Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2025 and 2024 and notes thereto contained elsewhere in this Report, and our annual report on Form 10-K for the twelve months ended December 31, 2024 including the consolidated financial statements and notes thereto contained in such Report. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements. See "Cautionary Note Concerning Forward-Looking Statements."

Overview

We are a medical device technology and software as a service ("SaaS") company focused on enabling primary care physicians ("PCPs") to increase their revenues by providing them with relevant, value-based tools to evaluate and treat chronic disease as well as provide preventive care through reimbursable procedures. In some cases, the products we provide our physician clients will enable them to diagnose and treat patients with chronic diseases which they historically have referred to specialists, allowing them to increase their practice revenue. As part of our mission, we are providing PCPs with the software, training and devices necessary to allow them to treat their patients using value-based healthcare, informatics and algorithmic personalized medicine, including digital therapeutics. Our virtual and point of care solutions also support non face to face clinical decision making and remote patient monitoring, to address chronic care and preventive medicine and are reimbursable to the medical practice.

Increasingly, regulators and insurance companies have come to recognize what health care technologists have been saying for nearly 17 years, which is that most chronic conditions are better managed with more frequent and short encounters often without a physician's direct participation, rather than infrequent visits. More health insurers have realized that Artificial Intelligence ("AI") enabled digital medicine technologies such as those provided through our proprietary internally-developed QHSLab platform software ("QHSLab") can provide the necessary encounters to foster patient compliance in between visits to a physician.

Based on the success of PCPs using our QHSLab allergy diagnostics combined with the products acquired from MedScience Research Group, Inc. ("MedScience"), we intend to increase our revenues by charging physicians a monthly subscription fee for the use of QHSLab and soliciting additional PCPs to increase their revenues by using our proven revenue generating QHSLab and AllergiEnd® line of products. We also plan to introduce additional point of care diagnostics and treatments, and digital medicine programs that PCPs can use and prescribe in their practices. In all cases, PCPs will be paid under existing government and private insurance programs, based upon analyses conducted utilizing QHSLab and treatments provided as a result of such analyses.

Our ability to operate profitably is determined by our ability to generate revenues from the licensing of our QHSLab software and the sale of diagnostic related products and treatment protocols and the provision of services through our QHSLab system. Currently, we are generating revenues from the sale of AllergiEnd® diagnostic related products and immunotherapy treatments. Our ability to generate a profit from these sales is determined by our ability to increase the number of physicians using these products. We will continue to upgrade QHSLab in an effort to increase the number of products sold based upon the services it can provide and for which we are able to charge a fee for its use.

We operate as a single operating segment and single reportable segment. Operating segments are defined as components of a business that can earn revenue and incur expenses and for which discrete financial information is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. Our CODM, the Chief Executive Officer, allocates resources and assesses performance based upon condensed consolidated financial information due to the interconnected relationship of our products to the same customers, therefore manages our business as a single operating segment.

Results of Operations during the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024

Revenues

During the fourth quarter of 2020 we began to sell the AllergiEnd® Products, consisting of AllergiEnd® Allergy Diagnostics and Allergen Immunotherapy treatments, to physicians. During the second quarter of 2022, we began to enter into SaaS subscription agreements to provide physicians with access to our proprietary internally-developed QHSLab platform software that provides clinical decision support and patient monitoring for numerous chronic conditions seen in primary care settings including allergy, asthma, anxiety, depression, chronic pain, and sleep disorders for example. During the fourth quarter of 2022, we began entering into Integrated Service Program ("ISP") agreements to provide physicians' offices with agreed-upon clinical decision support, digital health assessments, administrative workflow, and reimbursement support services utilizing our QHSLab platform.

For the three months ended June 30, 2025, we generated revenues of $605,446 compared to $473,073 of revenues for the three months ended June 30, 2024 which was driven by a 64% increase in our ISP revenues during the period.

For the six months ended June 30, 2025, we generated revenues of $1,250,865 compared to $961,660 of revenues for the six months ended June 30, 2024. The increase in revenues for the first half of 2025, is attributed to the inclusion of revenues as a result of the achievement of the performance obligations associated with a clinical study undertaken by us pursuant to an agreement with a third party, a 48.2% increase in revenues generated from ISP services to $426,130 compared to $287,452 in the first half of 2024. Revenues for the first half of 2025 were also driven by an 8% increase in sales of Allergy Diagnostic Kits to $462,557 compared to $428,060 for the six months ended June 30, 2024.

Our revenues consisted of the following:

		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
		2025				2024				2025				2024
Allergy Diagnostic Kit Sales		$	197,644			$	190,994			$	462,557			$	428,060
Integrated Service Program			263,628				160,448				426,130				287,452
Immunotherapy Treatment Sales			119,885				92,482				217,214				178,807
Clinical Study Revenue			-				-				89,100				-
Subscription Revenue			9,252				14,339				18,537				32,709
Shipping and handling			10,091				8,861				20,061				18,820
Training and Other Revenue			4,946				5,949				17,266				15,812
Total revenue		$	605,446			$	473,073			$	1,250,865			$	961,660

Cost of Revenues and Gross Profit

Cost of revenues consists of the cost of the AllergiEnd® test kits and allergen immunotherapy pharmacy prepared treatment sets, shipping costs to our customers as well as administrative services and labor expenses directly related to ISP sales and the amortization of our capitalized software.

For the three months ended June 30, 2025 and 2024, cost of revenues was $206,431 and $178,628, respectively.

The Company generated a gross profit of $399,015 during the three months ended June 30, 2025 compared to $294,445 for the three months ended June 30, 2024. Gross margin improved to 65.9% for the quarter compared to 62.2% during the three months ended June 30, 2024.

For the six months ended June 30, 2025 and 2024, cost of revenues was $421,906 and $381,057, respectively.

The Company generated a gross profit of $828,959 during the six months ended June 30, 2025 compared to $580,603 for the six months ended June 30, 2024. Gross margin increased from 60.4% during the six months ended June 30, 2024 to 66.3% during the six months ended June 30, 2025. This increase in gross margin was driven by several factors, including a favorable shift in product mix, highlighted by a $138,678 (48.2%) increase in ISP revenue and synergies across our core product lines as well as the recognition of revenue as a result of the achievement of research performance obligations associated with the clinical study which utilizes costs already included in cost of goods sold.

As we continue to introduce new products at an early stage in our development cycle, the gross margins may vary significantly between periods, due, among other things, to differences among our customers and products sold, customer negotiating strengths, and product mix.

Sales and Marketing

Sales and marketing expenses consist primarily of costs associated with selling and marketing our products to PCPs, principally ongoing sales efforts to recruit new PCPs and maintain our relationships with PCPs already using our software and products. These expenses include employee compensation and costs of consultants.

For the three months ended June 30, 2025, sales and marketing expenses totaled $158,447 compared to $134,183 for the three months ended June 30, 2024.

For the six months ended June 30, 2025, sales and marketing expenses totaled $302,846 compared to $256,129 for the six months ended June 30, 2024, an increase of $46,717.

The increase in sales and marketing expenses for the period ended June 30, 2025 compared to the same period in 2024 relate to an increase in payroll-related and strategic marketing expenses as we were investing in more sales and marketing activities to support our increasing ISP revenue. We expect our sales and marketing expenses to increase as we seek to build our customer base and launch additional products. Nevertheless, if we are successful in onboarding a sufficient number of PCPs and maintaining our relationships with these PCPs once they begin to fully utilize our products, sales and marketing expenses could decrease as a percentage of revenues, though we may increase our marketing efforts as funds become available.

General and Administrative

General and administrative expenses consist primarily of costs associated with operating a business including accounting, legal and management consulting fees.

For the three months ended June 30, 2025, general and administrative expenses totaled $98,650, an increase of $51,195, compared to $47,455 for the three months ended June 30, 2024.

For the six months ended June 30, 2025, general and administrative expenses totaled $254,173 an increase of $116,776, compared to $137,397 for the six months ended June 30, 2024.

The increase in general and administrative expenses for the period ended June 30, 2025 compared to the same period in 2024 is primarily due to increased fees associated with investor relations combined with increases in sales processing, cloud-related hosting and legal fees.

Research and Development

Research and development ("R&D") includes expenses incurred in connection with the research and development of our medical device technology solution, including software development and costs related to our clinical study. R&D costs are expensed as they are incurred.

For the three months ended June 30, 2025, R&D expenses totaled $112,364 which is an increase of $47,552 compared to $64,812 for the three months ended June 30, 2024.

For the six months ended June 30, 2025, R&D expenses totaled $236,397 which is an increase of $128,947 compared to $107,450 for the six months ended June 30, 2024.

The increase in R&D expenses for the period ended June 30, 2025, as compared to 2024, was driven by increases in software development expenses as we continue to expand the commercialization of our QHSLab platform software and R&D consulting expenses including the appointment of a medical and scientific affairs liaison during the second quarter of 2024. We expect that our R&D expenses will continue to increase as we invest in and expand our operations and further develop new products and services as part of the Company's growth strategy.

Other Income and Expense

For the three months ended June 30, 2025, interest expense increased by $31,627 to $64,484 from $32,857 for the three months ended June 30, 2024.

For the six months ended June 30, 2025, interest expense increased by $67,068 to $132,054 from $64,986 for the six months ended June 30, 2024.

The increase is driven by default interest associated with our $806,000 Note and $440,000 Note which were assigned to Catheter Precision, Inc. ("Catheter") on May 12, 2025. The interest rate on each Note increased from 5% to 18% as of the date of default under each Note. All accrued interest as of the default date was consolidated into the principal balance creating a new principal balance for the default interest rate.

Liquidity and Capital Resources

Liquidity is a measure of a company's ability to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. On June 30, 2025, we had current assets totaling $385,980, including $168,358 of cash, $148,191 of accounts receivable, $42,264 of inventory, and $27,167 related to prepaid expenses and other current assets. At such date we had total current liabilities of $2,354,356 consisting of $362,162 in accounts payable, $411,087 in other current liabilities and $1,581,107 representing the current portions of outstanding loans and convertible notes. There were no balances classified as long-term liabilities on our condensed consolidated balance sheets.

On December 31, 2024, we had current assets totaling $420,827, including $157,168 of cash, $196,089 of accounts receivable, $41,779 of inventory, and $25,791 related to prepaid expenses and other current assets. At such date we had total current liabilities of $2,407,308 consisting of $340,962 in accounts payable, $343,945 in other current liabilities and $1,722,401 representing the current portions of outstanding loans and convertible notes. There were no balances classified as long-term liabilities on our condensed consolidated balance sheets.

We generated cash flows of $77,484 and $143,961 from operations during the periods ending June 30, 2025 and 2024, respectively.

During the third quarter of 2021, we issued a promissory note of $750,000 in connection with our acquisition of assets related to our AllergiEnd® products and an Original Issue Discount Secured Convertible Promissory Note in the principal amount of $806,000 (the "First OID Note") along with warrants to purchase 930,000 shares of our common stock for aggregate consideration of $750,000. In July 2022, to supplement our cash on hand, we issued to the holder of the First OID Note an Original Issue Discount Secured Convertible Promissory Note (the "Second OID Note," collectively with the First OID Note, the "OID Notes") in the principal amount of $440,000 and warrants to purchase 550,000 shares of our common stock for aggregate consideration of $400,000. Our obligations under the OID Notes are secured by a lien on substantially all of our assets. All amounts outstanding under the First OID Note and Second OID Note were payable on August 10, 2022, and July 22, 2023, respectively. The right to exercise the warrants issued in connection with the First OID Note expired on August 9, 2024 and the right to exercise the warrants issued in connection with the Second OID Note expired on July 18, 2025.

The remaining principal and interest accrued on the Acquisition Note was $451,828 as of June 30, 2025, and we are in default under this Note. We last received a notice of forbearance from the holder of the Acquisition Note on March 20, 2025, in which it reserved all of its rights. Amounts accrued as interest under the Acquisition Note do not include interest and penalties which would be payable if the holder of such Note elects to exercise its rights under the default provisions of the Note.

The outstanding principal amount and interest accrued under the OID Notes was $1,368,055 as of June 30, 2025. We have accrued default interest of 18% as of December 31, 2024 for the OID Notes and continue to accrue interest on the OID Notes at that rate. We last received a notice of forbearance from the manager of the then holder of the OID Notes on February 19, 2024, in which it reserved all rights it might have as a result of our defaults under the OID Notes and the related documents between us. On February 20, 2025 we received notices of default in respect of the OID Notes. See Note 7 Convertible Notes Payable for additional information regarding the OID Notes.

On May 12, 2025, the OID Notes were assigned to Catheter. There is no guarantee that Catheter, the holder of the OID Notes, and the holder of the Acquisition Note will continue to forbear from exercising such rights as they may have to collect amounts due, including seeking to foreclose upon such liens they may have on our assets.

Plan of Operation and Funding

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We had an accumulated deficit of $4,463,917 at June 30, 2025, generated net losses of $132,567 and $259,239 for the six months ended June 30, 2025 and the year ended December 31, 2024, respectively, and generated cash from operations of $77,484 in the six months ended June 30, 2025, and $142,437 in the year ended December 31, 2024. We are currently in default of our obligations under our OID Notes and the Acquisition Note. These factors, among others, raise substantial doubt about our ability to continue as a going concern for a reasonable period of time. Our continuation as a going concern is dependent upon our ability to obtain necessary equity or debt financing and ultimately from generating revenues and positive cash flow to continue operations and, in the interim, to convince the holders of our notes to forbear from exercising any rights they might have as a result of our defaults. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Our working capital requirements are expected to increase in line with the growth of our business. We will remain highly leveraged as we seek to expand our business. Existing working capital and anticipated cash flows are expected to be adequate to fund our operations over the next twelve months, provided the holders of our notes do not initiate enforcement proceedings. If necessary, we would seek to supplement the amounts available to fund our operations through the issuance of debt or equity.

In addition to using our cash to satisfy our working capital needs, from time to time we have made payments on our outstanding indebtedness to limit the continued growth in the amount of accrued interest and penalties, and to retain the support of our lenders, and may do so in the future. While the previous holder of our OID Notes agreed to forbear from seeking to collect the amounts due, it assigned its rights in the OID Notes to Catheter. To date, Catheter has not commenced actions seeking to enforce its rights under the OID Notes and the Company has engaged in discussions with Catheter in an effort to restructure the OID Notes. The holder of the Acquisition Note previously agreed to forbear from exercising such rights as it may have as a result of our default and to date has not commenced an action seeking to enforce its rights under the Acquisition Note. Nevertheless, at this time, there is no guarantee the holders of the OID Notes and Acquisition Notes will continue seeking to enforce their rights under their notes. If they elect to exercise their rights, the amount of accrued interest and penalties owed under the agreements will substantially increase. Further, should they demand immediate payment of all amounts currently due and, in the case of the OID Notes, exercise rights available under the related Security Agreements, it would have a material adverse effect on our business and jeopardize our ability to continue operations. Any future effort to restructure existing indebtedness through agreements with our current lenders to allow us to increase the amount we can devote to expanding our operations will require the consent of our current lenders and likely would require the issuance of additional debt or equity securities. Should we seek to raise additional capital to satisfy our lenders, there is no assurance sufficient amounts will be available.

While we are focused on our business, we intend to continually explore our options to raise additional capital or, when available, borrow additional funds on terms which we believe are favorable to us. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders, could require the issuance of equity securities at prices we believe are below our true value and could cause the price of our common stock to decrease. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional borrowings could require that we grant the lenders a security interest or other rights that impede our ability to operate as we deem best for our shareholders. Further, any default under a loan agreement could result in an action which could force us to seek bankruptcy protection. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to maintain or expand our existing operations, take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business and adversely impact our financial results.

Our ability to obtain funds through the issuance of debt or equity is dependent upon the state of the financial markets at such time as we may seek to raise funds. The state of the capital markets may be adversely impacted by various risks and uncertainties, including, but not limited to future and current impacts of global events such as wars in the Ukraine and Israel, increases in inflation and other risks detailed in the risk factors sections detailed in our Annual Report on Form 10-K for the year ended December 31, 2024.