Our business is subject to
a number of risks that you should be aware of before making a decision to invest in our securities, as fully described under “Risk
Factors” in this prospectus. The principal factors and uncertainties that make investing in our securities risky include, among
others:
An investment in our securities
has a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below and the other information
in this prospectus. Any of the risks and uncertainties set forth herein could materially and adversely affect our business, results of
operations and financial condition, which in turn could materially and adversely affect the trading price or value of our securities.
Additional risks not currently known to us or which we consider immaterial based on information currently available to us may also materially
adversely affect us. As a result, you could lose all or part of your investment.
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We are a development stage company with little operating history, a
history of losses and we cannot assure profitability and there is substantial doubt about our ability to continue as a going concern.
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Our independent registered public accounting firm has included an explanatory paragraph relating to our
ability to continue as a going concern in its report on our audited financial statements. We may be unable to continue to operate without
the threat of liquidation for the foreseeable future.
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Raising additional capital by issuing securities or through debt financings or licensing arrangements
may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product
candidate on terms unfavorable to us.
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There are substantial inherent risks in attempting to commercialize newly developed products, and, as
a result, we may not be able to successfully develop new products.
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We will need to achieve commercial acceptance of our products, if cleared or approved, to generate revenues
and achieve profitability.
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We currently only have four product candidates, which are still in development, and we have not obtained
authorization from any regulatory agency to commercially distribute the products in any country and we may never obtain such authorizations.
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We will depend on third parties for the manufacture and distribution of our product candidates and products,
if cleared or approved, and the loss of our third-party manufacturer and distributor could harm our business.
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We may be forced to litigate to enforce or defend our intellectual
property rights, to protect our trade secrets or to determine the validity and scope of other parties’ proprietary rights.
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If our intellectual property protection is inadequate, competitors may gain access to our technology and
undermine our competitive position.
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We have and may continue to encounter substantial delays in planned clinical trials, or our planned clinical
trials for other indications may fail to demonstrate the safety and efficacy of our product candidates to the satisfaction of applicable
regulatory authorities.
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We may be substantially dependent on third parties to conduct our clinical trials.
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We may be required to suspend or discontinue clinical trials due to side effects or other safety risks
that could preclude approval of our products.
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U.S. legislative or FDA regulatory reforms may make it more difficult and costly for us to obtain regulatory
approval of our product candidates and to manufacture, market and distribute our products after marketing authorization is obtained.
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Conducting any future clinical trials of our product candidates and any future commercial sales of a product
candidate may expose us to expensive product liability claims, and we may not be able to maintain product liability insurance on reasonable
terms or at all and may be required to limit commercialization of our product candidates.
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We participate in transactions and make tax calculations for which the ultimate tax determination may
be uncertain.
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If we fail to develop or maintain an effective system of internal controls, we may not be able to accurately
report our financial results or prevent financial fraud. As a result, current and potential stockholders could lose confidence in our
financial reporting.
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If our expenses are greater than anticipated, then we will have fewer funds with which to pursue our plan
of operations and our financing requirements will be greater than anticipated.
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We are heavily dependent upon the ability and expertise of our management team and a very limited number
of employees and the loss of such individuals could have a material adverse effect on our business, operating results or financial condition.
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Investors could lose confidence in our financial reports, and the value of our common stock may be adversely
affected, if our internal controls over financial reporting are found not to be effective by management or by our independent registered
public accounting firm.
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Challenges to our tax positions in U.S. or non-U.S. jurisdictions, the interpretation and
application of recent U.S. tax legislation or other changes in U.S. or non-U.S. taxation of our operations could harm our
business, revenue and financial results.
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If our business is unsuccessful, our stockholders may lose their entire investment.
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The sale or issuance of our common stock to Lincoln Park may cause dilution and the sale of the shares of common stock acquired
by Lincoln Park, or the perception that such sales may occur, could cause the price of our common stock to fall.
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A limited public trading market exists for our common stock, which makes it difficult for our stockholders to sell their common
stock on the public markets. Any trading in our shares may have a significant effect on our stock prices.
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The sale of shares of our common stock could cause the price of our common stock to decline.
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A limited number of stockholders collectively own a significant portion of our common shares and may act, or prevent corporate
actions, to the detriment of other stockholders.
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The reverse split of our common stock could decrease our total market capitalization and increase, and may continue to increase,
the volatility of our stock price.
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The reverse stock split could increase our authorized but unissued shares of common stock, which could negatively
impact a potential investor.
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Trading of our common stock could be sporadic, and the price of our common stock may be volatile; we caution you as to the highly
illiquid nature of an investment in our shares.
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RISK FACTORS
An investment in our securities
has a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below and the other information
in this prospectus. Any of the risks and uncertainties set forth herein could materially and adversely affect our business, results of
operations and financial condition, which in turn could materially and adversely affect the trading price or value of our securities.
Additional risks not currently known to us or which we consider immaterial based on information currently available to us may also materially
adversely affect us. As a result, you could lose all or part of your investment.
Risks Related to Our Financial Position and
Need for Capital
We are a development stage company
with little operating history, a history of losses and we cannot assure profitability.
We have been incurring operating
losses and cash flow deficits since the inception of such operations. Our lack of operating history, and the lack of historical pro forma
combined financial information, makes it difficult for investors to evaluate our prospects for success. Prospective investors should consider
the risks and difficulties we might encounter, especially given our lack of an operating history or historical pro forma combined financial
information. There is no assurance that we will be successful, and the likelihood of success must be considered in light of its relatively
early stage of operations. As we have not begun to generate revenue, it is extremely difficult to make accurate predictions and forecasts
of our finances. There is no guarantee that our products or services will be attractive to potential consumers.
There is substantial doubt about our
ability to continue as a going concern.
We are in the development
stage and are currently seeking additional capital, mergers, acquisitions, joint ventures, partnerships and other business arrangements
to expand our product offerings and generate revenue. Our ability to continue as a going concern is dependent upon our ability in the
future to generate revenue and achieve profitable operations and, in the meantime, to obtain the necessary financing to meet our obligations
and repay our liabilities when they become due. External financing, predominantly by the issuance of equity and debt, will be sought to
finance our operations; however, there can be no certainty that such funds will be available at terms acceptable to us. These conditions
indicate the existence of material uncertainties that may cast significant doubt about our ability to continue as a going concern.
We have not generated any
revenue or profit from operations since our inception. We expect that our operating expenses will increase over the next twenty-four months
in order to continue our development activities. Based on our average monthly expenses and current burn rate, we estimate that our cash
on hand will not be able to support our operations through the balance of this calendar year. This amount could increase if we encounter
difficulties that we cannot anticipate at this time or if we acquire other businesses. Should this amount not be sufficient to support
our continuing operations, we do not expect to be able to raise any additional capital through debt financing from traditional lending
sources since we are not currently generating a profit from operations. Therefore, we only expect to raise money through equity financing
via the sale of our common stock or equity-linked securities such as convertible debt. We are currently in discussions with a number of
institutional investors who could provide the capital required for our ongoing operations. If we cannot raise the money that we need in
order to continue to operate our business beyond the period indicated above, we will be forced to delay, scale back or eliminate some
or all of our proposed operations. If any of these were to occur, there is a substantial risk that our business would fail. If we are
unsuccessful in raising additional financing, we may need to curtail, discontinue, or cease operations.
Our actual financial position and
results of operations may differ materially from management’s expectations.
We have experienced some changes
in our operating plans and certain delays in our plans. As a result, our revenue, net loss and cash flow may differ materially from our
projections. The process for estimating our revenue, net loss and cash flow requires the use of estimates and assumptions. These estimates
and assumptions may be revised as additional information becomes available and as additional analyses are performed. In addition, the
assumptions used in planning may not prove to be accurate, and other factors may affect our financial condition or results of operations.
We expect to incur significant
ongoing costs and obligations related to our investment in infrastructure and growth and for regulatory compliance, which could have a
material adverse impact on our results of operations, financial condition and cash flows. In addition, future changes in regulations,
more vigorous enforcement thereof or other unanticipated events could require extensive changes to our operations, increased compliance
costs or give rise to material liabilities, which could have a material adverse effect on our business, results of operations and financial
condition. Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset
our higher operating expenses. We may incur significant losses in the future for a number of reasons, including unforeseen expenses, difficulties,
complications and delays, and other unknown events. If we are unable to achieve and sustain profitability, the market price of our Common
Shares may significantly decrease.
Our limited operating history creates
substantial uncertainty about future results.
We have limited operating
history and operations on which to base expectations regarding our future results and performance. To succeed, we must do most, if not
all, of the following:
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raise corporate equity to support our operating costs and to have sufficient funds to develop, market
and sell our products;
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locate strategic licensing and commercialization partners;
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obtain proper regulatory clearances domestically and abroad;
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attract, integrate, retain and motivate qualified management and sales personnel;
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successfully execute our business strategies;
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respond appropriately and timely to competitive developments; and
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develop, enhance, promote and carefully manage our corporate identity.
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Our business will suffer if
we are unable to accomplish these and other important business objectives. We are uncertain as to when, or whether, we will fully implement
our contemplated business plan and strategy or become profitable.
Because we may never have net income
from our operations, our business may fail.
We have no history of profitability
from operations. There can be no assurance that we will ever operate profitably. Our success is significantly dependent on uncertain events,
including successful developing our products, establishing satisfactory manufacturing arrangements and processes, and distributing and
selling our products. If we are unable to generate significant revenues from sales of our products, we will not be able to earn profits
or continue operations. We can provide no assurance that we will generate any revenues or ever achieve profitability. If we are unsuccessful
in addressing these risks, our business will fail, and investors may lose all of their investment in our Company.
Our ability to generate positive cash
flows is uncertain.
To develop and expand our
business, we will need to make significant up-front investments in our manufacturing capacity and incur research and development, sales
and marketing, and general and administrative expenses. In addition, our growth will require a significant investment in working capital.
Our business will require significant amounts of working capital to meet our project requirements and support our growth. We cannot provide
any assurance that we will be able to raise the capital necessary to meet these requirements. If adequate funds are not available or are
not available on satisfactory terms, we may be required to significantly curtail our operations and may not be able to fund our current
production requirements, let alone fund expansion, take advantage of unanticipated acquisition opportunities, develop or enhance our products,
and respond to competitive pressures. Any failure to obtain such additional financing could have a material adverse effect on our business,
results of operations, and financial condition.
We need to raise additional funds,
and such funds may not be available on acceptable terms.
We may consider issuing additional
debt or equity securities in the future to fund our business plan, for general corporate purposes or for potential acquisitions or investments.
If we issue equity or convertible debt securities to raise additional funds, our existing stockholders may experience dilution, and the
new equity or debt securities may have rights, preferences, and privileges senior to those of our existing stockholders. If we incur additional
debt, it may increase our leverage relative to our earnings or to our equity capitalization, requiring us to pay additional interest expenses.
We may not be able to obtain financing on favorable terms, in which case, we may not be able to develop or enhance our products, execute
our business plan, take advantage of future opportunities, or respond to competitive pressures.
We may have difficulty raising additional
capital, which could deprive us of the resources necessary to implement our business plan, which would adversely affect our business,
results of operation and financial condition.
We expect to continue devoting
significant capital resources to fund research and development and marketing. In order to support the initiatives envisioned in our business
plan, we will need to raise additional funds through the sale of assets, public or private debt or equity financing, collaborative relationships
or other arrangements. If our operations expand faster or at a higher rate than currently anticipated, we may require additional capital
sooner than we expect. We are unable to provide any assurance or guarantee that additional capital will be available when needed by our
company or that such capital will be available under terms acceptable to our company or on a timely basis.
Our ability to raise additional
financing depends on many factors beyond our control, including the state of capital markets, the market price of our common stock and
the development or prospects for development of competitive products by others. Because our common stock is not listed on a major stock
market, many investors may not be willing or allowed to purchase it or may demand steep discounts. If additional funds are raised through
the issuance of equity, convertible debt or similar securities of our company, the percentage of ownership of our company by our company’s
stockholders will be reduced, our company’s stockholders may experience additional dilution upon conversion, and such securities
may have rights or preferences senior to those of our common stock. The preferential rights granted to the providers of such additional
financing may include preferential rights to payments of dividends, super voting rights, a liquidation preference, protective provisions
preventing certain corporate actions without the consent of the fund providers, or a combination thereof. We are unable to provide any
assurance that additional financing will be available on terms favorable to us or at all.
If adequate funds are not
available or are not available on acceptable terms, our ability to fund our expansion, take advantage of potential opportunities, would
be limited significantly. We will also scale back or delay implementation of research and development of new products. Thus, the unavailability
of capital could substantially harm our business, results of operations and financial condition.
The capital requirements necessary
to implement our business plan initiatives could pose additional risks to our business and stockholders.
We require additional debt
or equity financing to implement our business plan and marketing strategy. Since the terms and availability of such financing depend,
to a large degree, on general economic conditions and third parties over which we have no control, we can give no assurance that we will
obtain the needed financing or that we will obtain such financing on attractive terms. In addition, our ability to obtain financing depends
on a number of other factors, many of which also are beyond our control, such as interest rates and national and local economic conditions.
If the cost of obtaining needed financing is too high or the terms of such financing are otherwise unacceptable in relation to the strategic
opportunity we are presented with, then we may decide to forego that opportunity. Additional indebtedness could increase our leverage
and make us more vulnerable to economic downturns and may limit our ability to withstand competitive pressures. Additional equity financing
could result in dilution to our stockholders.
Our independent registered public
accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited
financial statements.
Our independent registered
public accounting firm has issued its audit opinion on our consolidated financial statements appearing in our Annual Report on Form 10-K
for the fiscal year ended July 31, 2021, including an explanatory paragraph as to substantial doubt with respect to our ability to continue
as a going concern. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally
accepted in the United States of America, assuming we will continue as a going concern, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. For the fiscal year ended July 31, 2021, our net loss was $16,883,095, and
we had an accumulated deficit of $45,733,823. As of July 31, 2021, we had current liabilities of $3,377,887 and current assets of $610,119
and a working capital deficit of $2,767,768. For the fiscal year ended July 31, 2020, our net loss was $4,348,855 and, as of July 31,
2020, we had an accumulated deficit of $28,850,728. As of July 31, 2020, we had current liabilities of $707,062, and current assets of
$99,619 and a working capital deficit of $657,443. These factors raise substantial doubt about our ability to continue as a going concern
which is dependent on our ability to raise the required additional capital or debt financing to meet short- and long-term operating requirements.
We may also encounter business endeavors that require significant cash commitments or unanticipated problems or expenses that could result
in a need for additional cash. Our ability to continue as a going concern is dependent upon raising capital from financing transactions.
To stay in business, we will need to raise additional capital through public or private sales of our securities or debt financing. In
the past, we have financed our operations by issuing secured and unsecured convertible debt and equity securities in private placements,
in some cases with equity incentives for the investor in the form of warrants to purchase our common stock, and we have borrowed from
related parties. We have sought, and will continue to seek, various sources of financing. If we raise additional funds through the issuance
of equity or convertible debt securities, the percentage ownership of our current stockholders could be reduced, and such securities might
have rights, preferences, or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or
available at all. If adequate funds are not available on acceptable terms, we may not be able to take advantage of prospective business
endeavors or opportunities, which could significantly and materially restrict our operations. If we are unable to obtain necessary capital,
we may have to cease operations. There are no additional commitments from anyone to provide us with financing. We can provide no assurance
as to whether our capital raising efforts will be successful or as to when, or if, we will be profitable in the future. Even if we achieve
profitability, we may not be able to sustain such profitability. If we are unable to obtain financing or achieve and sustain profitability,
we may have to suspend operations or sell assets, making us unable to execute our business plan. Failure to become and remain profitable
may adversely affect the market price of our common stock and our ability to raise capital and continue operations. For additional information,
see Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Going Concern.”
Raising additional capital by issuing
securities or through debt financings or licensing arrangements may cause dilution to our existing stockholders, restrict our operations
or require us to relinquish rights to our technologies or product candidate on terms unfavorable to us.
To the extent that we raise
additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of
such securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing, if available,
may involve agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring additional
debt, making capital expenditures or declaring dividends. If we raise additional funds through strategic partnerships with third parties,
we may have to relinquish valuable rights to our technologies or product candidate, future revenue streams, research programs or product
candidate, or otherwise grant licenses on terms that are not favorable to us. If we are unable to raise additional capital when needed,
we may be required to delay, limit, reduce or terminate our product development or commercialization efforts for our product candidate
or our preclinical product candidates, or grant rights to develop and market potential future product candidates that we would otherwise
prefer to develop and market ourselves. Any of these events could adversely affect our ability to achieve our product development and
commercialization goals and have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Our Technology, Development
and Commercialization of our Product Candidates
Our success depends on the viability
of our business model, which is unproven and may be unfeasible.
Our revenue and income potential
are unproven, and the business model of Odyssey is new. Our new business model is based on a variety of assumptions based on a growing
trend in the health care systems in the United States and many other countries, where we are seeing a movement towards preventative medicine
that is directly decreasing general healthcare costs. The CardioMap®, through its screening and predictive values, is a tool, if approved
or cleared, might be implemented in this preventative approach. Considering heart disease-caused deaths are still the number one cause
of death and one of the most important health care costs factors, the CardioMap® device has potential value in any medical practice.
If approved or cleared for marketing, it could be an ideal device, allowing insurance companies to potentially cut costs through early
diagnostic and preventative care. These assumptions may not reflect the business and market conditions we actually face. As a result,
our operating results could differ materially from those projected under our business model, and our business model may prove to be unprofitable.
There is no guarantee that the device will be approved or cleared for commercial use.
The Save a Life choking rescue
device is in the development stage and has not been approved or cleared for commercial use. Further development is required, and the final
product will require FDA approval or clearance. There is no guarantee that the device will be approved or cleared for commercial use.
The product candidate
PRV-001, for which we own 50% of the intellectual property, will be developed by Prevacus and is in its early stages and
will require extensive testing and clinical trials before it is commercialized. There is no guarantee that PRV-001 will be approved
for commercial use.
The product candidate PRV-002
being developed by us and is in its early stages and will require extensive testing and clinical trials before it is commercialized. There
is no guarantee that PRV-002 will be approved for commercial use.
If we fail to obtain marketing
authorization for our product candidates, our business, financial condition, and results of operations will be materially adversely affected.
There are substantial inherent risks
in attempting to commercialize newly developed products, and, as a result, we may not be able to successfully develop new products.
We plan to conduct research
and development of health-related technologies. However, commercial feasibility and acceptance of such product candidates are unknown.
Scientific research and development require significant amounts of capital and takes an extremely long time to reach commercial viability,
if at all. During the research and development process, we may experience technological barriers that we may be unable to overcome. Because
of these uncertainties, it is possible that some of our future product candidates will never be successfully developed. If we are unable
to successfully develop new products, we may be unable to generate new revenue sources or build a sustainable or profitable business.
We will need to achieve commercial
acceptance of our products, if cleared or approved, to generate revenues and achieve profitability.
Superior competitive products
may be introduced, or customer needs may change, which would diminish or extinguish the uses for our products, if cleared or approved.
We cannot predict when significant commercial market acceptance for our products, if cleared or approved, will develop, if at all, and
we cannot reliably estimate the projected size of any such potential market. If markets fail to accept our products, then we may not be
able to generate revenues from them. Our revenue growth and achievement of profitability will depend substantially on our ability to introduce
new products that are accepted by customers. If we are unable to cost-effectively achieve acceptance of our products by customers, or
if our products do not achieve wide market acceptance, then our business will be materially and adversely affected.
We currently only have four product
candidates, which are still in development, and we have not obtained authorization from any regulatory agency to commercially distribute
the products in any country and we may never obtain such authorizations.
We currently have no products
authorized for commercial distribution in either the United States, Europe or any other country. We are developing the devices and pharmaceutical
drugs which require regulatory clearance or approvals, we cannot begin marketing and selling our product candidates until we obtain applicable
authorizations from the respective regulatory agency. The process of obtaining regulatory authorization is expensive and time-consuming
and can vary substantially based upon, among other things, the type, complexity and novelty of a product candidate. Changes in regulatory
policy, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product
application may cause delays in the authorization of a product candidate or rejection of a regulatory application altogether.
The FDA has substantial discretion
in the review process and may refuse to accept our application or may decide that our data are insufficient to grant the request and require
additional pre-clinical, clinical, or other studies. In addition, varying interpretations of the data obtained from pre-clinical and
clinical testing could delay, limit, or prevent marketing authorization from the FDA or other regulatory authorities. Any marketing authorization
from the FDA we ultimately obtain may be limited or subject to restrictions or post-market commitments that render the product candidate
not commercially viable. If our attempts to obtain marketing authorization are unsuccessful, we may be unable to generate sufficient revenue
to sustain and grow our business, and our business, financial condition, and results of operations will be materially adversely affected.
We face significant competition in
an environment of rapid technological change, and our competitors may develop products that are more advanced or more effective than ours
are which may adversely affect our financial condition and our ability to successfully market our products.
Our competitors in the industry
are predominantly large companies with longer operating histories, with significantly easier access to capital and other resources and
an established product pipeline than us. There can be no assurance that we will be able to establish ourselves in our targeted markets,
or, if established, that we will be able to maintain our market position, if any. Our commercial opportunity may be reduced if our competitors
develop new or improved products that are more convenient, more effective or less expensive than our product candidates are. Competitors
also may obtain FDA or other regulatory marketing authorization for their products more rapidly or earlier than we may obtain marketing
authorization for ours, which could result in our competitors establishing a strong market position before we are able to enter the market.
Risks Related to Our Reliance on Third Parties
We expect to rely on third parties
for the worldwide marketing and distribution of our product candidates, who may not be successful in selling our products, if cleared
or approved.
We currently do not have adequate
resources to market and distribute any of our products, if cleared or approved, worldwide and expect to engage third-party marketing and
distribution companies to perform these tasks. While we believe that distribution partners will be available, we cannot assure you that
the distribution partners, if any, will succeed in marketing our products on a global basis. We may not be able to maintain satisfactory
arrangements with our marketing and distribution partners, who may not devote adequate resources to selling our products. If this happens,
we may not be able to successfully market our products, which would decrease or eliminate our ability to generate revenues.
Our products, if cleared or approved,
may be displaced by superior products developed by third parties.
The healthcare industry is
constantly undergoing rapid and significant change. Third parties may succeed in developing or marketing products that are more effective
than those developed or marketed by us or that would make our products obsolete or non-competitive. Additionally, researchers could develop
new procedures and medications that replace or reduce the use of our products. Accordingly, our success will depend, in part, on our ability
to respond quickly to medical and technological changes through the development and introduction of new products. We may not have the
resources to do this. If our products become obsolete and our efforts to develop new products do not result in commercially successful
products, then our sales and revenues will decline.
We are, and will continue to be, dependent
in significant part on outside scientists and third-party research institutions for our research and development in order to be able to
commercialize our product candidates.
We currently have a limited
number of employees and resources available to perform the research and development necessary to commercialize our product candidates
and potential future product candidates. We therefore rely, and will continue to rely, on third-party research institutions, collaborators
and consultants for this capability.
We will depend on third parties for
the manufacture and distribution of our product candidates and products, if cleared or approved, and the loss of our third-party manufacturer
and distributor could harm our business.
We will depend on our third-party
contract manufacturing partner to manufacture and supply our devices and drugs for clinical and commercial purposes. Additionally, we
will depend on a different third-party distribution partner to warehouse and ship our products, if cleared or approved, to customers.
Our reliance on a third-party manufacturer and a distribution provider to supply us with our drug and devices and to provide such other
distribution services exposes us to risks that could delay our sales or result in higher costs or lost product revenues. In addition,
manufacturers could encounter difficulties, including, but not limited to, those caused by the COVID-19 pandemic, in securing
long-lead time components, achieving volume production, quality control and quality assurance or suffer shortages of qualified personnel,
which could result in their inability to manufacture sufficient quantities of our commercially available product, if cleared or approved,
to meet market demand. Our third-party manufacturer or distributor may also fail to follow and remain in compliance with FDA regulations
which could lead to significant delays in the availability of materials for our product candidates or products, if cleared or approved
and/or FDA enforcement actions against them and/or us.
If we are unable to obtain
adequate supplies of our product candidates and products that meet our specifications and quality standards, it will be difficult for
us to compete effectively.
We may not be able to build an effective
distribution network for our products, if cleared or approved.
We currently have very few
employees and we may either build internal capabilities or rely on distributors to sell our products, if cleared or approved. We cannot
assure you that we will succeed in building an internal team or entering into and maintaining productive arrangements with an adequate
number of distributors that are sufficiently committed to selling our products, if cleared or approved. The establishment of a distribution
network is expensive and time consuming. As we launch new products and increase our marketing effort with respect to existing products,
we will need to continue to hire, train, retain and motivate skilled resources with significant technical knowledge. In addition, the
commissions we pay for product sales could increase over time, which would result in higher sales and marketing expenses. Furthermore,
if we were to rely on distributors, the current and potential distributors may market and sell the products of our competitors. Even if
the distributors market and sell our products, our competitors may be able, by offering higher commission payments or other incentives,
to persuade these distributors to reduce or terminate their sales and marketing efforts related to our products. The distributors may
also help competitors solicit business from our existing customers. Some of our independent distributors may likely account for a significant
portion of our sales volume, and, if we were to lose them, our sales could be adversely affected. Even if we engage and maintain suitable
relationships with an adequate number of distributors, they may not generate revenue as quickly as we expect them to, commit the necessary
resources to effectively market and sell our products, or ultimately succeed in selling our products.
Risks Related to Intellectual Property
We may be unable to adequately protect
its proprietary and intellectual property rights.
Our ability to compete may
depend on the superiority, uniqueness and value of any intellectual property and technology that we may develop in the future. We intend
to protect our proprietary rights by relying on a combination of patent, trademark, copyright and trade secret laws, confidentiality agreements
with its employees and third parties, and protective contractual provisions. Despite these efforts, any of the following occurrences may
reduce the value of any of our intellectual property:
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The market for our products and services may depend to a significant extent upon the goodwill associated
with its trademarks and trade names, and its ability to register its intellectual property under U.S. federal and state law.
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Patents in the medical device industry involve complex legal and scientific questions and patent protection
may not be available for some or any products;
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Our applications for trademarks and copyrights relating to our business may not be granted and, if granted,
may be challenged or invalidated.
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Issued patents, trademarks and registered copyrights may not provide us with competitive advantages.
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Our efforts to protect our intellectual property rights may not be effective in preventing misappropriation
of any of our products or intellectual property.
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Our efforts may not prevent the development and design by others of products similar to, competitive with,
or superior to, those we develop.
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Another party may obtain a blocking patent and we would need to either obtain a license or design around
the patent in order to continue to offer the contested feature or service in our products.
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The expiration of patent or other intellectual property protections for any assets owned by us could result
in significant competition, potentially at any time and without notice, resulting in a significant reduction in sales. The effect of the
loss of these protections on us and our financial results will depend, among other things, upon the nature of the market and the position
of our products in the market from time to time, the growth of the market, the complexities and economics of manufacturing a competitive
product and regulatory approval requirements but the impact could be material and adverse. We may be forced to litigate to defend our
intellectual property rights, or to defend against claims by third parties against us relating to intellectual property rights.
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We may not be able to protect intellectual
property that we hope to acquire, which could adversely affect our business.
The companies that we hope
to acquire may rely on patent, trademark, trade secret, and copyright protection to protect their technology. We believe that technological
leadership can be achieved through additional factors such as the technological and creative skills of our personnel, new product developments,
frequent product enhancements, name recognition, and reliable product maintenance. Nevertheless, our ability to compete effectively depends
in part on our ability to develop and maintain proprietary aspects of our technology, such as patents. We may not secure future patents;
and patents that we may secure may become invalid or may not provide meaningful protection for our product innovations. In addition, the
laws of some foreign countries do not protect intellectual property rights to the same extent as the United States. Furthermore, there
can be no assurance that competitors will not independently develop similar products, “reverse engineer” our products, or,
if patents are issued to us, design around such patents. We also expect to rely upon a combination of copyright, trademark, trade secret,
and other intellectual property laws to protect our proprietary rights by entering into confidentiality agreements with our employees,
consultants, and vendors, and by controlling access to and distribution of our technology, documentation and other proprietary information.
There can be no assurance, however, that the steps to be taken by us will not be challenged, invalidated, or circumvented, or that the
rights granted thereunder will provide a competitive advantage to us. Any such circumstance could have a material adverse effect on our
business, financial condition and results of operations. While we are not currently engaged in any intellectual property litigation or
proceedings, there can be no assurance that we will not become so involved in the future or that our products do not infringe any intellectual
property or other proprietary right of any third party. Such litigation could result in substantial costs, the diversion of resources
and personnel, and significant liabilities to third parties, any of which could have a material adverse effect on our business.
We may not be able to protect our
trade names and domain names.
We may not be able to protect
our trade names and domain names against all infringers, which could decrease the value of our brand name and proprietary rights. We currently
hold the Internet domain name Odyssey Group International, Inc. Domain names are generally regulated by Internet regulatory bodies, are
subject to change, and, in some cases, may be superseded, in some cases by-laws, rules and regulations governing the registration of trade
names and trademarks with the United States Patent and Trademark Office as well as ascertain other common law rights. If the domain registrars
are changed, if new ones are created, or if we are deemed to be infringing upon another’s trade name or trademark, we may be unable
to prevent third parties from acquiring or using, as the case may be, our domain name, trade names or trademarks, which could adversely
affect our brand name and other proprietary rights.
We may be forced to litigate to
enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of other
parties’ proprietary rights.
Any such litigation could
be very costly and could distract management from focusing on operating our business. The existence and/or outcome of any such litigation
could harm our business. We may become subject to litigation, including for possible product liability claims, which may have a material
adverse effect on our reputation, business, results from operations, and financial condition. We may be named as a defendant in a lawsuit
or regulatory action. We may also incur uninsured losses for liabilities which arise in the ordinary course of business, or which are
unforeseen, including, but not limited to, employment liability and business loss claims. Any such losses could have a material adverse
effect on our business, results of operations, sales, cash flow or financial condition. Further, the administration of medical substances
to humans can result in product liability claims by consumers. Product liability claims can be expensive, difficult to defend and may
result in large judgments or settlements against us. We may not be able to obtain or maintain adequate insurance or other protection against
potential liabilities arising from product sales. Product liability claims could also result in negative perception of our products or
other reputational damage which could have a material adverse effect on our business, results of operations, sales, cash flow or financial
condition.
If our intellectual property protection
is inadequate, competitors may gain access to our technology and undermine our competitive position.
We regard our intended and
future intellectual property as important to our success, and we intend to rely on patent law to protect our proprietary rights. Despite
our precautions, unauthorized third parties may copy certain portions of our devices or products or reverse engineer or obtain and use
information that we regard as proprietary. We may seek additional patents in the future. We do not know if any future patent application
will be issued with the scope of the claims, we seek, if at all or whether any patents we receive will be challenged or invalidated. Thus,
we cannot assure you that any intellectual property rights that we may receive can be successfully asserted in the future or that they
will not be invalidated, circumvented or challenged. In addition, the laws of some foreign countries do not protect proprietary rights
to the same extent, as do the laws of the United States. Our means of protecting any proprietary rights we may receive in the United States
or abroad may not be adequate and competitors may independently develop a similar technology. Any failure to protect our proprietary information
and any successful intellectual property challenges or infringement proceedings against us could have a material adverse effect on our
business, financial condition and results of operations.
We may be subject to various litigation
claims and legal proceedings, including intellectual property litigation, such as patent infringement claims, which could adversely affect
our business.
We, as well as certain of
our directors and officers, may be subject to claims or lawsuits. These lawsuits may result in significant legal fees and expenses and
could divert management’s time and other resources. If the claims contained in these lawsuits are successfully asserted against
us, we could be liable for damages and be required to alter or cease certain of our business practices or product lines. Any of these
outcomes could cause our business, financial performance and cash position to be negatively impacted.
Additionally, our commercial
success will also depend, in part, on not infringing on the patents or proprietary rights of others. There can be no assurance that the
technologies and products used or developed by us will not infringe such rights. If such infringement occurs and we are not able to obtain
a license from the relevant third party, we will not be able to continue the development, manufacture, use, or sale of any such infringing
technology or product. There can be no assurance that necessary licenses to third-party technology will be available at all or on commercially
reasonable terms. In some cases, litigation or other proceedings may be necessary to defend against or assert claims of infringement or
to determine the scope and validity of the proprietary rights of third parties. Any potential litigation could result in substantial costs
to, and diversion of, our resources and could have a material and adverse impact on us.
An adverse outcome in any
such litigation or proceeding could subject us to significant liabilities, require us to cease using the subject technology or require
us to license the subject technology from the third party, all of which could have a material adverse effect on our business.
Risks Related to Government Regulation
Our products are subject to substantial
federal and state regulations.
Our research and development
activities and the manufacturing and marketing of our product candidates and products, if cleared or approved, are subject to the laws,
regulations, and guidelines in the United States and other countries in which the products will be marketed, if cleared or approved. Specifically,
in the United States, the FDA regulates, among other areas, new medical device clearances and approvals and the development and commercialization
of prescription drugs.
Obtaining FDA marketing authorization
will be costly, may result in time-consuming delays and will subject us to ongoing compliance costs and regulatory risk for non-compliance.
Obtaining FDA marketing authorization,
through clearance, or pre-market approval (“PMA”) for medical devices and approval of drugs can be expensive and uncertain,
can take years, and require detailed and comprehensive scientific and clinical data. Notwithstanding the expense, these efforts may never
result in FDA authorization. Even if we were to obtain regulatory authorization, it may not be for the uses we intended or which are commercially
attractive, in which case we would not be permitted to market our product for those uses.
The FDA can delay, limit or
deny authorization of a device or drug for many reasons, including:
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we may not be able to demonstrate to the FDA’s satisfaction that our product candidate is safe and
effective for its intended users;
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the data from our pre-clinical studies and clinical trials may be insufficient to support authorization,
where required; and
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the manufacturing process or facilities we use may not meet applicable requirements.
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In addition, the FDA may change
its authorization policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay
marketing authorization of our product candidates under development. Any delay in, or failure to receive or maintain clearance or approval
for our product candidates could prevent us from generating revenue from our products, if cleared or approved, and adversely affect our
business operations and financial results.
Even if granted, a 510(k)
clearance, de novo classification and clearance, or pre-market approval for any future product may place substantial restrictions
on how our device or drug is marketed or sold, and FDA will continue to place considerable restrictions on our products and operations.
The manufacture, distribution and sale of medical devices and drugs must comply with extensive laws and regulations, including those relating
to registration and listing, labeling, marketing, complaint handling, adverse event and medical device reporting, reporting of corrections
and removals, and import and export. If we or our facilities or those of our manufacturers or suppliers are found to be in violation of
applicable laws and regulations, or if we or our manufacturers or suppliers fail to take satisfactory corrective action in response to
an adverse inspection, the regulatory authority could take enforcement action, including any of the following sanctions:
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untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
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customer notifications of repair, replacement, refunds, detention or seizure of our products;
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product recalls;
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operating restrictions or partial suspension or total shutdown of production;
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refusing or delaying requests for marketing authorization of new products or modified products;
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withdrawing marketing authorizations that have already been granted;
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refusing to provide Certificates for Foreign Government;
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refusing to grant export approval for our products; or
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pursuing criminal prosecution.
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Additionally, the FDA and
other regulatory authorities have broad enforcement powers. Regulatory enforcement or inquiries, or other increased scrutiny on us, could
affect the perceived safety and efficacy of our product candidate and dissuade our customers from using our product candidate, if and
when it is authorized for marketing.
We have and may continue to encounter
substantial delays in planned clinical trials, or our planned clinical trials for other indications may fail to demonstrate the safety
and efficacy of our product candidates to the satisfaction of applicable regulatory authorities.
While we currently have no
ongoing clinical trials, we will need to conduct further clinical trials. Clinical trials are complex, expensive, time consuming, uncertain
as to outcome and are subject to substantial and unanticipated delays. Before we may begin clinical trials, if required, for one of our
medical device product candidates and if the clinical trial is determined to present a significant risk, we will be required to submit
and obtain approval for an investigational device exemption, or IDE, that describes, among other things, the manufacture of, and controls
for, the device and a complete investigational plan. Clinical trials generally involve a substantial number of patients in a multi-year
study.
For our pharmaceutical product
candidates, we are required to submit an Investigational New Drug Application, or IND, the contents of which are subject to discussions
with FDA and include, among other things, results of preclinical studies and other testing, manufacturing information, proposed clinical
trial protocols and general investigational plan. We cannot begin any clinical trials in the United States until thirty (30) days after
the IND has been accepted by FDA. Clinical trials involve the administration of the investigational product to human subjects under the
supervision of qualified investigators in accordance with current Good Clinical Practices, or cGCPs, which include the requirement that
all research subjects provide their informed consent for their participation in any clinical study. Clinical trials are conducted under
protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness
criteria to be evaluated. A separate submission to the existing IND must be made for each successive clinical trial conducted during product
development and for any subsequent protocol amendments. Furthermore, an independent Investigational Review Board, or IRB, for each site
proposing to conduct the clinical trial must review and approve the plan for any clinical trial and its informed consent form before the
clinical trial begins at that site and must monitor the study until completed. Regulatory authorities, the IRB or the sponsor may suspend
a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk
or that the clinical trial is unlikely to meet its stated objectives. Some studies also include oversight by an independent group of qualified
experts organized by the clinical study sponsor, known as a data safety monitoring board, which may review data and endpoints at designated
check points, make recommendations and/or halt the clinical trial if it determines that there is an unacceptable safety risk for subjects
or other grounds, such as no demonstration of efficacy. There are also requirements governing the reporting of ongoing clinical studies
and clinical study results to public registries.
Human clinical trials are
typically conducted in three sequential phases that may overlap or be combined:
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Phase One: The product candidate is initially introduced into healthy human subjects or patients with
the target disease or condition. These studies are designed to test the safety, dosage tolerance, absorption, metabolism, and distribution
of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence
on effectiveness. In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently
toxic to ethically administer to healthy volunteers, the initial human testing;
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Phase Two: The product candidate is administered to a limited patient population with a specified disease
or condition to evaluate the preliminary efficacy, optimal dosages, and dosing schedule and to identify possible adverse side effects
and safety risks. Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning;
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Phase Three: The product candidate is administered to an expanded patient population to further evaluate
dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically
dispersed clinical trial sites. These clinical trials are intended to establish the overall risk.
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Post-approval clinical trials, sometimes referred to as Phase 4 studies, may be conducted after initial
marketing approval. These clinical trials are used to gain additional experience from the treatment of patients in the intended therapeutic
indication. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA.
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Because we do not have the
infrastructure necessary to conduct clinical trials, we will have to hire one or more contract research organizations, or CROs, to conduct
trials on our behalf. CRO contract negotiations may be costly and time consuming and we will rely heavily on the CRO to ensure that our
trials are conducted in accordance with regulatory and industry standards. We may encounter problems with our clinical trials and any
of those problems could cause us or the FDA to suspend those trials or delay the analysis of the data derived from them. Moreover, any
failure to abide by the applicable regulatory requirements by us, our CROs, and/or clinical trial sites may result in regulatory enforcement
action against such third parties or us.
We cannot guarantee that clinical
trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage
of testing. Delays, including, but not limited those caused by the COVID-19 pandemic, can be costly and could negatively affect
our ability to complete a clinical trial and may allow our competitors to bring products to market before we do, which could impair our
ability to receive marketing authorization and successfully commercialize our products. If we are unable to complete such planned clinical
trials, or are unsuccessful in doing so, we may be unable to advance our product candidates to regulatory authorization and commercialization,
which would harm our business, financial condition, results of operations.
We may be substantially dependent
on third parties to conduct our clinical trials.
Since we may conduct clinical
trials to obtain FDA marketing authorization, we will need to rely heavily on third parties over the course of our clinical trials, and
as a result will have limited control over the clinical investigators and limited visibility into their day-to-day activities.
Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol and legal,
regulatory and scientific standards, and our reliance on third parties does not relieve us of our regulatory responsibilities. These third
parties and we are required to comply with current good clinical practices, or cGCPs, which are regulations and guidelines enforced by
the FDA and comparable foreign regulatory authorities for product candidates in clinical development. Regulatory authorities enforce these
cGCPs through periodic inspections of trial sponsors, principal investigators, and trial sites. If we or any of these third parties fail
to comply with applicable cGCP regulations, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or
comparable foreign regulatory authorities may require us to perform additional nonclinical or clinical trials before approving our marketing
applications or may subject them or us to regulatory enforcement actions. We cannot be certain that, upon inspection, such regulatory
authorities will determine that any of our clinical trials comply with the cGCP regulations. In addition, our clinical trials may be required
to be conducted with a large number of test patients. Our failure or any failure by these third parties to comply with these regulations
or to recruit a sufficient number of patients may require us to repeat clinical trials, which would delay the regulatory marketing authorization
process. Moreover, our business may be implicated if any of these third parties violates federal or state fraud and abuse or false claims
laws and regulations or healthcare privacy and security laws.
Any third parties conducting
our clinical trials are not and will not be our employees and, except for remedies available to us under our agreements with such third
parties, we cannot control whether or not they devote sufficient time and resources to our ongoing preclinical, clinical, and nonclinical
programs. These third parties may also have relationships with other commercial entities, including our competitors, for whom they may
also be conducting clinical studies or other development activities, which could affect their performance on our behalf. If these third
parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced,
or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or
regulatory requirements or for other reasons, our clinical trials may be extended, delayed, or terminated and we may not be able to complete
development of, obtain regulatory marketing authorization of or successfully commercialize our product candidate. As a result, our financial
results and the commercial prospects for our product candidate would be harmed, our costs could increase, and our ability to generate
revenue could be delayed.
If any of our relationships
terminate with these third-party CROs, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable
terms. Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural
transition period when a new CRO begins work. As a result, delays occur, which can materially affect our ability to meet our desired clinical
development timelines. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter
similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business,
financial condition, and prospects.
We may be required to suspend or discontinue
clinical trials due to side effects or other safety risks that could preclude approval of our products.
Our clinical trials may be
suspended at any time for a number of reasons. We may voluntarily suspend or terminate our clinical trials if at any time we believe that
they present an unacceptable risk to participants. In addition, regulatory agencies may order the temporary or permanent discontinuation
of our clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatory
requirements or that they present an unacceptable safety risk to participants.
If we are unable to obtain a reimbursement
code from the U.S. Department of Health and Human Services so that our devices or drugs, following receipt of marketing authorization
is covered under Medicare and Medicaid, this could have a negative impact on our intended sales and would have a material adverse effect
on our business, financial condition and operating results.
We plan to submit an application
to the U.S. Department of Health and Human Services for a reimbursement code so that our devices and drugs are covered under Medicare
and Medicaid following receipt of marketing authorization. However, there can be no assurance that our application will be successful,
or that we will be able to obtain a reimbursement code in a timely manner. In the event that we do not obtain a reimbursement, our customers
may be unable to obtain reimbursement for their purchases under private or government-sponsored insurance plans, which could have a negative
impact on our sales and have a material adverse effect on our business, financial condition and operating results.
If we fail to comply with healthcare
laws, we could face substantial penalties and financial exposure, and our business, operations and financial condition could be adversely
affected.
We do not have a product available
for sale in the United States. If, however, we achieve this goal, the availability of payments from Medicare, Medicaid or other third-party
payers would mean that many healthcare laws would place limitations and requirements on the manner in which we conduct our business, including
our sales and promotional activities and interactions with healthcare professionals and facilities. In some instances, our interactions
with healthcare professionals and facilities that occurred prior to commercialization (e.g., the granting of stock options) could have
implications at a later date. The laws that may affect our ability to operate include, among others: (i) the federal healthcare programs
Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying
remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or
recommendation of, any good or service for which payment may be made under federal healthcare programs such as Medicare or Medicaid, (ii) federal
false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims
for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent, and which may apply to entities like us
if we provide coding and billing advice to customers, or under theories of “implied certification” where the government and qui
tam relators may allege that device companies are liable where a product that was paid for by the government in whole or in part
was promoted “off-label,” lacked necessary marketing authorization, or failed to comply with good manufacturing
practices or other laws; (iii) transparency laws and related reporting and/or disclosures such as the Sunshine Act; and/or (iv) state
law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed
by any third-party payer, including commercial insurers, many of which differ from their federal counterparts in significant ways, thus
complicating compliance efforts.
If our operations are
found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be
subject to penalties, including civil and criminal penalties, exclusion from participation in government healthcare programs,
damages, fines and the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment or
restructuring of our operations could adversely affect our ability to operate our business and our financial results. The risk of
our being found in violation of these laws is increased by the fact that their provisions are open to a variety of evolving
interpretations and enforcement discretion. Any action against us for violation of these laws, even if we successfully defend
against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our
business.
Our communications regarding product
candidates, even while in development, are subject to extensive government scrutiny. We may be subject to governmental, regulatory
and other legal proceedings relative to advertising, promotion, and marketing, and communications with study subjects and healthcare professionals,
which could have a significant negative effect on our business.
We are subject to governmental
oversight and associated civil and criminal enforcement relating to advertising, promotion, and marketing, and such enforcement is evolving
and intensifying. Communications regarding our products in development and regarding our clinical trials may subject us to enforcement
if they do not comply with applicable laws and regulations. In the United States, we are potentially subject to enforcement from the FDA,
other divisions of the Department of Health and Human Services, the U.S. Federal Trade Commission, or the FTC, the Department of Justice,
and state and local governments. Other parties, including private plaintiffs, also are commonly bringing suit against pharmaceutical
and medical device companies. We may be subject to liability based on the actions of individual employees and third-party contractors
carrying out activities on our behalf.
U.S. legislative or FDA regulatory
reforms may make it more difficult and costly for us to obtain regulatory approval of our product candidates and to manufacture, market
and distribute our products after marketing authorization is obtained.
From time to time, legislation
is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulatory approval, manufacture
and marketing of regulated products or the reimbursement thereof. In addition, FDA regulations and guidance are often revised or reinterpreted
by the FDA in ways that may significantly affect our business and our products. Any new regulations or revisions or reinterpretations
of existing regulations may impose additional costs or lengthen review times of future products. In addition, FDA regulations and guidance
are often revised or reinterpreted by the agency in ways that may significantly affect our business and our products. It is impossible
to predict whether legislative changes will be enacted, or FDA regulations, guidance or interpretations changed, and what the impact of
such changes, if any, may be.
Risks Related to our Business Operations
Failure to implement our business
strategy could adversely affect our operations.
Our financial position, liquidity
and results of operations depend on our management’s ability to execute our business strategy. Key factors involved in the execution
of the business strategy include:
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successful sales through indirect sales distribution;
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continued investment in technology to support operating efficiency;
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continued access to significant funding and liquidity sources;
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achieving the desired cost of goods on inventory; and
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obtaining the required regulatory clearances or approvals from the FDA.
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Our failure or inability to
execute any element of our business strategy could materially adversely affect our financial position, liquidity and results of operations.
Our inability to attract, train and
retain additional qualified personnel may harm our business and impede the implementation of our business strategy.
We need to attract, integrate,
motivate and retain a significant number of additional personnel in 2021 and beyond. Competition for these individuals in our industry
and geographic region is intense, and we may be unable to attract, assimilate or retain such highly qualified personnel in the future.
Our business cannot continue to grow if we are unable to attract such qualified personnel. Our failure to attract and retain highly trained
personnel that are essential to our business may limit our growth rate, which would harm our business and impede the implementation of
our business strategy.
We may be unable to maintain sufficient
product liability insurance.
We may incur product liability
for products sold through our distribution chain. Consumers may sue if products sold through our distribution chain or purchased through
our websites are defective or injure the user. This type of claim could require us to spend significant time and money in litigation or
to pay significant damages. At this time, we carry no product liability insurance. As a result, any legal claims, whether or not successful,
could seriously damage our reputation and business.
Conducting any future clinical trials
of our product candidates and any future commercial sales of a product candidate may expose us to expensive product liability claims,
and we may not be able to maintain product liability insurance on reasonable terms or at all and may be required to limit commercialization
of our product candidates.
We face an inherent risk of
product liability as a result of the preclinical and future clinical testing of our product candidates and will face an even greater risk
when and if we commercialize any products. For example, we may be sued if our product candidates cause or are perceived to cause injury
or are found to be otherwise unsuitable during preclinical or clinical testing, manufacturing, marketing or sale. Any such product liability
claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence,
strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully
defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit testing and commercialization
of our product candidates. Even successful defense would require significant financial and management resources. Regardless of the merits
or eventual outcome, liability claims may result in:
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decreased or interrupted demand for our products;
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injury to our reputation;
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withdrawal of clinical trial participants and inability to continue our clinical trials;
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initiation of investigations by regulators;
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costs to defend the related litigation;
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a diversion of management’s time and our resources;
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substantial monetary awards to trial participants or patients;
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product recalls, withdrawals or labeling, marketing or promotional restrictions;
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loss of revenue;
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exhaustion of any available insurance and our capital resources;
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the inability to commercialize any product candidate; and
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a decline in our share price.
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Our inability to obtain sufficient
product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization
of products we develop, alone or with collaborators. Our insurance policies may have various exclusions, and we may be subject to a product
liability claim for which we have no coverage. We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed
our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay
such amounts. Even if our agreements with any future corporate collaborators entitle us to indemnification against losses, such indemnification
may not be available or adequate should any claim arise.
We anticipate growth in our business,
and any inability to manage such growth could harm our business.
Our success will depend, in
part, on our ability to effectively manage our growth and expansion. Any growth in, or expansion of, our business is likely to continue
to place a significant strain on our management and administrative resources, infrastructure and systems. In order to succeed, we will
need to continue to implement management information systems and improve our operating, administrative, financial and accounting systems
and controls. We will also need to train new employees and maintain close coordination among our executive, accounting, finance and operations
organizations. These processes are time consuming and expensive, will increase management responsibilities and will divert management
attention. Our inability or failure to manage our growth and expansion effectively could substantially harm our business and adversely
affect our operating results and financial condition.
Our inability to retain and properly
insure against the loss of the services of our executive officer and other key personnel may harm our business and impede the implementation
of our business strategy.
Our future success depends
significantly on the skills and efforts of Joseph Michael Redmond, President, CEO and Director and possibly other key personnel. The loss
of the services of any of these individuals could harm our business and operations. In addition, we have not obtained key person life
insurance on any of our key employees. If any of our executive officers or key employees left or was seriously injured and unable to work
and we were unable to find a qualified replacement and/or to obtain adequate compensation for such loss, we may be unable to manage our
business, which could harm our operating results and financial condition.
We participate in transactions and
make tax calculations for which the ultimate tax determination may be uncertain.
We participate in many transactions
and make tax calculations during the course of our business for which the ultimate tax determination is uncertain. While we believe we
maintain provisions for uncertain tax positions that appropriately reflect our risk, these provisions are made using estimates of the
amounts expected to be paid based on a qualitative assessment of several factors. It is possible that liabilities associated with one
or more transactions may exceed our provisions due to audits by, or litigation with, relevant taxing authorities which may materially
adversely affect our financial condition and results of operations.
We may indemnify our directors and
officers against liability to us and our stockholders, and such indemnification could increase our operating costs.
Our bylaws allow us to indemnify
our directors and officers against claims associated with carrying out the duties of their offices. Our bylaws also allow us to reimburse
them for the costs of certain legal defenses. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to our directors, officers or control persons, we have been advised by the SEC that such indemnification is against public
policy and is therefore unenforceable. Since our directors and officers are aware that they may be indemnified for carrying out the duties
of their offices, they may be less motivated to meet the standards required by law to properly carry out such duties, which could increase
our operating costs. Further, if our directors and officers file a claim against us for indemnification, the associated expenses also
could increase our operating costs.
If we fail to develop or maintain
an effective system of internal controls, we may not be able to accurately report our financial results or prevent financial fraud. As
a result, current and potential stockholders could lose confidence in our financial reporting.
We are subject to the risk
that sometime in the future our independent registered public accounting firm could communicate to the board of directors that we have
deficiencies in our internal control structure that they consider to be “significant deficiencies.” A “significant deficiency”
is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is more than
a remote likelihood that a material misstatement of the entity’s financial statements will not be prevented or detected by the entity’s
internal controls.
Effective internal controls
are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports
or prevent fraud, we could be subject to regulatory action or other litigation and our operating results could be harmed. We are required
to document and test our internal control procedures to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act,” or “SOX”), which requires our management to annually assess the effectiveness of our internal
control over financial reporting.
We currently are not an “accelerated
filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended. Section 404 of the Sarbanes-Oxley Act of
2002 (“Section 404”) requires us to include an internal control report with our Annual Report on Form 10-K. That report must
include management’s assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal
year. This report must also include disclosure of any material weaknesses in internal control over financial reporting that we have identified.
As of July 31, 2021, management assessed the effectiveness of our internal control over financial reporting based on SEC guidance on conducting
such assessments and on the criteria for effective internal control over financial reporting established in Internal Control and Integrated
Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Management concluded,
during the year-ended July 31, 2021, that our internal controls and procedures were not effective to detect the inappropriate application
of U.S. GAAP rules. Management realized there were deficiencies in the design or operation of our internal control that adversely affected
our internal control, which management considers to be material weaknesses. A material weakness in the effectiveness of our internal control
over financial reporting may increase the chance of fraud and the loss of customers, reduce our ability to obtain financing, and require
additional expenditures to comply with these requirements. Any of these consequences could have a material adverse effect on our business,
results of operations and financial condition. For additional information, see Item 9A – Controls and Procedures.
It may be time-consuming,
difficult, and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act.
We may need to hire additional financial reporting, internal controls, and other finance personnel in order to develop and implement appropriate
internal controls and reporting procedures. If we are unable to comply with the internal control requirements of the Sarbanes-Oxley Act,
then we may not be able to obtain the independent accountant certifications required by such act, which may preclude us from keeping our
filings with the SEC current.
If we are unable to maintain
the adequacy of our internal controls, as those standards are modified, supplemented, or amended from time to time, we may not be able
to ensure that we may conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with
Section 404. Failure to achieve and maintain an effective internal control environment could cause us to face regulatory action and cause
investors to lose confidence in our reported financial information, either of which could adversely affect the value of our common stock.
Our Articles of Incorporation provide
that certain proceedings may only be instituted in the District Courts of Nevada, which may prevent or delay such proceedings and will
increase the costs to enforce stockholder rights.
Our Articles of Incorporation
provide that the following actions and proceedings may only be brought in the courts located in the State of Nevada: (i) derivative actions
brought on behalf of the company, (ii) any action asserting breach of fiduciary duty by the directors or officers, (iii) any action brought
under the Business Associations, Securities and Commodities statutes of the State of Nevada, and (iv) actions asserting a claim under
the internal affairs doctrine. No court has determined that such provisions are enforceable in Nevada, and we may be forced to defend
proceedings brought in other states if such provision is ruled unenforceable. If enforceable, claims covered by this provision may be
maintained in the courts of the State of Nevada only if such courts have personal jurisdiction over the defendants. If the State of Nevada
does not have personal jurisdiction over any named defendant, this provision may have the effect of preventing the prosecution of any
claim. Additionally, because stockholders may initiate such actions only in the State of Nevada, stockholders will be required to incur
additional costs and expense such as engaging legal counsel authorized to practice in Nevada. Moreover, the laws of the State of Nevada
may be more favorable to us or our management than the laws of the state in which any stockholder resides.
Our certificate of incorporation allows
our board to create new series of preferred stock without approval by our stockholders, which could adversely affect the rights of the
holders of our common stock.
Our board of directors has
the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority
to issue preferred stock without stockholder approval. As a result, our board of directors could authorize the issuance of a series of
preferred stock granting holders a preferred right to our assets upon liquidation, the right to receive dividend payments before dividends
are distributed to the holders of common stock, and the right to redemption of the shares, together with a premium prior to the redemption
of our common stock. In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater
voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our
common stock or result in dilution to our existing stockholders.
Our financial and operating performance
is adversely affected by the coronavirus pandemic.
The outbreak of a strain of
coronavirus (COVID-19) in the U.S. has had an unfavorable impact on our business operations. Mandatory closures of businesses imposed
by the federal, state and local governments to control the spread of the virus is disrupting the operations of our management, business
and finance teams. In addition, the COVID-19 outbreak has adversely affected the U.S. economy and financial markets, which may result
in a long-term economic downturn that could negatively affect future performance. The extent to which COVID-19 and the efforts to
mitigate the effects will impact our business and our consolidated financial results will depend on future developments which are highly
uncertain and cannot be predicted at the time of the filing, but is expected to result in a material adverse impact on our business, results
of operations and financial condition.
If our expenses are greater than anticipated,
then we will have fewer funds with which to pursue our plan of operations and our financing requirements will be greater than anticipated.
We may find that the costs
of carrying out our plan of operations are greater than we anticipate. We expect our expenses to increase over time in connection with
our ongoing activities, particularly if and as we: invest in marketing and distribution capabilities in support of developing and potentially
commercializing our products in the U.S., if cleared or approved; make improvements product design; launch the PRV-002 trial
or conduct other trials of the products, subject to discussion with FDA; pursue regulatory clearances and approvals; maintain, expand
and protect our intellectual property portfolio; engage third party manufacturers; and add additional personnel. Increased operating costs
may cause the amount of financing that we require to increase. Investors may be more reluctant to provide additional financing if we cannot
demonstrate that we can control our operating costs. There is no assurance that additional financing required as a result of our operating
costs being greater than anticipated will be available to us. If we do not control our operating expenses, then we will have fewer funds
with which to carry out our plan of operations with the result that our business may fail.
We are heavily dependent upon the
ability and expertise of our management team and a very limited number of employees and the loss of such individuals could have a material
adverse effect on our business, operating results or financial condition.
We currently have a very small
management team. Our success is dependent upon the ability, expertise and judgment of our senior management. While employment agreements
are customarily used as a primary method of retaining the services of key employees, these agreements cannot assure the continued services
of such employees. Any loss of the services of such individuals could have a material adverse effect on our business, operating results
or financial condition.
Our ability to use net operating losses
to offset future taxable income may be subject to certain limitations.
Under Section 382 of
the Internal Revenue Code of 1986, as amended, or the Code, substantial changes in a corporation’s ownership may limit the amount
of net operating losses, or NOLs, that can be utilized annually in the future to offset the corporation’s (and the corporation’s
affiliates’) U.S. federal and state taxable income. Specifically, this limitation may arise in the event of a cumulative change
in ownership of more than 50% within any three-year period. The amount of the annual limitation is determined based on the value of the
corporation that underwent the ownership change, immediately before the ownership change. Subsequent ownership changes may further affect
any limitation in future years (including by way of exercising of warrants).
We are a “smaller reporting
company” under federal securities laws and we cannot be certain whether the reduced reporting requirements applicable to such companies
will make our common stock less attractive to investors.
We are a “smaller reporting
company” under federal securities laws. For as long as we continue to be a smaller reporting company, we may take advantage of exemptions
from various reporting requirements that are applicable to other public companies, including reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy statements. We will remain a smaller reporting company so long as our public
float remains less than $250 million as of the last business day of our most recently-completed second fiscal quarter. We cannot
predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common
stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline or be
more volatile.
Investors could lose confidence in
our financial reports, and the value of our common stock may be adversely affected, if our internal controls over financial reporting
are found not to be effective by management or by our independent registered public accounting firm.
As long we remain a non-accelerated filer,
we are exempt from the attestation requirement in the assessment of our internal control over financial reporting by our independent auditors
pursuant to section 404(b) of the Sarbanes-Oxley Act of 2002 but are required to make our own internal assessment of the effectiveness
of our internal controls over financial reporting. The existence of one or more material weaknesses could affect the accuracy and timing
of our financial reporting. Investors could lose confidence in our financial reports, and the value of our common stock may be harmed,
if our internal controls over financial reporting are found not to be effective by management or by our independent registered public
accounting firm.
Several people who work for us on
a part-time consulting basis may be subject to conflicts of interest.
Several people who provide
services to us are part-time consultants. Each may devote part of his working time to other business endeavors, including consulting relationships
with other corporate entities, and may have responsibilities to these other entities. Because of these relationships, some of the persons
who provide services to us may be subject to conflicts of interest. Such conflicts may include deciding how much time to devote to our
affairs, as well as what business opportunities should be presented to us.
Our business and operations would
suffer in the event of computer system failures, cyber-attacks or a deficiency in our cyber-security.
Despite the implementation
of security measures, our internal computer systems, and those of third parties on which we rely, are vulnerable to damage from computer
viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions (including
ransomware attacks) over the Internet, attachments to emails, persons inside our organization, or persons with access to systems inside
our organization. No network or system can ever be completely secure, and the risk of a security breach or disruption, particularly through
cyber-attacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as
the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. If such an event were
to occur and cause interruptions in our operations, it could result in operations, reputation, or a material disruption of our development
programs for an indeterminate period of time. For example, the loss of clinical trial data from completed or ongoing or planned clinical
trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
In some cases, data cannot be reproduced. To the extent that any disruption or security breach was to result in a loss of or damage to
our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur material legal claims
and liability, damage to our reputation, and the further development of our devices and drugs or any future product candidate could be
delayed. If a security breach results in the exposure or unauthorized disclosure of personal information, we could incur additional costs
associated with data breach notification and remediation expenses, investigation costs, regulatory penalties and fines, and legal proceedings.
Our insurance coverage may not be adequate to cover all the costs related to such breaches or attacks.
Challenges to our tax positions in
U.S. or non-U.S. jurisdictions, the interpretation and application of recent U.S. tax legislation or other changes in U.S. or non-U.S. taxation
of our operations could harm our business, revenue and financial results.
We operate, or intend to operate,
in a number of tax jurisdictions, including in the United States at the federal, state and local levels, and in Australia, and we therefore
are or will be subject to review and potential audit by tax authorities in these various jurisdictions. Significant judgment is required
in determining our worldwide provision for income taxes and other tax liabilities, and tax authorities may disagree with tax positions
we take and challenge our tax positions. Successful unilateral or multi-jurisdictional actions by various tax authorities may increase
our worldwide effective tax rate, result in additional taxes or other costs or have other material consequences, which could harm our
business, revenue and financial results.
Our effective tax rate may
also change from year to year or vary materially from our expectations based on changes or uncertainties in the mix of activities and
income allocated or earned among various jurisdictions in the US, changes in tax laws and the applicable tax rates in these jurisdictions
(including future tax laws that may become material), tax treaties between countries, our eligibility for benefits under those tax treaties
and the valuation of deferred tax assets and liabilities. Such changes could result in an increase in the effective tax rate applicable
to all or a portion of our income, impose new limitations on deductions, credits or other tax benefits or make other changes that may
adversely affect our business, cash flows or financial performance. For example, if we are unable to fully realize the benefit of interest
expense incurred in future periods as a result of recent tax law changes (as discussed below), we may need to recognize a valuation allowance
on any related deferred tax assets, which would impact our annual effective income tax rate.
Risks Related to Our Common Stock and Its Market
Value
Your ownership will be diluted by
future issuances of capital stock.
Our business strategy requires
us to raise additional equity capital through the sale of common stock or preferred stock. Your percentage of ownership will become diluted
as we issue new shares of stock. Stockholders have no rights to buy additional shares of stock in the event we issue new shares of stock,
known as preemptive rights. We may issue common stock, convertible debt or common stock pursuant to a public offering or a private placement,
upon exercise of warrants or options, or to sellers of properties we directly or indirectly acquire instead of, or in addition to, cash
consideration. Investors purchasing common stock in this Offering who do not participate in any future stock issues will experience dilution
in the percentage of the issued and outstanding stock they own.
We have limited capitalization and
may require financing, which may not be available.
We have limited capitalization,
which increases our vulnerability to general adverse economic and industry conditions, limits our flexibility in planning for and reacting
to changes in our business and industry, and may place us at a competitive disadvantage to competitors with sufficient capitalization.
If we are unable to obtain sufficient financing on satisfactory terms and conditions, we will be forced to curtail or abandon our plans
or operations. Our ability to obtain financing will depend upon a number of factors, many of which are beyond our control.
Investors may experience dilution
in the value of the shares of common stock.
We anticipate offering common
stock or preferred stock in offerings, which could cause further dilution.
If our business is unsuccessful, our
stockholders may lose their entire investment.
Although our stockholders
will not be bound by or be personally liable for our expenses, liabilities or obligations beyond their total original investments in our
common stock, if we suffer a deficiency in funds with which to satisfy our obligations, our stockholders as a whole may lose their entire
investment in our company.
The sale or issuance of our common
stock to Lincoln Park may cause dilution and the sale of the shares of common stock acquired by Lincoln Park, or the perception that such
sales may occur, could cause the price of our common stock to fall.
On August 14, 2020, we entered
into a Purchase Agreement with Lincoln Park and, on that date, we sold 602,422 shares of our common stock to Lincoln Park in an initial
purchase under the Purchase Agreement for a total purchase price of $250,000. We also issued 793,802 shares of our common stock to Lincoln
Park as consideration for its irrevocable commitment to purchase our common stock under the Purchase Agreement. The remaining shares of
our common stock that may be issued under the Purchase Agreement may be sold by us to Lincoln Park at our discretion from time to time
over a 36-month period commencing after the satisfaction of certain conditions set forth in the Purchase Agreement, including that the
SEC has declared effective the related registration statement and that such registration statement remains effective. The purchase price
for the shares that we may sell to Lincoln Park under the Purchase Agreement will fluctuate based on the price of our common stock. Depending
on market liquidity at the time, sales of such shares may cause the trading price of our common stock to fall.
Subject to the terms
of the Purchase Agreement, we generally have the right to control the timing and amount of any future sales of our shares to Lincoln
Park. Additional sales of our common stock, if any, to Lincoln Park will depend upon market conditions and other factors to be determined
by us. We may ultimately decide to sell to Lincoln Park all, some, or none of the additional shares of our common stock that may be available
for us to sell pursuant to the Purchase Agreement. If and when we do sell shares to Lincoln Park, after Lincoln Park has acquired the
shares, Lincoln Park may resell all or some of those shares at any time or from time to time in its discretion. Therefore, sales to Lincoln
Park by us could result in substantial dilution to the interests of other holders of our common stock. Additionally, the sale of a substantial
number of shares of our common stock to Lincoln Park, or the anticipation of such sales, could make it more difficult for us to sell
equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales. As of July 31,
2021, Lincoln Park had purchased a total of 2,153,326 shares of our common stock at a weighted average price of $0.68 per share for total
proceeds of $1,471,475. Through October 29, 2021, we sold an additional 974,482 shares of our common stock to LPC for total proceeds
$367,036. As of October 29, 2021, remaining purchase availability was $8,411,489 and remaining shares available were 16,143,566.
A limited public trading market
exists for our common stock, which makes it difficult for our stockholders to sell their common stock on the public markets. Any trading
in our shares may have a significant effect on our stock prices.
Although our common stock
is listed for quotation on the OTC Markets, under the symbol “ODYY,” the trading activity of our common stock is volatile
and may not develop or be sustained. As a result, any trading price of our common stock may not be an accurate indicator of the valuation
of our common stock. Any trading in our shares could have a significant effect on our stock price. If a more liquid public market for
our common stock does not develop, then investors may not be able to resell the shares of our common stock that they have purchased and
may lose all of their investment. No assurance can be given that an active market will develop or that a stockholder will ever be able
to liquidate its shares of common stock without considerable delay, if at all. Many brokerage firms may not be willing to effect transactions
in the securities. Even if an investor finds a broker willing to affect a transaction in our securities, the combination of brokerage
commissions, state transfer taxes, if any, and any other selling costs may exceed the selling price. Furthermore, our stock price may
be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general
economic, political, and market conditions, such as recessions, interest rates, and international currency fluctuations, may adversely
affect the market price and liquidity of our common stock.
Our common stock may never be listed
on a national exchange and is subject to being removed from the OTC Marketplace.
Our common stock is quoted
for trading on the OTC PINK Marketplace. We still will be unable to list our stock on the OTC PINK . Should we fail to satisfy the eligibility
standards of OTC Markets for the OTC Markets Fully Reporting, the trading price of our common stock could continue to suffer and the trading
market for our common stock may be less liquid and our common stock price may be subject to increased volatility.
Our common stock is deemed to be a
“penny stock,” which may make it more difficult for investors to sell their shares due to suitability requirements.
Our stock is categorized as
a “penny stock,” as that term is defined in SEC Rule 3a51-1, which generally provides that a “penny stock” is
any equity security that has a market price (as defined) less than U.S. $5.00 per share, subject to certain exceptions. Our securities
are covered by the penny stock rules, including Rule 15g-9, which imposes additional sales practice requirements on broker-dealers who
sell to persons other than established customers and accredited investors. The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC
which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson
in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.
The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or
in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer
must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s
written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the
secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability
of broker-dealers to trade our securities and reduce the number of potential investors. We believe that the penny stock rules discourage
investor interest in, and limit the marketability of, our common stock.
The sale of shares of our common stock
could cause the price of our common stock to decline.
Depending on market liquidity
at the time, a sale of shares covered by a registration statement could cause the trading price of our common stock to decline. The sale
of a substantial number of shares of our common stock under a registration statement, or the anticipation of such a sale, could make it
more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we otherwise might desire
to affect such sales.
A low market price would severely
limit the potential market for our common stock.
Our common stock may trade
at a price below $5.00 per share, subjecting trading in the stock to certain SEC rules requiring additional disclosures by broker-dealers.
These rules generally apply to any non-NASDAQ equity security that has a market price share of less than $5.00 per share, subject to certain
exceptions (a “penny stock”). Such rules require the delivery, before any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith and impose various sales practice requirements on broker-dealers
who sell penny stocks to persons other than established customers and institutional or wealthy investors. For these types of transactions,
the broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent
to the transaction before the sale. The broker-dealer also must disclose the commissions payable to the broker-dealer, current bid and
offer quotations for the penny stock, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and
the broker-dealer’s presumed control over the market. Such information must be provided to the customer orally or in writing before
or with the written confirmation of trade sent to the customer. Monthly statements must be sent disclosing recent price information for
the penny stock held in the account and information on the limited market in penny stocks. The additional burdens imposed on broker-dealers
by such requirements could discourage broker-dealers from effecting transactions in our common stock.
If applicable, FINRA sales practice
requirements could limit a stockholder’s ability to buy and sell our stock.
In addition to the penny stock
rules promulgated by the SEC, above, FINRA rules (which would apply to our common stock in the event that our common stock ultimately
becomes traded over the counter via the OTC Electronic Bulletin Board) require that, in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for that customer. Under these FINRA rules, before recommending
speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information
about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules,
FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers.
If these FINRA rules were to apply to our common stock, such application would make it more difficult for broker-dealers to recommend
that their customers buy our common stock, which could limit the ability to buy and sell our common stock and have an adverse effect on
the market value for our shares of common stock.
An investor’s ability to trade
our common stock may be limited by trading volume.
A consistently active trading
market for our common stock may not occur on a national stock exchange or an automated quotation system. A limited trading volume may
prevent our stockholders from selling shares at such times or in such amounts as they otherwise may desire.
A limited number of stockholders collectively
own a significant portion of our common shares and may act, or prevent corporate actions, to the detriment of other stockholders.
A limited number of stockholders,
including our founders and members of the Board of Directors and our management, currently own a significant portion of our outstanding
common shares. Accordingly, these stockholders may, if they act together, exercise significant influence over all matters requiring stockholder
approval, including the election of a majority of our directors and the determination of significant corporate actions. This concentration
could also have the effect of delaying or preventing a change in control that could otherwise be beneficial to our stockholders.
Our company has a concentration of
stock ownership and control, which may have the effect of delaying, preventing or deterring a change of control.
Our common stock ownership
is highly concentrated. Through ownership of shares of our common stock, nine stockholders collectively own beneficially more than
81% of our total outstanding shares of common stock. As a result of this concentrated ownership of our common stock, our nine stockholders
may be able to exert significant control over all matters requiring stockholder approval, including the election of directors and approval
of mergers and other significant corporate transactions. This concentration of ownership may have the effect of delaying, preventing or
deterring a change in control of our company. It also could deprive our stockholders of an opportunity to receive a premium for their
shares as part of a sale of our company, and it may affect the market price of our common stock.
The reverse split of our common stock
could decrease our total market capitalization and increase, and may continue to increase, the volatility of our stock price.
At our 2021 annual stockholder
meeting, which was held on September 14, 2021, the stockholders approved the proposal that granted the Board discretionary authority to
amend our Certificate of Incorporation to effect a reverse stock split of the issued and outstanding shares of our Common Stock, par value
$0.001 per share, such split to combine a whole number of outstanding shares of our Common Stock in a range of not less than two shares
and not more than 30 shares, into one share of Common Stock at any time prior to January 31, 2022. The amendments will not change the
number of authorized shares of Common Stock or Preferred Stock or the relative voting power of our stockholders.
There can be no assurance
that the total market capitalization of our common stock after the reverse stock split will be equal to or greater than the total market
capitalization before the reverse stock split or that the per share market price of our common stock following the reverse stock split
will increase in proportion to the reduction in the number of shares of common stock outstanding before the reverse stock split. Furthermore,
a decline in the market price of our common stock after the reverse stock split may result in a greater percentage decline than would
occur in the absence of a reverse stock split, and the liquidity of our common stock could be adversely affected following such a reverse
stock split.
The reverse stock split could increase
our authorized but unissued shares of common stock, which could negatively impact a potential investor.
Because the number of authorized
shares of our common stock will not be reduced proportionately, the reverse stock split could increase the Board’s ability to issue
authorized and unissued shares without further stockholder action. The issuance of additional shares of common stock or securities convertible
into common stock may have a dilutive effect on earnings per share and relative voting power and may cause a decline in the trading price
of the common stock. We could use the shares that are available for future issuance in dilutive equity financing transactions, or to oppose
a hostile takeover attempt or delay or prevent changes in control or changes in or removal of management, including transactions that
are favored by a majority of the stockholders or in which the stockholders might otherwise receive a premium for their shares over then-current
market prices or benefit in some other manner.
A decline in the price of our common
stock could affect our ability to raise any required working capital and adversely affect our operations.
A decline in the price of
our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise any required
capital for our operations. Because our operations to date have been principally financed through the sale of equity securities, a decline
in the price of our common stock could have an adverse effect upon our liquidity and our continued operations. A reduction in our ability
to raise equity capital in the future may have a material adverse effect upon our business plans and operations. If our stock price declines,
we may not be able to raise additional capital or generate funds from operations sufficient to meet our obligations.
Trading of our common stock could
be sporadic, and the price of our common stock may be volatile; we caution you as to the highly illiquid nature of an investment in our
shares.
Our common stock is listed
on the OTC PINK. Securities of microcap and small-cap companies have experienced substantial volatility in the past, often based
on factors unrelated to the companies’ financial performance or prospects. We believe that trading in our stock has been and will
likely continue to be subject to significant volatility. These factors include macroeconomic developments in North America and globally
and market perceptions of the attractiveness of particular industries. Factors unrelated to our performance that may affect the price
of our common stock include the following: the extent of analytical coverage available to investors concerning our business may be limited
if investment banks with research capabilities do not follow us, a reduction in trading volume and general market interest in our common
stock may affect an investor’s ability to trade significant numbers of shares of our common stock; the size of our public float
may limit the ability of some institutions to invest in our common stock. As a result of any of these factors, the market price of our
common stock at any given point in time may not accurately reflect our long-term value. The price of our common shares may increase or
decrease in response to a number of events and factors, including: changes in financial estimates; our acquisitions and financings; quarterly
variations in our operating results; the operating and share price performance of other companies that investors may deem comparable;
and purchase or sale of blocks of our common stock. These factors, or any of them, may materially adversely affect the prices of our common
shares regardless of our operating performance.
The market price of our common
stock is affected by many other variables which are not directly related to our success and are, therefore, not within our control. These
include other developments that affect the breadth of the public market for shares of our common stock and the attractiveness of alternative
investments. The effect of these and other factors on the market price of our common stock is expected to make our common stock price
volatile in the future, which may result in losses to investors.
We have not paid any dividends and
do not foresee paying dividends in the future.
We intend to retain earnings,
if any, to finance the growth and development of our business and do not intend to pay cash dividends on shares of our common stock in
the foreseeable future. The payment of future cash dividends, if any, will be reviewed periodically by the board of directors and will
depend upon, among other things, conditions then existing including earnings, financial condition and capital requirements, restrictions
in financing agreements, business opportunities and other factors.
If securities or industry analysts
do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding
our stock adversely, our stock price and trading volume could decline.
The trading market for our
common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our
market or our competitors. If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide
more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us were
to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which
in turn could cause our stock price or trading volume to decline.
The United States Tax Cuts and Jobs
Act of 2017 could adversely affect our business and financial condition.
The U.S. Tax Cuts and Jobs
Act, or the TCJA, significantly reforms the Code. The TCJA, among other things, contains significant changes to U.S. federal corporate
income taxation, including reduction of the U.S. federal corporate income tax rate from a top marginal rate of 35% to a flat rate of 21%,
limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses), limitation of
the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks for net
operating losses arising after December 31, 2017, immediate deductions for certain new investments instead of deductions for depreciation
expense over time, and creating, modifying or repealing many business deductions and credits. Federal net operating losses arising in
taxable year ending after December 31, 2017, will be carried forward indefinitely pursuant to the TCJA. We continue to examine the
impact this tax reform legislation may have on our business. Notwithstanding the reduction in the corporate income tax rate, the overall
impact of the TCJA is uncertain and our business and financial condition could be adversely affected. The impact of this tax reform on
holders of our common stock is also uncertain and could be adverse.
Cautionary Note
We have sought to identify what we believe to
be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor
can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors
before making an investment decision with respect to our common stock.