Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion and analysis contain forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under 'Risk Factors' and elsewhere in this Annual Report on Form 10-K.

Executive Level Overview

The Company develops, manufactures, and markets CelluSTAT®, the Company's patented hemostatic gauze designed to absorb exudate and help control bleeding from superficial wounds. Made from cotton, our gauze provides an effective solution for wound care and hemostasis in various healthcare settings.

The Company is actively working to expand our market reach by securing regulatory approvals for use in human surgical applications. It is in the process of seeking U.S. Class III approval from the Food and Drug Administration (FDA) and CE Mark certification in Europe. These approvals would allow the Company to introduce its hemostatic gauze product line into the surgical market, where the Company's management believes it can make a meaningful impact on patient care.

See Item 1 "Business - Developments" for a discussion about the Company's efforts in seeking FDA Premarket Approval for its CelluSTAT product.

Results of Operations years ending December 31, 2025 and 2024

The following table sets forth a summary of certain key financial information for the years ended December 31, 2025 and 2024:

		2025				2024
Revenue		$	-			$	-
Gross profit		$	-			$	-
Operating (expenses)		$	(2,255,474	)		$	(2,007,572	)
Operating (loss)		$	(2,255,474	)		$	(2,007,572	)
Other income (expense)		$	(413,874	)		$	5,839
Net (loss)		$	(2,669,348	)		$	(2,001,733	)
Basic and diluted		$	(0.01	)		$	(0.01	)

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Year ended December 31, 2025 versus year ended December 31, 2024

During the year ended December 31, 2025 and 2024, the Company had $0 revenues, respectively. The Company did not generate any revenues in the current year due to the continued focus of the Company's capital and resources towards obtaining a Class III PMA.

Operating Expenses

Total operating expenses for the year ended December 31, 2025 and 2024 were $2,255,474 and $2,007,572, respectively.

The increase in operating expenses was primarily due to an increase of $745,125 in stock-based compensation offset by a decrease of approximately $494,750 in professional expenses. The increase in stock-based compensation is due to the vesting of 4,725,000 RSUs and recording $1,120,125 as stock-based compensation. The decrease in professional expenses is due to the Company terminating services with certain consultants.

Other income (expense)

Other income (expense) for the year ended December 31, 2025 and 2024 was $(413,874) and $5,839, respectively. The change in other income (expense) was due to an increase in a loss on fraud of $242,000, an increase in interest expense of $90,962 from the outstanding convertible notes and loan balances, an increase in gain on derivative liabilities of $28,334 and a decrease in gain on settlement of debt of $115,085 from a settlement of accounts payable in the same period of the prior year vs no similar settlement in the current period.

The net loss for the year ended December 31, 2025 was $2,669,348 as compared to a net loss of $2,001,733 for the prior year. The increase in the net loss is due to the Company having an increase in operating expenses of $247,902 and an increase in other expense of $419,713 during the year ended December 31, 2025, as explained above.

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Liquidity and Capital Resources

As of December 31, 2025, the Company had a negative working capital of $3,837,757. The Company has not yet attained a level of operations, and for the foreseeable future will not achieve commercial operations, which will allow it to meet its current overhead expense obligations. The report of our independent registered public accounting firm on our 2025 and 2024 financial statements includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The Company generated no revenue during the years ended December 31, 2025 and 2024 due to focusing its capital and resources towards seeking a Class III PMA for its CelluSTAT hemostatic technology. There can be no assurance that adequate financing will continue to be available to the Company and, if available, on terms that are favorable to the Company. Our ability to continue as a going concern is also dependent on many events outside of our direct control, including, among other things, our ability to achieve our business goals and objectives.

As discussed in Note 6 of the financial statements, the Company entered into a common stock purchase agreement ("CSPA") with White Lion, which gives the Company the right, but not the obligation, to require White Lion to purchase up to $10,000,000 of the Company's common stock, subject to certain limitations and conditions set forth in the CSPA. The Company has received approximately $3.3 million in proceeds from White Lion from the sale of shares under the CSPA which the Company used to pay for its operations and advance its Class III PMA application. White Lion's commitment under the CSPA expired in October 2025. On December 16, 2025 we entered into an Any Markets Purchase Agreement ("AMPA") with Alumni Capital, LP, which requires Alumni Capital to purchase up to $4,000,000 of the Company's common stock, subject to certain limitations and conditions set forth in the AMPA. The sale of additional equity or convertible debt securities would be dilutive to our shareholders.

Cash Flows

The Company's cash on hand as of December 31, 2025 and 2024 was $65,249 and $168,883, respectively.

The following table summarizes selected items from our statements of cash flows for the years ended December 31, 2025 and 2024:

		2025				2024
Net cash used in operating activities		$	(1,186,942	)		$	(1,194,716	)
Net cash used in investing activities			-				-
Net cash provided by financing activities			1,083,308				1,268,179
Net increase (decrease) in cash and cash equivalents		$	(103,634	)		$	73,463

Net Cash Provided by (Used in) Operating Activities

Net cash used in operating activities for the year ended December 31, 2025 was $1,186,942. The Company had a net loss of $2,669,348, amortization of right-of-use asset of $810, gain on derivative liabilities of $28,334, and an increase in prepaid and other current assets of $17,343 offset by stock for services and compensation of $1,120,125, amortization of debt discount $1,649, amortization expense of $4,050, an increase in accounts payable and accrued expenses of $224,878, an increase in accrued liabilities - related party of $86,924 and an increase in accrued compensation of $91,267.

Net cash used in operating activities for the year ended December 31, 2024 was $1,194,716. The Company had a net loss of $2,001,733 and a gain on settlement of debt of $115,085 offset by amortization expense of $4,050, stock for services and compensation of $375,000, write-off of inventory of $33,598, amortization of right-of-use asset of $586, a decrease in prepaid and other current assets of $4, an increase in accrued liabilities - related party of $76,924, an increase in accrued compensation of $355,750 and an increase in accounts payable and accrued expenses of $76,190.

Net Cash Provided by (Used in) Investing Activities

The Company did not have any investing activities during the year ended December 31, 2025.

The Company did not have any investing activities during the year ended December 31, 2024.

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Net Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was $1,083,308. This was due to the result of the Company receiving proceeds of $770,000 from convertible notes, receiving proceeds of $250,000 from notes payable - related party, receiving proceeds of $65,708 from the sale of common stock offset by making payments of $2,400, receiving advances from related party of $145,000 offset by repayment of advances from related party of $145,000.

Net cash provided by financing activities for the year ended December 31, 2024 was $1,268,179. This was due to the result of the Company receiving proceeds of $863,579 from the sale of common stock offset by making payments of $11,400, proceeds of $66,000 from the sale of units, $200,000 in proceeds from a convertible note payable, and $150,000 in proceeds from a promissory note payable.

Off-Balance Sheet Arrangements

As of December 31, 2025 and 2024, we had no off-balance sheet arrangements.

Related Parties

Information concerning related party transactions is included in the financial statements and related notes, appearing elsewhere in this Annual Report on Form 10-K.

Critical Accounting Estimates

The preparation of financial statements in conformity with generally accepted accounting principles of the United States ("GAAP") requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses in the financial statements and accompanying notes. Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the Company. Based on this definition, we have the critical accounting estimates identified below. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results which are found in Note 2 - Significant Accounting Policies of the accompanying financial statements. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.

Stock-Based Compensation

The Company accounts for stock-based compensation under the provisions of ASC 718, Compensation-Stock Compensation. Stock-based compensation expense for employees and non-employees is measured at the grant date fair value. Stock-based compensation for all stock-based awards to employees and directors is recognized as an expense over the requisite service period, which is generally the vesting period.

Warrants

The Company accounts for common stock warrants in accordance with applicable accounting guidance provided in ASC 480 Distinguishing Liabilities from Equity and ASC 815 Derivatives and Hedging, as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement. The warrants classified within equity are indexed to the Company's common stock, provide for settlement in a fixed number of registered or unregistered shares for a fixed exercise price, and are freestanding equity instruments. Accordingly, they meet the criteria for equity classification under ASC 815-40 and are not subject to remeasurement in future periods. For warrants classified as equity instruments the Company applies the Black Scholes model and expenses the fair value as financing costs. For warrants classified as derivative financial instruments, the Company applies the Black Scholes model to value the warrants.

Recent Accounting Pronouncements

See Note 2, "Significant Accounting Policies".