ended October 31, 2024, there were no significant changes to our significant accounting policies and estimates as described in Note 2. Summary of Significant Accounting Policies included in Part II, Item 8. of our Annual Report on Form 10-K for the year ended July 31, 2024, which was filed with the SEC on November 13, 2024. Results of Operations We do not currently sell or market any products and we did not have any revenue in the three-month periods ended October 31, 2024 or 2023. We will commence actively marketing products after the products and drugs in development have been FDA cleared or approved, but there can be no assurance, however, that we will be successful in obtaining FDA clearance or approval for our products. Three Months Ended October 31, $ % 2024 2023 Change Change Research and development $ – $ 23,001 $ (23,001 ) 100% Stock-based compensation 60,487 322,798 (262,311 ) 81% General and administrative 519,841 501,440 18,401 4% Gain on sale of asset – (500,000 ) 500,0000 -100% Loss from operations (580,328 ) (347,239 ) (233,089 ) -67% Unrealized losses on investment (370,698 ) – (370,698 ) -100% Interest expense (68,781 ) (190,861 ) 122,080 64% Other income, net 901 65 836 nm Net loss $ (1,018,906 ) $ (538,035 ) $ (480,871 ) -89% Basic and diluted net loss per share $ (0.01 ) $ (0.01 ) $ (0.00 ) nm Research and Development Research and development relates to our current projects and includes expenses for clinical research, design and manufacturing, formulation, regulatory and consultants. Currently, we are not working on any research and development projects. Stock-Based Compensation The decrease in stock-based compensation was due to fewer awards issued in recent quarters as well as a lower price for our common stock. General and Administrative Expense General and administrative includes expenses related to salaries and related benefits for employees in finance, accounting, sales, administrative and research and development activities, as well as stock-based compensation, costs related to maintaining compliance as a public company and legal and professional fees. 17 The change in General and administrative expense was due to the following: Three months ended October 31, 2024 compared to three months ended October 31, 2023 Increase (decrease) in: Public company expense $ 185,914 Wages (72,046 ) Business development and investor relations (70,371 ) Legal and professional fees (28,932 ) Bad debt expense 22,625 Insurance (5,202 ) Travel (4,832 ) Other (8,755 ) $ 18,401 The decreases in wages and business development and investor relations were due to fewer employees and lower activity throughout the company. Gain on Sale of Asset The gain on sale of asset in fiscal 2024 relates to our sale of our 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 to Oragenics in December 2023. Unrealized Losses on Investment Unrealized losses on investment in relates to the valuation of the common stock of Oragenics held by us as an investment. See Notes 3 and 4 of Notes to Consolidated Financial Statements for additional information. Interest Expense Interest expense includes interest on debt outstanding, as well as the amortization of debt discount and debt issuance costs. Certain information regarding debt outstanding was as follows: Three Months Ended October 31, 2024 2023 Weighted average debt outstanding $ 1,939,015 $ 2,563,270 Weighted average interest rate 10.07% 9.33% Liquidity and Capital Resources See Recent Funding above for a discussion of our recent financings. 18 The following table sets forth the primary sources and uses of cash: Three Months Ended October 31, 2024 2023 Net cash used in operating activities $ (248,514 ) $ (59,907 ) Net cash provided by financing activities 300,000 220,924 To date, we have financed our operations primarily through debt financing and limited sales of our common stock. Our ability to continue to access capital could be affected adversely by various factors, including general market and other economic conditions, interest rates, the perception of our potential future earnings and cash distributions, any unwillingness on the part of lenders to make loans to us and any deterioration in the financial position of lenders that might make them unable to meet their obligations to us. If these conditions continue and we cannot raise funds through a public or private debt financing, or an equity offering, our ability to grow our business may be negatively affected. In such case, we have suspended research and development activities until market conditions improve. Debt The following notes payable were outstanding: October 31, 2024 July 31, 2024 Convertible note issued to LGH due December 31, 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 $0.072 per share $ 1,035,000 $ 1,035,000 Promissory notes issued to officers and directors due December 31, 2024, with an interest rate of 8.0% per annum and convertible at $0.12 per share 100,000 100,000 Accredited investor promissory note due February 13, 2025, with an interest rate of 10% per annum and convertible into 30,000 shares of Oragenics common stock held by us. 50,000 50,000 Mast Hill convertible promissory note due June 13, 2025, with an interest rate of 10% per annum and convertible at $0.072 per share 499,667 499,667 Accredited investor promissory note due August 22, 2025, with an interest rate of 18% per annum 300,000 – 1,984,667 1,684,667 Unamortized debt discount and closing costs (31,676 ) (38,134 ) $ 1,952,991 $ 1,646,533 Inflation Inflation did not have a material impact on our business and results of operations during the periods being reported on. Off Balance Sheet Arrangements We do not have any material off balance sheet arrangements. 19 Item 3. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company and are not required to provide information under this item.