Odyssey Health Inc

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 50% ownership in unique neurosteroid drug compound intended to treat 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, 2024 (“fiscal 2024”) or 2023 (“fiscal 2023”) and we had an accumulated deficit of $61,003,146 as of July 31, 2024. For the foreseeable future, we expect to experience continuing operating losses and negative cash flows from operations. As of July 31, 2024, we had current liabilities of $5,919,895, current assets of $56,943, and a working capital deficit of $5,862,952. Negative working capital at July 31, 2024 did not provide enough working capital to meet our current operating expenses through the first quarter of fiscal 2025.

The operating deficit and negative working capital at July 31, 2024 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. If we are unable to raise additional capital, secure additional debt financing, secure additional equity financing, secure a strategic partner, reduce our operating expenditures, or seek bankruptcy protection, 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. 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 recorded the rebate as expenses were incurred as an offset to research and development as follows:

Prepaid expenses and other current assets

Prepaid expenses and other current assets consist of loans and advances receivable and prepaid insurance. At July 31, 2024 we reserved $27,833 for loans and advances receivable.

Intangible assets, net

Intangible assets consisted of costs related to a patent for our concussion drug device combination.

Amortization expense was as follows:

All intangible assets were sold in the second quarter of fiscal 2024. See Note 4.

Investment

Investment consists of 511,308 shares of Oragenics, Inc. (“Oragenics”) common stock which is valued quarterly based on the common stock price as reported by the NYSE American stock exchange. Our 511,308 shares of Oragenics common stock represented 9.2% of the outstanding shares of Oragenics common stock at July 31, 2024.

We also hold 7,488,692 shares of Oragenics convertible Series F preferred stock (the “Preferred Stock”) which is accounted for at cost minus impairments as it is not currently listed on a registered securities exchange. The Preferred Stock is not accounted for as an equity-method investment as it does not have voting rights nor board representation and management does not have significant influence over Oragenics.

The Preferred Stock was discounted based on conditions set forth in the Agreement stating 1) the Series F preferred stock converts into common stock on a 1-to-1 basis not exceeding 19.9% of the total outstanding shares of Oragenics’ common stock, 2) the continued listing of the Oragenics common stock on the NYSE American Exchange in order for the Series F to convert into common stock, 3) the Black-Scholes Pricing Model and 4) the limitations under SEC Rule 144, including (i) the number of shares available for sale, (ii) the prescribed holding period of six months, and (iii) affiliates restrictions on sell in excess of the greater of 1% of the total shares outstanding or the average of the previous four-week trading volume.

Cost was originally 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 and the value at December 28, 2023 was $12,955,437.

Due to the decrease in the value of underlying Oragenics common stock and based on conditions set forth in the Agreement above, we revalued the Series F preferred stock at July 31, 2024 and recorded a 100% impairment totaling $12,955,437.

See Notes 4 and 6 for additional information regarding Oragenics.

Beneficial conversion feature of convertible notes payable

The beneficial conversion feature (“BCF”) of a convertible note (Note 7) 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.

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. See Note 12.

Stock-based compensation

We recognize stock-based compensation expense in accordance with ASC 718 for all restricted stock and stock option awards made to employees, directors and independent contractors.

The fair value of stock option awards (Note 8) 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. See Note 6.

In-process research and development

Our in-process research and development costs are expensed when incurred in accordance with with ASC 730-10-25-2(c) Topic 730 Research and Development. 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. 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. The option was never exercised and the expense was recognized when incurred. See Note 9.

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, 2024 or 2023. We recognize interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense.

Note 3. New Accounting Pronouncements

ASU 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 2023-07

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which enhances segment reporting under Topic 280 by expanding the breadth and frequency of segment disclosures. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. We have one segment. The adoption of ASU 2023-07 did not have any effect on our financial position, results of operations or cash flows.

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 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 certain assets related to the treatment of brain related illnesses and diseases (the “Assets”) with a total carrying value of $48,367 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 $16,449,054, which resulted in a gain of $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 Preferred Stock. Upon receipt,511,308 shares of the 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. Then restricted common stock became 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 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 Preferred Stock will convert upon Oragenics shareholder approval and upon certain listing and change in control criteria being achieved. Restrictions on the sale or conversion of the Preferred Stock must include all of the following: (i) the Corporation shall have applied for and been approved for initial listing on the NYSE American or another national securities exchange or shall have been delisted from the NYSE American, and (ii) if, and only if, required by the rules of the NYSE American, the Corporation’s shareholders shall have approved any change of control that could be deemed to occur upon the conversion of the Preferred Stock into Oragenics Common Stock, based on the facts and circumstances existing at such time.

Note 5. 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.

The Milestone Consideration (“Milestone”) may be earned by Prevacus as follows:

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 the 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.

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. At July 31, 2024 and 2023, the Asset purchase liability was $1,125,026.

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 6. 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, 2024 or 2023.

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, 2024.

Financial instruments that are carried at fair value consist of our common stock of Oragenics as follows:

There were no financial instruments carried at fair value at July 31, 2023.

Valuation of Oragenics Common Stock

Our 511,308 shares of Oragenics common stock were valued at $1.04 on July 31, 2024, as quoted on the NYSE American Stock Exchange.

Valuation of Oragenics Series F Preferred Stock

Cost was originally 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 and the value at December 28, 2023 was $12,955,437.

As discussed in Note 2, we determined that our investment in Oragenics Preferred Stock was 100% impaired due to the decline in value of the underlying Oragenics common stock and based on conditions set forth in the Agreement stating 1) the Series F preferred stock converts into common stock on a 1-to-1 basis not exceeding 19.9% of the total outstanding shares of Oragenics’ common stock, 2) the continued listing of the Oragenics common stock on the NYSE American Exchange in order for the Series F to convert into common stock, 3) the Black-Scholes Pricing Model and 4) the limitations under SEC Rule 144, including (i) the number of shares available for sale, (ii) the prescribed holding period of six months, and (iii) affiliates restrictions on sell in excess of the greater of 1% of the total shares outstanding or the average of the previous four-week trading volume.

Contingent Liabilities

At July 31, 2024 and 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 July 31, 2024 and 2023 related to milestones in our Asset Purchase Agreement with Prevacus, Inc. The fair value of thecontingent 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 5 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:

Note 7. 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 remained 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 remained the same.

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 remained 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.

On December 30, 2023, we entered into Amendment No. 7 to the Convertible Promissory Note to the Securities Purchase Agreement dated April 5, 2021, with 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 will 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 June 30, 2024, we entered into Amendment No. 8 to the Convertible Promissory Note to the Securities Purchase Agreement dated April 5, 2021, with LGH. Pursuant to the Amendment, the maturity date of the note was extended to December 31, 2024. As consideration the note conversion price was changed to $0.072 per common share.

Following these amendments and payments, at July 31, 2024, there was $1,035,000 of principal and $173,880 of accrued interest outstanding compared to $1,055,000 of principal and $89,781 of accrued interest at July 31, 2023.

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 of principal and $20,000 of accrued interest remained outstanding on the note at July 31, 2023. This note included a set amount of interest of $20,000 for the life of the note. In addition, Tysadco assigned this note to 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 of accrued interest into 975,000 shares of common stock at $0.20 per share.

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 and convertible into 20,000 shares of Oragenics common stock currently held by us at the investor’s option. In June 2024, this note was amended to provide for settlement of the note by issuing the accredited investor 30,000 shares of Oragenics common stock currently held by us at the investor’s option. In August 2024, this note was amended to extended the maturity date to February 13, 2025. At July 31, 2024, $50,000 in principal and $2,316 in accrued interest 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 with two directors and two officers to extend the maturity date of the Promissory Notes to January 31, 2024. All other terms and conditions remained the same.

On July 31, 2024, we entered into four Promissory Note Amendments (the “Amendments”) to the Promissory Notes entered into December 21, 2021, and December 22, 2021 with two directors and two officers to extend the maturity date of the Promissory Notes to January 31, 2025. All other terms and conditions remained the same.

At July 31, 2024 and July 31, 2023, we had $100,000 and $125,000, respectively, of principal and $20,865 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 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 $200,000 amortization payment due March 13, 2024, was extended to September 13, 2024, and the maturity date was extended to December 13, 2024.

Mast Hill converted the following amounts of principal, interest and fees to shares of our common stock:

Payments made to Mast Hill were as follows:

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 March 14, 2024, Mast Hill converted their outstanding warrant for 2,778,778 shares of our common stock in a cashless exercise, which resulted in the issuance of 1,926,713 shares of our common stock at an exercise price of $0.072 per share. Following this exercise, Mast Hill had warrants exercisable for 14,666,667 shares of our common stock at $0.072 per share.

Following these repayments and conversions, at July 31, 2024, and July 31, 2023, respectively, there was $499,667 and $920,000 of principal, $26,694 and $15,009 of accrued interest and warrants exercisable for 14,666,667 and 7,000,000 shares of our common stock 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. The NPA had a 12% per annum interest rate and maturity date of August 15, 2024.

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 our common stock at $0.072 per share andno amounts remained outstanding.

Notes Payable Outstanding

See Note 14 for discussion of a $300,000 promissory note entered into in August 2024.

Note 8. 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, 2024,830,000 shares remained available for future issuances and 17,625,000 shares of our common stock were reserved for issuance for awards outstanding pursuant to the 2021 Plan. Awards covering a total of 1,995,000 shares were granted outside of the 2021 Plan in fiscal 2024, all of which were outstanding at July 31, 2024.

Stock Options

Stock option activity during fiscal 2024 was as follows:

Criteria used for determining the Black-Scholes value of options granted were as follows:

Restricted Stock Units (“RSUs”)

RSU activity during fiscal 2024 was as follows:

Warrants

Warrant activity during fiscal 2024 was as follows:

Unrecognized Stock-Based Compensation Costs

At July 31, 2024, we had total unrecognized stock-based compensation of $198,149, which will be recognized over the weighted average remaining vesting period of 0.75 years.

Note 9. Common Stock

Mast Hill

On August 7, 2023, Mast Hill converted their outstanding warrant exercisable for 2,000,000 shares in a cashless exercise, which resulted in the issuance 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 March 14, 2024, Mast Hill converted their outstanding warrant for 2,778,778 shares of our common stock in a cashless exercise, which resulted in the issuance of 1,926,713 shares of our common stock at an exercise price of $0.072 per share. Following this exercise, Mast Hill had warrants exercisable for 14,666,667 shares of our common stock at $0.072 per share.

During fiscal 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 7.

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 of 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 April 30, 2024.

Restricted Shares Issued to Consultants

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.

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 had 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 until the expiration on December 31, 2023. 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 through the expiration date, LPC purchased a total of 7,982,518 shares of our common stock for total proceeds to us of $2,656,106. Of these amounts,600,000 and 3,633,591 shares were purchased for total proceeds to us of $55,620 and $580,220, respectively, in fiscal 2024 and 2023.

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 paid A.G.P. a fee of 8% of the amount of the funds received from LPC., which totaled $111,468 over the life of the LPC Purchase.

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 was amortized over the one-year life of the note.

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.

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 7, we issued the following shares of our common stock in connection with debt financings during fiscal 2024 and 2023:

**Note 10. Income Taxes **

We file income tax returns in the U.S. federal jurisdiction and the various states in which we operate. We registered with the Franchise Tax Board in the State of California in tax year 2020. Our tax returns are not currently under examination for any year. Our deferred tax assets consist of federal net operating loss carryforwards that expire through the year 2036. The deferred tax assets are net of a 100% valuation allowance as it is more likely than not at this time that the deferred tax assets will not be realized within the carryforward period due to substantial uncertainty as to our ability to continue as a going concern (Note 1).

The following table reconciles the U.S. federal statutory rate to our effective tax rate:

Our tax provision (benefit) was as follows:

Our net deferred tax asset was as follows:

As of July 31, 2024, we had $28,831,391 of federal net operating loss carry forwards. These carry forwards, if not used, will begin to expire in 2040. 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.

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 2024 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, 2024, there wereno 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 11. 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:

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:

See Note 7 for a discussion of $25,000 Promissory Notes payable to each of two officers and two directors.

Note 12. Net Loss Per Share

The following securities were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive:

Note 13. Commitments and Contingencies

We were a party to a lawsuit in Superior Court, Kent County in the State of Rhode Island entitledRobert 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 alleged as part of these negotiations VDH agreed to suspend all negotiations with all other suitors in order to pursue the merger with us. VDH alleged 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 alleged Hainey provided VDH with $20,000. VDH contended they relied upon Hainey’s and our representations to their detriment as they incurred substantial expense exhausting all of the $20,000. We 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 was held on July, 8, 2024, in the Kent County Superior Court. As no timely objection was filed, and after hearing the motion, the presiding Judge granted the motion to dismiss and the Order was signed on July 24, 2024.

Note 14. Subsequent Events

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.

Accredited Investor Note Amendment

In August 2024, we amended our six-month $50,000 promissory note with Jonathan Lutz to extended the maturity date to February 13, 2025. See Note 7.

Mast Hill

On October 29, 2024, we entered into Amendment No. 3 to the Securities Purchase Agreement dated December 13, 2022, with Mast Hill. Pursuant to the Amendment, the $200,000 amortization payment due September 13, 2024, was extended to March 13, 2025, and the maturity date was extended to June 13, 2025. As consideration, we entered into a Pledge Agreement, pledging one million (1,000,000) shares of Oragenics’ stock held by us as collateral, until the note is paid.