Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 1

 

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended July 31, 2019

or

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to             .

Commission File No. 333-200785

ODYSSEY GROUP INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada	47-1022125
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

 

2372 Morse Ave

Irvine, CA 92614

(619) 832-2900 

(Address and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act: None

 

Title of each Class	Trading Symbol	Name of each exchange on which registered
N/A	N/A	N/A

Securities registered pursuant to Section 12(g) of the Act:

Title of each Class	Trading Symbol	Name of each exchange on which registered
Common Stock ($0.001 par value)	ODYY	OTC

____________________________________

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer  o	Accelerated filer  o
	Non-accelerated filer  o	Smaller reporting company  x
	Emerging growth company  o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, computed by reference to the last sales price ($1.25) as reported by the OTC Bulletin Board, as of the last business day of the Registrant’s most recently completed second fiscal quarter (January 31, 2019).		$	25,735,000
Number of shares of common stock outstanding as of October, 23 2019			86,990,400

____________________________________

DOCUMENTS INCORPORATED BY REFERENCE

The Company hereby incorporates by reference all of the reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, including but not limited to: None

 

 

ODYSSEY GROUP INTERNATIONAL, INC.

FORM 10-K/A

For the Fiscal Year Ended July 31, 2019

INDEX

 

		Page
PART II
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	1
PART IV
Item 15.	Exhibits and Financial Statement Schedules	8
Signatures		9

 

 

 

 

 

 

 

 

 

 

 

ODYSSEY GROUP INTERNATIONAL, INC.

 

Explanatory Note

 

During the year ended July 31, 2019, the Company acquired various intellectual properties. In preparing the financial statements, management and the audit committee determined that the intellectual property acquired be amortized over the life of the underlying patents. On subsequent review, it was determined that a reduction of the intellectual property and resulting increase in research and development expense more appropriately reflects the nature of the transactions and accounting required by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 730 Research and Development (ASC 730-10-25-2(c)). As permitted by Instruction G to Form 10-K, the Company incorporated by reference into Part II of the Original Filing.

 

This Amendment No. 1 ("Amendment No. 1") to the Annual Report on Form 10-K/A amends the Annual Report on Form 10-K of Odyssey Group International, Inc. for the fiscal year ended July 31, 2019, as filed with the Securities and Exchange Commission ("SEC") on October 23, 2019 (the "Original Filing"). Subsequent to its Original Filing, the Company, in consultation with its Audit Committee, concluded that its previously issued Financial Statements for the periods beginning with the fourth quarter of 2019 through the third quarter of 2020 (collectively, the “Affected Periods”) should be restated due to the misapplication of the accounting regarding the capitalization of research and developments costs.

 

The non-reliance conclusion with respect to fiscal year end 2019 and interim 2020 financial statements included in the Affected Reports resulted from the determination that the research and developments costs capitalized in the intangible assets should be recognized as research and development expenses to be in compliance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 730 Research and Development (ASC 730-10-25-2(c)). 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 the Affected Reports the Company recorded such development cost as intangible assets. The adjustments required to correct the foregoing treatment of such costs will result in a non-cash increase in research & development expense and a decrease of net intangible assets for the fiscal year ended July 31, 2019.

 

For the convenience of the reader, this Amended Filing sets forth the Original Filing as modified and superseded where necessary to reflect the restatement. The following items have been amended principally as a result of, and to reflect, the restatement:

 

Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Part IV – Item 15. Exhibits and Financial Statement Schedules

 

In accordance with applicable SEC rules, this Amended Filing includes certifications from our Chief Executive Officer and Chief Financial Officer dated as of the date of this filing.

 

Except for the items noted above, no other information included in the Original Filing is being amended by this Amended Filing. The Amended Filing continues to speak as of the date of the Original Filing and we have not updated the filing to reflect events occurring subsequently to the Original Filing date other than those associated with the restatement of the Company’s financial statements. Accordingly, this Amended Filing should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original Filing.

 

 

 

 

 

PART II

 

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K 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. We have included important risks and uncertainties in the cautionary statements included in this report, particularly the section titled “Risk Factors” incorporated by reference herein. 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

 

We have a deficit of $24,501,872 as of July 31, 2019. For the foreseeable future, we expect to experience continuing operating losses and negative cash flows from operations as our management executes our current business plan. The cash of $167,095 available at July 31, 2019, may not provide enough working capital to meet our current operating expenses through October 23, 2020, as we continue to accrue overhead expenses. We will need to raise additional capital through a debt financing or equity offering to meet our operating and capital needs. There can be no assurance, however, that we will be successful in our fundraising efforts or that additional funds will be available on acceptable terms, if at all.

 

If we are unable to raise additional capital by October 23, 2020, we will adjust our current business plan. Due to our lack of additional committed capital, recurring losses, negative cash flow and accumulated deficit, there is substantial doubt about the Company’s ability to continue as a going concern.

 

Restatement for Correction of an Error

 

During the year ended July 31, 2019, the Company acquired various intellectual properties. In preparing the financial statements, management and the audit committee determined that the intellectual property acquired be amortized over the life of the underlying patents. On subsequent review, it was determined that a reduction of the intellectual property and resulting increase in research and development expense more appropriately reflects the nature of the transactions and accounting required by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 730 Research and Development (ASC 730-10-25-2(c)). As permitted by Instruction G to Form 10-K, the Company incorporated by reference into Part II of the Original Filing. 

 

 

 

 

 

 

This Amendment No. 1 ("Amendment No. 1") to the Annual Report on Form 10-K/A amends the Annual Report on Form 10-K of Odyssey Group International, Inc. for the fiscal year ended July 31, 2019, as filed with the Securities and Exchange Commission ("SEC") on October 23, 2019 (the "Original Filing"). In the Original Filing, the Company, in consultation with its Audit Committee, concluded that its previously issued Financial Statements for the periods beginning with the fourth quarter of 2019 through the third quarter of 2020 (collectively, the “Affected Periods”) should be restated due to the misapplication of the accounting regarding the capitalization of research and developments costs.

 

The non-reliance conclusion with respect to fiscal year end 2019 and interim 2020 financial statements included in the Affected Reports resulted from the determination that the research and developments costs capitalized in the intangible assets should be recognized as research and development expenses to be in compliance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 730 Research and Development (ASC 730-10-25-2(c)). 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.

 

The adjustments required to correct the foregoing treatment of such costs resulted in a non-cash increase in research & development expense and a decrease of intangible assets of $23,011,400 and an increase in accumulated amortization and a decrease in amortization expense of $30,830. For the fiscal year ended July 31, 2019, general and administrative expenses increased $22,980,570 and net intangible assets decreased $23,124,570 and contingent liability decreased by $144,000.

 

In addition to the restatement of the financial statements, certain information within the following notes to the financial statements have been restated to reflect the correction of a misstatement discussed above as well as to add disclosure language as appropriate:

 

Note 3. Summary of Significant Accounting Policies

Note 5. Intangible Assets

Note 10. Income Taxes

Note 11. Going Concern

Note 12. Related Party Transactions

 

The financial statement misstatements reflected in the table below did not impact cash flows from operations, investing, or financing activities in the Company’s statements of cash flows for any period previously presented.

 

 

 

 

 

Going Concern

 

Substantial doubt exists as to our ability to continue as a going concern based on the fact that we do not have adequate working capital to finance our day-to-day operations. The Company has not realized any revenues for the year ended July 31, 2019. The Company has an operating deficit of $24,501,872 as of July 31, 2019. The operating deficit indicates substantial uncertainty about the Company’s ability to continue as a going concern. Management’s plans include engaging in further research and development and raising additional capital in the short term to fund such activities through sales of its common stock. Management’s ability to implement its plans and continue as a going concern may be dependent upon raising additional capital. 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 the operation of our business. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. Our financial statements do not include adjustments that might result from the outcome of this uncertainty.

 

Critical Accounting Policies and Estimates

 

There are no critical accounting policies or estimates reflected in the accompanying financial statements. Reference is made to the Company’s significant (but not critical) accounting policies set forth in Note 3 to the accompanying financial statements.

 

Impact of New Accounting Pronouncements

 

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”), in the form of Accounting Standards Updates (“ASUs”), to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs.

 

The FASB issued ASU 2017-11, Earnings Per Share (Topic 260) effective for annual reporting periods beginning after December 15, 2018. The amendments update the change in the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. This new guidance is effective for interim and annual reporting periods beginning after December 15, 2018 and interim periods, with early adoption permitted. The Company will adopt the standard as of August 1, 2019 and does not expect the adoption to have a material impact on the Company’s financial statements and disclosures.

 

The FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, effective for annual reporting periods beginning after December 15, 2017 adopting this standard on its financial statements. The ASU amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The new guidance will allow companies to make certain changes to awards without accounting for them as modifications. It does not change the accounting for modifications. The new guidance will be applied prospectively to awards modified on or after the adoption date. This new guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company will adopt the standard as of August 1, 2019 and does not expect the adoption to have a material impact on the Company’s financial statements and disclosures.

 

The FASB issued ASU 2016-02, Leases (Topic 842), which is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.  The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. The Company will adopt the standard as of August 1, 2019 and does not expect the adoption to have a material impact on the Company’s financial statements and disclosures.

 

 

 

 

 

Results of Operations

 

Revenue

 

The Company does not currently sell or market any products. The Company 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.

 

For the years ended July 31, 2019 and 2018, the Company did not have sales. We are not currently selling or marketing any products, as our products are in late stage development and FDA clearance or approval to market the product will be required in order to sell in the United States.

 

Costs of Goods Sold

 

Our cost of goods sold consists primarily of the amounts paid to a third-party manufacturer for the product we purchased for resale.

 

The Company did not have sales for the years ended July 31, 2019 and 2018, and accordingly, there were no cost of goods sold for the respective periods.

 

Gross Profit and Gross Margin

 

For the years ended July 31, 2019 and 2018, the Company had no gross profit or gross margin.

  

Operating Expenses

 

Our operating expenses consist primarily of general and administrative expenses, which include salaries, stock-based compensation expense and legal and professional fees associated with the costs for services or employees in finance, accounting, sales, administrative activities and the formation and compliance of a public company. 

 

Overall operating expenses increased by $22,938,271 or 5,456% from the year ended July 31, 2018 to year ended July 31, 2019. The increase in operating expenses is mainly due to the expensing of $23,011,400 of in-process research and development as a result of the asset acquisitions of the CardioMap®, Save a Life and Prevacus patents, an increase in payroll expense of $84,366, stock option expense of $25,833 and $31,591 in general and administrative expense for the year ended July 31, 2019. offset by the non-recurring impairment allowance against a loan receivable of $131,447, consulting and marketing expenses incurred in regards to the automotive joint venture of $107,804 and purchase of the Company’s interest for the year ended July 31, 2018.

 

Interest Expense

 

Interest expense was $70,282 for the year ended July 31, 2019 compared to interest expense of $62,673 for the year ended July 31, 2018. The increase in interest expense for the year ended July 31, 2019, is attributed to the increased balance of notes payable due.

 

 

 

 

Net Loss from Operations

 

Loss from operations increased by $22,945,880 or 4,750% from a loss of $483,115 for the year ended July 31, 2018 to a loss of $23,428,995 for the year ended July 31, 2019. The increase in loss is the is primarily due to the Company’s expense of $23,011,400 of in-process research and development as a result of the acquisitions of the CardioMap®, Save a Life and Prevacus patents, and by increased payroll, stock, travel, amortization and general and administrative expense for the year ended July 31, 2019, offset by the non-recurring impairment allowance and consulting and marketing expenses incurred with regards to the automotive joint venture for the year ended July 31, 2018,

 

Cash Flows

 

The following table sets forth the primary sources and uses of cash and cash equivalents for the years ended July 31, 2019 and 2018 as presented below:

 

		Year Ended				Year Ended
		2019				2018
Net cash used in operating activities		$	(104,837	)		$	(146,062	)
Net cash provided by financing activities			271,542				133,026

 

Liquidity and Capital Resources

 

To date we have financed our operations primarily through debt financing and limited sales of our common stock. In 2018 and 2019, we increased our borrowings on notes payable to fund operations. As of July 31, 2019, and July 31, 2018, the note has a balance of $784,913 and $631,645. As of July 31, 2019, we had cash of $167,095. We do not believe that such cash is sufficient to sustain operations through the next 12 months. Therefore, we anticipate that we will need to raise additional capital through debt or equity financings.

 

On January 4, 2017, we entered into a “Master Revolving Note” (the “Note”) to Vivakor, Inc. (“Vivakor”), for the principal plus simple interest of 12.5% per annum. The Note entitles Vivakor to a payment of 2% of all gross sales until repayment or conversion (until the total sum of all payments made to the Holder equals two times the original principal amount of the Note). The Note was secured by a pledge of our equipment, general intangibles and intellectual property. This Note was amended on February 1, 2018, where the debt holder agreed to convert portions of its loan pari passu with any new investment raise of $500,000 or more. On February 1, 2018, the debt holder gave notice to convert $15,000 into 1,500,000 shares of Common Stock. On January 9, 2019, Vivakor gave written notice to the Company effecting a conversion of $25,314 of convertible debt into 2,531,400 shares of Common Stock of the Company, issued to Vivakor pursuant to the Master Revolving Note, dated as of January 4, 2017 and amended as of February 1, 2018 by and between the Company and Vivakor. As of July 31, 2019, the note has a balance of $747,608.

 

As of July 31, 2019, the Company has three additional convertible debt notes outstanding. The notes bear interest at 7.0% annually and the entire outstanding principal amount, together with accrued interest shall become due and payable on the date that is one (1) year from the date of issuance, unless before such date, is converted into shares of capital stock of the Company. At the option of the holder, the principal amount of the notes and any accrued interest may be converted into shares of common stock at a conversion price of $1.00 per share or at a 10% discount to the closing price on the day of conversion, but not lower than $0.50 cents per share. At maturity, and subject to a trickle out agreement, the Company shall have the right to either pay off the loan and any interest accrued or convert the loan amount and any interest into shares of common stock. The debt holders were issued a common stock warrant equal to 10% of the notes with a price of $1.50 per share and a term for one year from the investment date. At July 31, 2019, the notes have a balance of $37,305. Because the conversion feature met the criteria for characterization as a beneficial conversion feature, a portion of the proceeds, including warrants, of $213,650 from the issuance of the notes are accounted for as attributable to the conversion feature.

 

 

 

 

 

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, our Company may need to suspend the creation of new products until market conditions improve.

 

Inflation

 

Inflation generally will cause suppliers to increase their rates. In connection with such rate increases, we may or may not be able to increase our pricing to consumers. Inflation could cause both our investment and cost of goods sold to increase, thereby lowering our return on investment and depressing our gross margins.

 

Off Balance Sheet Arrangements

 

Our company has no material off balance sheet arrangements.

 

 

 

 

 

 

 

 

 

 

 

 

INDEX TO FINANCIAL STATEMENTS

 

Financial statements of Odyssey Group International, Inc.
Report of Independent Registered Public Accounting Firm	F-1
Balance Sheets as of July 31, 2019 and 2018.	F-2
Statements of Operations for the Years Ended July 31, 2019 and 2018.	F-3
Statements of Stockholders’ Equity (Deficiency) for the Years Ended July 31, 2019 and 2018.	F-4
Statements of Cash flows for the Years Ended July 31, 2019 and 2018.	F-5
Notes to the Financial Statements	F-6

 

 

 

  

 

 

 

 

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Opinion on the Financial Statements. We have audited the accompanying balance sheets of the Odyssey Group International, Inc. (the Company) as of July 31, 2019 and 2018, and the related statements of operations, stockholders’ equity (deficiency) and cash flows, for each of the two years in the period ended July 31, 2019, and the notes to the financial statements (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended July 31, 2019, in conformity with accounting principles generally accepted in the United States (U.S.).

 

Ability to Continue as a Going Concern. The financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 11 to the financial statements, the Company has incurred losses since inception and is currently dependent on the stockholders and lenders to fund its contemplated operational and marketing activities that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 11. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

 

Restatement of Previously Issued Financial Statements. As discussed in Note 2 to the financial statements, the 2019 financial statements have been restated to correct a misstatement.

 

Basis for Opinion. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 

 

/s/ Piercy Bowler Taylor & Kern

Certified Public Accountants

 

We have served as the Company's auditor from 2014 to 2020.

Las Vegas, Nevada

October 23, 2019, except for the effects of the restatement discussed in Note 2 to the financial statements, as to which the date is November 13, 2020

 

 

 

 

 

 

Odyssey Group International, Inc.

Balance Sheets

 

 

		July 31, 2019				July 31, 2018
		(Restated)
Assets
Current assets:
Cash and cash equivalents		$	167,095			$	390
Prepaid expenses			302,833				–
Loan receivable			50,000				–
Total current assets			519,928				390
Property and equipment, net			1,517				2,069
Intangible assets			15,000				25,000
Total assets		$	536,445			$	27,459
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	47,743			$	26,691
Accrued wages			297,547				188,500
Notes payable, including accrued interest			784,913				631,645
Total liabilities			1,130,203				846,836
Stockholders' equity (deficiency):
Preferred stock, $.001 par value; 100,000,000 shares authorized, no shares issued or outstanding			–				–
Common stock, $.001 par value; 500,000,000 shares authorized with 86,990,400 and 61,414,000 issued and outstanding			86,990				61,414
Additional paid-in capital			23,821,124				192,086
Deficit			(24,501,872	)			(1,072,877	)
Total stockholders’ equity (deficiency)			(593,758	)			(819,377	)
Total liabilities and stockholders’ equity (deficiency)		$	536,445			$	27,459

 

The accompanying notes are an integral part of these financial statements

 

 

 

 

 

Odyssey Group International, Inc.

Statements of Operations

 

 

		Year ended				Year ended
		July 31, 2019				July 31, 2018
		(Restated)
Revenues		$	–			$	–
Costs of goods sold			–				–
Gross profit			–				–
General and administrative expense			23,358,713				288,995
Impairment loss			–				131,447
Loss from operations			(23,358,713	)			(420,442	)
Interest expense			(70,282	)			(62,673	)
Net loss		$	(23,428,995	)		$	(483,115	)
Basic net loss per share:		$	(0.34	)		$	(0.00	)
Weighted average number of shares			69,898,436				117,128,060

 

The accompanying notes are an integral part of these financial statements

 

 

 

 

 

 

 

 

Odyssey Group International, Inc.

Statements of Stockholders’ Equity (Deficiency)

For the Years Ended July 31, 2019 and 2018

 

 

		Common Stock								Additional Paid-In								Total Equity
		Shares				Dollars				Capital				Deficit				(Deficiency)
Balances July 31, 2017			114,839,600			$	114,840			$	55,060			$	(589,762	)		$	(419,862	)
Debt converted to common stock			1,574,400				1,574				32,026				–				33,600
Common stock issued for services			5,000,000				5,000				45,000				–				50,000
Common stock restructure			(60,000,000	)			(60,000	)			60,000				–				–
Net loss			–				–				–				(483,115	)			(483,115	)
Balances July 31, 2018			61,414,000			$	61,414			$	192,086			$	(1,072,877	)		$	(819,377	)
Note payable converted to common stock			2,531,400				2,531				22,783				–				25,314
Common stock issued for services			321,000				321				331,929				–				332,250
Common stock issued for compensation			4,720,000				4,720				67,280				–				72,000
Common stock issued for acquisition of in-process research and development			18,004,000				18,004				22,486,996				–				22,505,000
Common stock options issued for acquisition of in-process research and development			–				–				506,400				–				506,400
Warrants issued in connection with convertible notes			–				–				13,075				–				13,075
Beneficial conversion feature related to convertible notes			–				–				200,575				–				200,575
Net loss - (Restated)			–				–				–				(23,428,995	)			(23,428,995	)
Balances July 31, 2019 (Restated)			86,990,400			$	86,990			$	23,821,124			$	(24,501,872	)		$	(593,758	)

 

The accompanying notes are an integral part of these financial statements

 

 

 

 

 

 

 

 

 

Odyssey Group International, Inc.

Statements of Cash Flows

 

		Year Ended				Year Ended
		31-Jul-19				31-Jul-18
		(Restated)
Operating activities
Net loss		$	(23,428,995	)		$	(483,115	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense			10,551				10,551
Impairment loss			–				131,447
Common stock for in-process research and development			23,011,400				–
Stock based payment expense for consulting and compensation			101,417				–
Debt discount			408				–
Changes in operating assets and liabilities:
Increase in accounts payable			21,053				47,882
Increase in accrued wages			109,047				84,500
Increase in accrued interest			70,282				62,673
Net cash used in operating activities			(104,837	)			(146,062	)
Financing activities
Proceeds from note payable			271,542				133,026
Net cash provided by financing activities			271,542				133,026
Net change in cash and cash equivalents			166,705				(13,036	)
Cash and cash equivalents, beginning of year			390				13,426
Cash and cash equivalents, end of year		$	167,095			$	390
Noncash Investing and Financing Activities
Common stock issued for consulting services			332,250				50,000
Beneficial conversion feature related to convertible notes			213,650				–
Debt converted to common stock			25,314				15,000
Stock restructure - common stock			–				60,000
Accounts payable transferred to note payable			–				36,500

 

The accompanying notes are an integral part of these financial statements

 

 

 

 

Odyssey Group International, Inc.

Notes to Financial Statements

 

1. Nature of Operations

 

The corporate mission is to create or acquire distinct assets, intellectual property, and technologies with an emphasis on acquisition targets that 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. The Company has made significant investments in three different life saving technologies; the CardioMap® heart monitoring and screening device, the Save a Life choking rescue device and a unique neurosteroid drug compound intended to treat 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 intend 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 intend to 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 We intend to apply for trademarks and patents once we have developed proprietary products.

 

We are not currently selling or marketing any products, as our product is in late stage development and Food and Drug Administration ("FDA") clearance or approval to market the product will be required in order to sell in the United States.

 

2. Restatement for Correction of an Error

 

The Company has determined that the research and developments costs previously capitalized in the intangible assets should be recognized as research and development expenses to be in compliance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 730 Research and Development (ASC 730-10-25-2(c)). 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.

 

 

 

 

During the year ended July 31, 2019, the Company acquired and capitalized the following intangible assets. The Company acquired the patent related to the exclusive license and distribution rights of the CardioMap®, which is intended to be an advanced technology for early non-invasive testing for heart disease. The license to the patent and product distribution rights were being amortized over the life of the underlying patent. The acquisition cost of $18.75 million and was valued at the fair market value of $1.25 per share for the stock granted on the date of acquisition. The Company acquired the intellectual property, know-how and patents for an anti-choking, life-saving medical device from Dr. James De Luca, inventor and Murdock Capital Partners. The asset was valued at $675,400, which includes the fair market value of $1.25 per share for the stock granted on the date of acquisition, as well as stock options granted valued at $0.84 per share based upon the Black-Scholes valuation model and a onetime cash payment totaling $250,000 that will be paid upon FDA clearance of the product. The payment was recorded as a contingent liability and with a fair market value of $144,000. The Company acquired an interest in the patented chemical compound for a neurosteroid as part of an agreement with Prevacus, Inc. The acquisition cost was $3.73 million and was being amortized over the life of the patent. The asset was valued at the fair market value of $1.25 per share for the stock granted on the date of acquisition. The intellectual property, know-how and patents were being amortized over the life of the patents.

 

In the Affected Reports, the Company recorded such development cost as intangible assets. The adjustments required to correct the foregoing treatment of such costs resulted in a non-cash increase in research & development expense and a decrease of intangible assets of $23,011,400 and an increase in accumulated amortization and a decrease in amortization expense of $30,830. For the fiscal year ended July 31, 2019, general and administrative expenses increased $22,980,570 and net intangible assets decreased $23,124,570 and contingent liability decreased by $144,000.

 

In addition to the restatement of the financial statements, certain information within the following notes to the financial statements have been restated to reflect the correction of a misstatement discussed above as well as to add disclosure language as appropriate:

 

Note 3. Summary of Significant Accounting Policies

Note 5. Intangible Assets

Note 10. Income Taxes

Note 11. Going Concern

Note 12. Related Party Transactions

 

The financial statement misstatements reflected in the table below did not impact cash flows from operations, investing, or financing activities in the Company’s statements of cash flows for any period previously presented.

 

Comparison of restated financial statements to financial statements as previously reported

 

The following tables compare the Company’s previously issued Balance Sheets, Statement of Operations, Statement of Stockholders’ Equity (Deficiency), and Statement of Cash Flows as and for the year ended of July 31, 2019 and for the corresponding restated financial statements for that year end.

 

 

 

 

 

Odyssey Group International, Inc.

Balance Sheets

 

 

		Balance Sheet July 31, 2019
		As Previously Reported				Adjustments				As Restated
Assets
Current assets:
Cash and cash equivalents		$	167,095			$	–			$	167,095
Prepaid expenses			302,833				–				302,833
Loan receivable			50,000				–				50,000
Total current assets			519,928				–				519,928
Property and equipment, net			1,517				–				1,517
Intangible assets - patents & license distribution rights			23,139,570				(23,124,570	)			15,000
Total assets		$	23,661,015			$	(23,124,570	)		$	536,445
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	47,743			$	–			$	47,743
Accrued wages			297,547				–				297,547
Contingent liability			144,000				(144,000	)			–
Notes payable, including accrued interest			784,913				–				784,913
Total liabilities			1,274,203				(144,000	)			1,130,203
Stockholders' equity (deficiency):
Preferred stock, $.001 par value; 100,000,000 shares authorized, no shares issued or outstanding			–				–				–
Common stock, $.001 par value; 500,000,000 shares authorized with 86,990,400 and 61,414,000 issued and outstanding			86,990				–				86,990
Additional paid-in capital			23,821,124				–				23,821,124
Deficit			(1,521,302	)			(22,980,570	)			(24,501,872	)
Total stockholders’ equity (deficiency)			22,386,812				(22,980,570	)			(593,758	)
Total liabilities and stockholders’ equity (deficiency)		$	23,661,015			$	(23,124,570	)		$	536,445

 

 

 

 

 

Odyssey Group International, Inc.

Statements of Operations

 

 

		July 31, 2019
		As Previously Reported				Adjustments				As Restated
Revenues			–				–				–
Costs of goods sold			–				–				–
Gross profit			–				–				–
General and administrative expense		$	378,143			$	22,980,570			$	23,358,713
Loss from operations			(378,143	)			(22,980,570	)			(23,358,713	)
Interest expense			(70,282	)			–				(70,282	)
Net loss		$	(448,425	)		$	(22,980,570	)		$	(23,428,995	)
Basic net loss per share:			(0.01	)		$	(0.33	)		$	(0.34	)
Weighted average number of shares		$	69,898,436				69,898,436				69,898,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Odyssey Group International, Inc.

Statements of Stockholders’ Equity (Deficiency)

For the Years Ended July 31, 2019 and 2018

 

 

		Common Stock								Additional Paid-In								Total Equity
		Shares				Dollars				Capital				Deficit				(Deficiency)
Balances July 31, 2017			114,839,600			$	114,840			$	55,060			$	(589,762	)		$	(419,862	)
Debt converted to common stock			1,574,400				1,574				32,026				–				33,600
Common stock issued for services			5,000,000				5,000				45,000				–				50,000
Common stock restructure			(60,000,000	)			(60,000	)			60,000				–				–
Net loss			–				–				–				(483,115	)			(483,115	)
Balances July 31, 2018			61,414,000			$	61,414			$	192,086			$	(1,072,877	)		$	(819,377	)
Note payable converted to common stock			2,531,400				2,531				22,783				–				25,314
Common stock issued for services			321,000				321				331,929				–				332,250
Common stock issued for compensation			4,720,000				4,720				67,280				–				72,000
Common stock issued for acquisition of in-process research and development			18,004,000				18,004				22,486,996				–				22,505,000
Common stock options issued for acquisition of in-process research and development			–				–				506,400				–				506,400
Warrants issued in connection with convertible notes			–				–				13,075				–				13,075
Beneficial conversion feature related to convertible notes			–				–				200,575				–				200,575
Net loss - (Restated)			–				–				–				(23,428,995	)			(23,428,995	)
Balances July 31, 2019 (Restated)			86,990,400			$	86,990			$	23,821,124			$	(24,501,872	)		$	(593,758	)

 

 

 

 

 

 

 

 

 

Odyssey Group International, Inc.

Statements of Cash Flows

 

 

		Year Ended July 31, 2019
		As Previously Reported				Adjustments				As Restated
Operating activities
Net loss		$	(448,425	)		$	(22,980,570	)		$	(23,428,995	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense			41,381				(30,830	)			10,551
Common stock for in-process research and development			–				23,011,400				23,011,400
Stock based payment expense for consulting and compensation			101,417				–				101,417
Debt discount			408				–				408
Changes in operating assets and liabilities:
Increase in accounts payable			21,053				–				21,053
Increase in accrued wages			109,047				–				109,047
Increase in accrued interest			70,282				–				70,282
Net cash used in operating activities			(104,837	)			–				(104,837	)
Financing activities
Proceeds from note payable			271,542				–				271,542
Net cash provided by financing activities			271,542				–				271,542
Net change in cash and cash equivalents			166,705				–				166,705
Cash and cash equivalents, beginning of year			390				–				390
Cash and cash equivalents, end of year		$	167,095				–			$	167,095
Noncash Investing and Financing Activities
Common stock issued for acquisition of intangible assets		$	22,505,000			$	(22,505,000	)			–
Common stock issued for consulting services			332,250				–				332,250
Beneficial conversion feature related to convertible notes			213,650				–				332,250
Contingency liability related to acquisition of intangible assets			144,000				(144,000	)			–
Debt converted to common stock			25,314				–				23,314

 

 

 

 

 

 

 

3. Summary of Significant Accounting Policies

 

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

The Company has not elected to adopt the option available under GAAP to measure any of its eligible financial instruments or other items at fair value. Accordingly, the Company measures all of its assets and liabilities on the historical cost basis of accounting unless otherwise required by GAAP.

 

Accounts receivable

Accounts receivable are carried at original invoice amount less an estimated allowance for doubtful accounts, if deemed necessary by management. An allowance for doubtful accounts is based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts, if any, by identifying troubled accounts and by using historical experience applied to an aging of accounts.

 

Property and equipment, net

Property and equipment is stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets. For the year ended July 31, 2019 and 2018 the Company recognized depreciation expense of $552.

 

Beneficial Conversion Feature of convertible notes payable

The Beneficial Conversion Feature ("BCF") of a convertible note 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. The Company records a BCF related to the issuance of a convertible note when issued and also records the estimated fair value of any warrants issued with those convertible notes. 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 measured by allocating a portion of the note's proceeds to the warrants, if applicable, and as 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. The value of the proceeds received from a convertible note is then allocated between the conversion features and warrants on an allocated fair value basis. The allocated fair value is recorded in the financial statements as a debt discount (premium) from the face amount of the note and such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense.

 

Net loss per share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. No fully diluted loss per share is presented, because it would be anti-dilutive.

 

 

 

 

 

Revenue recognition

The Company recognizes revenue when control is transferred to the customer. For products sold through direct sales representatives, control is transferred upon shipment or upon delivery, based on the contract terms and legal requirements. Payment terms vary depending on the country of sale, type of customer, and type of product. If a contract contains more than one performance obligation, the transaction price is allocated to each performance obligation based on relative standalone selling price. Shipping and handling is treated as a fulfillment activity rather than a promised service, and therefore, is not considered a performance obligation. Taxes assessed by a governmental authority that are both imposed on, and concurrent with, a specific revenue producing transaction and collected by the Company from customers (for example, sales, use, value added, and some excise taxes) are not included in revenue. For contracts that have an original duration of one year or less, the Company uses the practical expedient applicable to such contracts and does not adjust the transaction price for the time value of money. We are not currently selling or marketing any products, as our product is in late stage development and FDA clearance to market the product will be required in order to sell in the United States.

 

Research and development expense

Research and development expense is expensed in the period when incurred. For the year ended July 31, 2019 and 2018, the Company incurred research and development expense of $23,011,400 and zero, respectively.

 

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. The Company believes its 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, 2019 and 2018. The Company recognizes interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense.

 

On December 22, 2017, the President of the United States signed and enacted into law H.R. 1 (the “Tax Reform Law”). The Tax Reform Law, effective for tax years beginning on or after January 1, 2018, except for certain provisions, resulted in significant changes to existing United States tax law, including various provisions that are expected to impact the Company. The Tax Reform Law reduces the federal corporate tax rate from 34% to 21% effective January 1, 2018. The Company analyzed the provisions of the Tax Reform Law to assess the impact on the Company’s financial statements and determined it had no material impact.

 

4. Impact of New Accounting Pronouncements

 

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”), in the form of Accounting Standards Updates (“ASUs”), to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs.

 

 

 

 

The FASB issued ASU 2017-11, Earnings Per Share (Topic 260) effective for annual reporting periods beginning after December 15, 2018. The amendments update the change in the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. This new guidance is effective for interim and annual reporting periods beginning after December 15, 2018 and interim periods, with early adoption permitted. The Company will adopt the standard as of August 1, 2019 and does not expect the adoption to have a material impact on the Company’s financial statements and disclosures.

 

The FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, effective for annual reporting periods beginning after December 15, 2017 adopting this standard on its financial statements. The ASU amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The new guidance will allow companies to make certain changes to awards without accounting for them as modifications. It does not change the accounting for modifications. The new guidance will be applied prospectively to awards modified on or after the adoption date. This new guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company will adopt the standard as of August 1, 2019 and does not expect the adoption to have a material impact on the Company’s financial statements and disclosures.

 

The FASB issued ASU 2016-02, Leases (Topic 842), which is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. The Company will adopt the standard as of August 1, 2019 and does not expect the adoption to have a material impact on the Company’s financial statements and disclosures.

 

5. Intangible Assets

 

FASB ASC 820, "Fair Value Measurements and Disclosures", establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described 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 assets or liabilities fair value measurement level within the fair value hierarchy is based on the lowest level.

 

 

 

 

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 the Company believes its 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.

 

6. Notes Payable

 

As of July 31, 2019, the Company has a note payable that is subject to periodic payments that come due based on sales. The note fully matures in January 2020, bears interest at 12.5% annually, and the remaining unpaid balance is convertible upon maturity at the holder’s option into shares of common stock at a conversion price fixed at $0.01 per share. As of July 31, 2019, the note has a balance of $747,608. Because the conversion feature does not meet the criteria for characterization as a beneficial conversion feature, no portion of the proceeds from the issuance of the note was accounted for as attributable to the conversion feature. This note was amended on February 1, 2018, where the debt holder agreed to convert portions of its loan pari passu with any new investment raise of $500,000 or more. Furthermore, the debt holder was issued a common stock warrant for 4 million shares at $0.25 per share with an expiration date of 90 days after the issuance, as consideration to the debt holder to agree to begin to convert portions of its loan to common stock pari passu with a new offering raise of investment at a minimum of $500,000. As of July 31, 2019, these warrants expired.

 

As of July 31, 2019, the Company has three additional convertible debt notes outstanding. The notes bear interest at 7.0% annually and the entire outstanding principal amount, together with accrued interest shall become due and payable on the date that is one (1) year from the date of issuance, unless before such date, is converted into shares of capital stock of the Company. At the option of the holder, the principal amount of the notes and any accrued interest may be converted into shares of common stock at a conversion price of $1.00 per share or at a 10% discount to the closing price on the day of conversion, but not lower than $0.50 per share. At maturity, and subject to a trickle out agreement, the Company shall have the right to either pay off the loan and any interest accrued or convert the loan amount and any interest into shares of common stock. The debt holders were issued a common stock warrant equal to 10% of the note with a price of $1.50 per share and a term for one year from the investment date. At July 31, 2019, the notes have a balance of $37,305. Because the conversion feature met the criteria for characterization as a beneficial conversion feature, a portion of the proceeds, including warrants, of $213,650 from the issuance of the notes are accounted for as attributable to the conversion feature.

 

7. Fair Value Measurements

 

The carrying values of cash, the note receivable, and notes payable approximate their estimated fair values because of the short-term nature of these instruments.

 

8. Common Stock

 

For the year ended July 31, 2018, the Company’s Board approved the return of 60 million shares from the founding common stockholders.

 

On December 11, 2018, the Company amended the employment agreement of J. Michael Redmond to further document and incorporate the transition of the control of the Green Energy Alternatives stock. In the amendment, the Company agrees to issue Mr. Redmond a total of 10 million shares of the Company’s common stock. At least 4.7 million stock grants were granted to Mr. Redmond from the Company, and 5.3 million shares have been assigned to Mr. Redmond through control of Green Energy Alternatives, LLC. The Company recognized $47,000 of compensation expense related to the 4.7 million shares granted, with an estimated fair value of $0.01 per share, for the year ended July 31, 2019.

 

On January 9, 2019, Vivakor, Inc. (“Vivakor”) gave written notice to the Company effecting a conversion of $25,314 of convertible debt into 2,531,400 shares of Common Stock of the Company, issued to Vivakor pursuant to the Master Revolving Note, dated as of January 4, 2017, and amended as of February 1, 2018, by and between the Company and Vivakor.

 

 

 

 

 

On April 17, 2019, the Company entered into an agreement for consulting services to be provided through April 2020. The Company granted the consultant 100,000 shares of the Company’s common stock.

 

On May 22, 2019, the Company entered into employment agreements for two part-time employees. The Company granted the employees 10,000 shares each of the Company’s common stock.

 

On March 22, 2019, April 17, 2019, June 1, 2019, and July 26, 2019, the Company entered into agreements for consulting services for the next 12 months. The Company granted the consultants a total of 305,000 shares of the Company’s common stock.

 

On June 27, 2019, Odyssey entered into a Definitive Agreement with Prevacus to form a Joint Venture relating to the development of a neurosteroid for treating two orphan disorders, ALS and Niemann Picks disease. Prevacus contributed to the JV, the chemical compound and Odyssey is be responsible for funding the JV through Phase One clinical trials. The JV company will own the patents. Each party will own the JV company equally. In addition to the JV, the two companies have entered into a share exchange agreement whereby Prevacus will receive three million shares of Odyssey common stock and Odyssey will receive one million shares of Prevacus stock. The chemical compound for the neurosteroid being developed has issued patents, and as consideration for the patented compound, Odyssey issued Prevacus two million shares of its common stock. As part of the Agreement, Dr. Jacob Vanlandingham Ph.D., CEO of Prevacus, was issued one million shares of the Company’s common stock. The Company allocated 984,000 shares to the acquisition of the patent and 16,000 shares were allocated to Dr. Vanlandingham as a Director of the Company.

 

On June 27, 2019, Odyssey entered into a Definitive Agreement with Dr. James De Luca, inventor and Murdock Capital Partners, advisors to De Luca, to acquire the intellectual property, know-how and patents for a life-saving medical device currently in development. The Company acquired intellectual property rights, namely, United States Letters Patent No. 7,559,921, entitled “Device for Removing a Lodged Mass” which issued on July 14, 2009 and which was reissued on June 2, 2015 and received U.S. Reissue Patent No. Re 45,535 and United States Patent Number 8,454,624 also entitled “Device for Removing a Lodged Mass” which was issued on June 4, 2013. As consideration for the patent and intellectual property, the Company granted stock options totaling 600,000 shares of the Company’s stock, vesting on certain milestones. The options will be split between De Luca and MCP. The Company also granted De Luca, 20,000 common shares. A onetime cash payment totaling $250,000 will be paid to Deluca and MCP upon FDA clearance of the product.

 

9. Stock Based Compensation

 

We have not adopted any equity compensation plans. We have entered into an individual compensation plan for Mr. Redmond, for which Mr. Redmond has been granted stock options of 15 million shares at $0.25 per share. The options vest upon achieving the following milestones: 5 million options vest upon each milestone, when the Company obtains revenue of $5 million, $10 million and $15 million. Mr. Redmond cannot sell any of the above stock options for two years from the effective date of the employment agreement or until the Company reaches $10 million in annual revenue, whichever occurs first. The stock option vesting accelerates and becomes immediately exercisable upon the sale, merger or any transaction resulting in the majority (more than 50%) of the Company stock being obtained. The Company has not recorded any expense, as we have not determined that it is probable that the milestones will be achieved.

 

10. Income Taxes

 

We file income tax returns in the U.S. federal jurisdiction and the various states in which we operate. The Company registered with the Franchise Tax Board in the State of California in tax year 2020, but was not required to file a tax return for tax year 2019. The Company’s tax returns are currently not under examination for any year. The Company’s deferred tax assets consist of federal net operating loss carryforwards that expire through the year 2035. 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 the Company’s ability to continue as a going concern (Note 11).

 

 

 

 

The following table reconciles the U.S. federal statutory rate to the Company’s effective tax rate:

 

		For the year ended July 31,
		2019				2018
US federal statutory rates		$	21%			$	21%
Valuation allowance			(21%	)			(21%	)
Effective tax rate		$	0%			$	0%

 

The Company’s tax provision (benefit) was as follows:

 

		For the year ended July 31,
		2019				2018
Current deferred		$	44,900			$	(291,100	)
Increase in valuation allowance			(44,900	)			291,100
Total		$	–			$	–

 

The Company’s net deferred tax asset as of July 31, 2019 and 2018 is as follows:

 

		For the year ended July 31,
		2019				2018
Deferred tax asset		$	(246,200	)		$	(291,100	)
Valuation allowance			246,200				291,100
Net deferred tax asset		$	–			$	–

 

As of July 31, 2019, the Company had $821,727 of federal net operating loss carry forwards. These carry forwards, if not used, will begin to expire in 2035. Current or future ownership changes, including issuances of common stock under the terms of the Company’s convertible notes payable may severely limit the future realization of these net operating losses.

 

The Company provides for a valuation allowance when it is more likely than not that they will not realize a portion of the deferred tax assets. The Company has established a valuation allowance against their net deferred tax asset due to the uncertainty that enough taxable income will be generated in those taxing jurisdictions to utilize the assets. Therefore, they have not reflected any benefit of such deferred tax assets in the accompanying financial statements. The Company’s net deferred tax asset and valuation allowance decreased by $44,900 for the year ended July 31, 2019, related to the current year activity.

 

The Company has reviewed all income tax positions taken or that are expected to be taken for all open years and determined that their income tax positions are appropriately stated and supported for all open years. The Company is subject to U.S. federal income tax examinations by tax authorities for years after 2019 due to unexpired net operating loss carryforwards originating in and subsequent to that year. The Company may be subject to income tax examinations for the various taxing authorities which vary by jurisdiction.

 

 

 

 

 

The Company’s 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, 2019, there were no unrecognized tax benefits, or any tax related interest or penalties.

 

The Company does not have any examinations ongoing. Tax returns for the years 2014 onwards are subject to federal, state or local examinations.

 

11. Going Concern

 

We have a deficit of $24,501,872, as of July 31, 2019. For the foreseeable future, we expect to experience continuing operating losses and negative cash flows from operations as our management executes our current business plan. The cash available at July 31, 2019, may not provide enough working capital to meet our current operating expenses through October 23, 2020, as we continue to accrue overhead expenses. We will need to raise additional capital through a debt financing or equity offering to meet our operating and capital needs. There can be no assurance, however, that we will be successful in our fundraising efforts or that additional funds will be available on acceptable terms, if at all.

 

If we are unable to raise additional capital by October 23, 2020, we will adjust our current business plan. Due to our lack of additional committed capital, recurring losses, negative cash flow and accumulated deficit, there is substantial doubt about the Company’s ability to continue as a going concern.

 

12. Related Party Transactions

 

The Company has a common officer with Green Energy Alternatives, Inc. As of July 31, 2019, and 2018, Green Energy Alternatives, Inc. held 5.3 million shares of the Company’s common stock.

 

Due to officer

During the year ended July 31, 2019, Mr. Redmond, CEO, paid approximately $30,060 of expenses incurred by the Company and the amount is included in accounts payable at July 31, 2019. During the year ended July 31, 2018, there were no expenses incurred by Mr. Redmond, CEO.

 

Accounts Payable

		Year Ended				Year Ended
		31-Jul-19				31-Jul-18
Joseph M. Redmond, CEO		$	30,060			$	–

 

Accrued Compensation

 

		Total
Balance 7/31/2018		$	80,000
2019 Salary			120,000
Payments			(18,462	)
Balance 7/31/2019		$	181,538

 

It has been determined that Dr. Vanlandingham is considered a related party due to his affiliation with Prevacus, Inc. as its president and his position on the Board of Directors, as a result of the agreement that was entered into in June 2019. At the time of the agreement and appointment to the Board, he was not a considered a related party. The Company allocated 984,000 shares to the acquisition of the patent and 16,000 shares were allocated to Dr. Vanlandingham as a Director of the Company. His affiliation has been disclosed in filings but not as a related party transaction.

 

 

 

 

 

13. Subsequent Events

  

We have evaluated subsequent events and, except for the transaction described below, there were no other events relative to the financial statements that require additional disclosure.

 

On August 6, 2019, the Company entered into a convertible note payable for $100,000. The notes bear interest at 7.0% annually and mature automatically. The entire outstanding principal amount, together with accrued interest shall become due and payable on the date that is one (1) year from the date of issuance, unless converted into shares of capital stock of the Company. Warrants equal to 10% of the shares purchased with a price of $1.50 per share were issued to the note holders. The price of the warrant is $1.50 per share and the term is for one year from the investment date.

 

On August 15, 2019, the Company amended its agreement with its financial consultant to included monthly payments of $5,000 and 200,000 stock options to be granted stock in accordance with the mutual agreement of the Board’s compensation committee. 

 

On August 20, 2019, the Company entered into a consulting agreement for research and development associated with the CardioMap®. The consultant will receive monthly payments of $5,000 and 2.0 million stock options, vesting upon certain milestone achievements.

 

On August 28, 2019, Jeff Conroy joined the Board of Odyssey as an independent director. Mr. Conroy is an operating and business development executive with over 30 years in the life science industry across therapeutics and medical devices. Mr. Conroy is the Chairman & CEO of Embody, a DARPA-funded medical device company developing regenerative implants for tendon and ligament repair. Since 2012, he has served as the Head of Corporate Development for Especificos Stendhal S.A. de C.V., a Latin American specialty pharmaceutical company. He is the Managing Director of Windward Investments - structuring licensing partnerships for life science companies. Mr. Conroy is an independent director of Cingulate Therapeutics, a CNS company developing ADHD therapeutics. Mr. Conroy holds a B.S. in Business Administration from Providence College. As Director, Mr. Conroy shall be compensated with stock in accordance with the mutual agreement of the Board’s compensation committee. 

 

On September 20, 2019, Jerry Casey joined the Board of Odyssey as an independent director. Jerry Casey has been a leader in the life science industry for over 30 years. Enjoying a long tenure as a senior executive at Genzyme Corporation, Mr. Casey was the driver behind Genzyme’s commercial success in the diagnostics arena, building a $175 million business which Genzyme sold to Japan-based Sekisui Chemical in 2011. Mr. Casey became the President and Chief Operating Officer of the new entity, Sekisui Diagnostics, LLC, until the end of 2014. Since leaving the company, Mr. Casey has been actively involved in several life sciences ventures, both as an advisor and an investor, while serving on multiple Boards. As Director, Mr. Casey shall be compensated with stock in accordance with the mutual agreement of the Board’s compensation committee. 

 

On October 3, 2019, the Company and Prevacus, Inc. amended the Master Agreement for a Joint Venture and Intellectual Property Purchase Agreement, dated June 26, 2019, to extend the timing of the formation of the Joint Venture to December 31, 2019.

 

On October 23, 2019, John Gandolfo joined the Board of Odyssey as an independent director and has been elected chair of the audit committee. Mr. Gandolfo has approximately 30 years of experience as a chief financial officer of multiple rapidly growing private and publicly held companies with a primary focus in the life sciences, healthcare and medical device areas. Mr. Gandolfo has had direct responsibility over capital raising, including five public offerings, financial management, mergers and acquisition transactions and SEC reporting throughout his professional career. Mr. Gandolfo is currently Chief Financial Officer of Eyenovia, Inc., a late-stage ophthalmic biopharmaceutical company. Mr. Gandolfo was Chief Financial Officer of Xtant Medical Holdings, Inc. from July 2010 through September 2017. He served as the Chief Financial Officer for Progenitor Cell Therapy LLC from January 2009 to June 2010. Prior to joining Progenitor, Mr. Gandolfo served as the Chief Financial Officer of Power Medical Interventions, Inc. from January 2007 to January 2009. Mr. Gandolfo was the Chief Financial Officer of Bioject Medical Technologies, Inc. He was also the Chief Financial Officer of Capital Access Network, Inc, from 2000 through September 2001, and Xceed, Inc. from 1999 to 2000. From 1994 to 1999, Mr. Gandolfo was Chief Financial Officer and Chief Operating Officer of Impath, Inc. From 1987 through 1994, he was Chief Financial Officer of Medical Resources, Inc. Mr. Gandolfo received his B.A. in business administration from Rutgers University. As Director, Mr. Gandolfo shall be compensated with stock in accordance with the mutual agreement of the Board’s compensation committee. 

 

 

 

 

 

PART IV

 

Item 15.

Exhibits

 

Exhibit Number		Exhibit Description
14		Code of Ethics
31.1*		Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer
32.1*		Section 1350 Certification of Chief Executive Officer
101.INS*		XBRL Instance Document
101.SCH*		XBRL Schema Document
101.CAL*		XBRL Calculation Linkbase Document
101.DEF*		XBRL Definition Linkbase Document
101.LAB*		XBRL Label Linkbase Document
101.PRE*		XBRL Presentation Linkbase Document

 

* Filed herewith.

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, as of November 13, 2020.

 

	ODYSSEY GROUP INTERNATIONAL, INC.
		By: /s/ Joseph Michael Redmond                         Joseph Michael Redmond Chief Executive Officer, President and Director (Principal Executive and Financial Officer)

 

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature		Title		Date
/s/ Joseph Michael Redmond		Chief Executive Officer, President, Director		November 13, 2020
Joseph Michael Redmond		(Principal Executive Officer)
/s/ Joseph Michael Redmond		Chief Financial Officer, Secretary, Director		November 13, 2020
Joseph Michael Redmond		(Principal Financial Officer)
/s/ Joseph Michael Redmond		Director		November 13, 2020
Joseph Michael Redmond