8-K: Odyssey Health Secures $25M Financing, 9-Year Service Deal

Odyssey Health, Inc. announced a multi-million-dollar, nine-year maintenance service contract and a financing facility of up to $25 million to support strategic growth and commercialization initiatives.

Summary

• Odyssey Health, Inc. (ODYY) entered into a Maintenance Agreement with Mast Hill Fund, L.P. (MHF) on November 13, 2025, for a nine-year term ending February 1, 2034, to provide maintenance services for a commercial facility in West Columbia, TX.
• Under the Maintenance Agreement, Odyssey will receive service fees, currently estimated at approximately $245,000 per year, calculated based on gross rental income minus certain costs and a maintenance reserve.
• In connection with the Maintenance Agreement, Odyssey issued a Maintenance Convertible Promissory Note to MHF with a principal amount of $2,262,000, bearing 10% interest per annum and maturing on November 13, 2026.
• Odyssey also entered into a Securities Purchase Agreement (SPA) with MHF on November 13, 2025, allowing for the issuance of a Master Convertible Promissory Note (SPA Note) with a maximum principal amount of up to $25,000,000.
• The SPA Note has an original issue discount (OID) of up to $2,500,000, meaning the maximum proceeds to Odyssey are up to $22,500,000.
• The first tranche of the SPA Note involved a $500,000 principal amount, a $450,000 purchase price, and net proceeds to Odyssey of $437,500 after $12,500 in legal fees.
• Both the Maintenance Note and the SPA Note bear interest at 10% per annum and are convertible into Odyssey's common stock at a conversion price equal to 85% of the lowest volume-weighted average price (VWAP) during the ten trading days preceding the conversion date.
• With the first tranche of the SPA Note, Odyssey issued MHF warrants immediately exercisable for 1,538,461 shares of common stock at an exercise price of $0.001 per share.
• Odyssey is required to file an effective registration statement with the SEC within 60 days of entering each tranche of the SPA Note to cover the resale of conversion shares and warrant shares.
• The notes are unsecured obligations of Odyssey but have priority over all existing and future unsecured indebtedness.
• Odyssey is subject to various covenants, including restrictions on paying dividends (other than stock dividends), repurchasing stock, selling significant assets, changing its business nature, or entering into certain financing transactions without MHF's consent.
• Numerous events of default are defined, including failure to pay, conversion failures, breach of agreements, market capitalization falling below $1,000,000, and failure to maintain SEC reporting requirements after six months.
• Upon an event of default, the notes become immediately due and payable, and Odyssey must pay MHF 150% of the outstanding principal plus accrued interest, along with collection costs.

Sentiment

Score: 3

Explanation: While the company secured significant financing and a long-term service contract, the terms of the financing are highly unfavorable and dilutive, indicating financial distress or limited options. The extensive restrictions and high default penalties pose substantial risks to the company's future.

Positives

• Secured a long-term, nine-year maintenance service contract, expected to generate stable, recurring revenue of approximately $245,000 per year.
• Obtained a significant financing facility of up to $25,000,000, providing capital for strategic initiatives and growth opportunities.
• Initial tranche of $437,500 net proceeds from the financing facility will be directed towards advancing the BreastCheck sub-licensing program.

Negatives

• The financing terms are highly dilutive, with conversion prices set at 85% of the lowest volume-weighted average price (VWAP) over the preceding 10 trading days.
• Significant warrant coverage was issued (1,538,461 shares for the first tranche at $0.001 exercise price), further increasing potential dilution.
• The financing includes a 10% original issue discount (OID) and a 10% annual interest rate, which are unfavorable terms for the company.
• Odyssey is subject to numerous restrictive covenants, including limitations on paying dividends, repurchasing stock, selling significant assets, or changing its business without the lender's consent.
• A mandatory second tranche of $500,000 principal ($450,000 purchase price) is required if certain conditions are met, further obligating the company.
• Upon an event of default, the company is liable to pay 150% of the outstanding principal plus accrued interest, a substantial penalty.
• The company must apply up to 100% of rental receivables from the maintenance agreement and up to 50% of other cash proceeds (from equity/debt issuance, asset sales) to repay the SPA Note, severely limiting financial flexibility.

Risks

• Significant dilution for existing shareholders due to the convertible nature of the notes and warrants at a discounted conversion price.
• Risk of default on the notes due to numerous and stringent event of default clauses, including failure to pay, conversion failures, and breach of covenants.
• Financial penalties and accelerated repayment obligations (150% of outstanding principal) upon an event of default.
• Inability to maintain a market capitalization of at least $1,000,000, which constitutes an Event of Default.
• Failure to comply with SEC reporting requirements or maintain an effective registration statement for resale of shares could trigger an Event of Default and incur penalties.
• Restrictions on corporate actions (e.g., asset sales, business changes, other financings) without the lender's consent could hinder operational flexibility and strategic growth.
• Potential for legal and arbitration costs due to the dispute resolution clauses in the agreements.
• Risk of delisting or suspension of common stock trading, which is an Event of Default.

Future Outlook

The company anticipates successfully implementing the facility service agreement to generate predictable cash flows. It expects to utilize the financing facility to support strategic initiatives, capitalize on growth opportunities across its diversified portfolio, and drive long-term shareholder value, particularly in advancing the development and commercialization of its BreastCheck sub-licensing program.

Management Comments

• "This agreement delivers predictable monthly cash flow and underscores our commitment to building recurring, scalable revenue." Michael Redmond, President and CEO of Odyssey Health, Inc.
• "The financing facility further positions us to capitalize on growth opportunities across our diversified portfolio and drive long-term shareholder value." Michael Redmond, President and CEO of Odyssey Health, Inc.

Industry Context

This announcement reflects a common strategy for smaller medical technology companies like Odyssey Health, Inc., which often rely on non-traditional financing to fund research, development, and commercialization efforts for new medical solutions such as BreastCheck. The long-term service contract provides a foundational revenue stream, which is crucial for companies in capital-intensive sectors. However, the highly dilutive nature of the convertible debt and warrants suggests the company may have limited access to more conventional, less costly financing options, a situation often faced by early-stage or higher-risk ventures in the medical device industry.

Comparison to Industry Standards

• The conversion price of 85% of the lowest VWAP over 10 trading days is significantly below typical market-rate convertible debt, indicating a substantial discount for the investor and high potential dilution for existing shareholders, which is generally worse than industry standards for financially stable companies.
• The issuance of warrants equal to 20% of the principal amount divided by the lowest traded price, exercisable at $0.001, represents a very aggressive equity sweetener for the lender, far exceeding standard warrant coverage in less distressed financing scenarios.
• The 10% original issue discount (OID) and 10% annual interest rate are on the higher end for corporate debt, reflecting the perceived risk by the lender.
• The extensive list of events of default and the severe penalty of 150% of outstanding principal plus interest upon default are highly restrictive and more punitive than typically found in standard corporate financing agreements, suggesting a high-risk profile for Odyssey.
• The requirement for the company to apply up to 100% of rental receivables and 50% of other cash proceeds to repay the note is a highly aggressive repayment term, significantly limiting the company's ability to reinvest cash flow into its operations or other strategic initiatives, unlike more flexible financing structures seen in healthier companies.

Corporate Governance

Legal Proceedings

• Any money judgment, writ, or similar process entered against the company or its subsidiary for more than $100,000, remaining unvacated, unbonded, or unstayed for 20 days, constitutes an Event of Default.
• Bankruptcy, insolvency, reorganization, or liquidation proceedings instituted by or against the company or any subsidiary constitute an Event of Default.
• All claims arising under the Maintenance Note, Master Convertible Promissory Note, Securities Purchase Agreement, and Warrants (excluding specific calculation disputes) are subject to binding arbitration in the State of Nevada.

Stakeholder Impact

• Shareholders face significant potential for dilution due to the highly unfavorable conversion terms of the notes (85% of lowest VWAP) and the substantial warrant coverage, which could materially decrease their ownership percentage and value per share.
• The company's financial flexibility is severely constrained by the requirement to apply a large portion of future cash flows (up to 100% of rental receivables, 50% of other proceeds) to repay the SPA Note, potentially limiting funds for operations, R&D, or other growth initiatives.
• The stringent covenants and numerous events of default place the company under considerable operational and financial pressure, increasing the risk of default and the associated 150% penalty.
• The long-term maintenance contract provides a stable revenue stream, which could be beneficial for the company's long-term viability and its ability to fund its medical device development, indirectly benefiting employees and future customers.

Next Steps

• Implement the facility service agreement to generate predictable cash flows.
• Utilize the financing facility to support strategic initiatives and capitalize on growth opportunities.
• Advance the development and commercialization of the BreastCheck sub-licensing program.
• File an effective registration statement with the SEC within 60 days of entering each tranche of the SPA Note.
• Purchase director and officer insurance within 60 calendar days of the closing, with two years of tail coverage.

Key Dates

Recommendation

The terms of this financing are extremely punitive and highly dilutive for existing shareholders. The deep discount conversion price, substantial warrant coverage, high interest rates, and numerous restrictive covenants, coupled with a 150% default penalty, indicate a company in a precarious financial position. While securing funding is positive, the cost of this capital suggests significant underlying risks and a likely inability to secure more favorable terms. The mandatory second tranche and the requirement to use a large portion of future cash flows for repayment further limit operational flexibility. This structure is designed to benefit the lender at the expense of equity holders, making the stock a high-risk investment with substantial downside potential from dilution and potential default.

Keywords

Odyssey Health, ODYY, convertible note, financing, medical device, BreastCheck, maintenance contract, capital raise, warrants, dilution, corporate governance, SEC filing, debt financing