10-K: QHSLab, Inc. Reports Increased Revenue but Faces Going Concern Uncertainty in Annual 10-K Filing

Sentiment:

Annual Report 28 March 2025 4:42 PM

QHSLab, Inc.'s annual report reveals revenue growth driven by allergy diagnostic kits and integrated service programs, but also highlights significant debt and uncertainties about the company's ability to continue as a going concern.

Capital raiseThe company's ability to continue as a going concern is dependent on obtaining necessary equity or debt financing.The company may need to offer the holders of its debt increases in the rates of interest they receive or otherwise compensate them through payments of cash or issuances of our equity securities or reductions in the price at which they can convert their convertible securities.

Worse than expectedThe company reported net losses and has substantial debt, raising concerns about its financial stability.The company's independent auditor's report raises uncertainty about its ability to continue as a going concern.The company identified material weaknesses in its internal controls related to segregation of duties.

Summary

QHSLab, Inc., a medical device technology and SaaS company, filed its annual report on Form 10-K for the fiscal year ended December 31, 2024.
The company focuses on providing primary care physicians with tools to evaluate and treat chronic diseases and provide preventive care.
QHSLab reported net losses of $259,239 and $468,362 for the years ended December 31, 2024 and 2023, respectively.
The company generated revenues of $2,131,926 in 2024, compared to $1,408,995 in 2023, primarily driven by sales of Allergy Diagnostic Kits and Integrated Service Program (ISP) services.
The report indicates a material weakness in internal controls due to a lack of segregation of duties.
The company is highly leveraged, with outstanding notes and loans totaling $2,061,988 as of the report date.
The report raises substantial doubt about the company's ability to continue as a going concern due to its debt and operating losses.
The company is in default on its Original Issue Discount Secured Convertible Promissory Notes and Acquisition Note.
The company's ability to continue as a going concern is dependent on obtaining financing and generating positive cash flow.
The company's common stock is subject to the Penny Stock Rules of the SEC, which makes transactions in its stock cumbersome and may reduce the value of an investment in its stock.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there's revenue growth, the going concern warning, debt levels, and internal control issues weigh heavily, indicating a cautious outlook.

Positives

The company experienced revenue growth in 2024, driven by increased sales of Allergy Diagnostic Kits and Integrated Service Program (ISP) services.
The company's gross margin improved from 56.3% in 2023 to 63.7% in 2024.
The company generated positive cash flows from operations during the year ended December 31, 2024.
The company is focused on expanding its product portfolio and increasing industry visibility.

Negatives

The company incurred net losses of $259,239 and $468,362 for the years ended December 31, 2024 and 2023, respectively.
The company is highly leveraged, with significant outstanding debt.
The company is in default on its Original Issue Discount Secured Convertible Promissory Notes and Acquisition Note.
The company identified material weaknesses in its internal controls related to segregation of duties.
The company's independent auditor's report raises uncertainty about its ability to continue as a going concern.

Risks

The company's ability to continue as a going concern is dependent on obtaining financing and generating positive cash flow.
The company is subject to the Penny Stock Rules of the SEC, which makes transactions in its stock cumbersome and may reduce the value of an investment in its stock.
The company faces intense competition in the healthcare industry.
The company's business is subject to evolving government regulations.
The company's reliance on third parties for its products and services poses a risk to its operations.
The company's dependence on key personnel and the potential loss of their services could adversely affect its operations.
The company's sole officer and director is engaged in other business activities and has a conflict in determining how much time to devote to the company's affairs.

Future Outlook

The company plans to increase revenues by charging physicians for the use of QHSLab, soliciting additional healthcare providers, and introducing new point of care diagnostics and treatments.

Management Comments

Increasingly, regulators and insurance companies have come to recognize what health care technologists have been saying for nearly 20 years, which is that most chronic conditions are better managed with more frequent and short encounters often without a physicians direct participation, rather than infrequent visits.
More health insurers have realized that AI enabled digital medicine technologies such as those provided through QHSLab can provide the necessary encounters to foster patient compliance in between face to face visits to a physician.

Industry Context

The healthcare industry is experiencing a shift towards digital technologies to improve outcomes, access, and cost-effectiveness, particularly in chronic and preventive care management.

Comparison to Industry Standards

The document mentions competitors such as Phresia, Qure4U, Linus Health, Chadis, Yosi Health, Greenway Health and Health Note.
These companies operate in the chronic disease management and digital health space, offering solutions for allergies, asthma, diabetes, hypertension, and behavioral health.
Many competitors have greater resources, recognition, deeper customer relationships, larger existing customer bases, and more mature intellectual property portfolios than QHSLab.

Related Party Transactions

The company is provided office space at no cost by an entity related to Troy Grogan.
Amounts due to related parties consist of cash advances received from our principal shareholder, bear no interest and are due on demand.

Stakeholder Impact

Shareholders face the risk of dilution from future equity issuances.
Creditors face the risk of default on outstanding debt.
Employees face uncertainty about the company's long-term viability.
Customers (physicians) may be affected by the company's ability to provide ongoing services and support.

Next Steps

The company intends to increase revenues by charging physicians for the use of QHSLab, soliciting additional healthcare providers, and introducing new point of care diagnostics and treatments.
The company will consider the need to add personnel and implement improved review procedures to address the material weaknesses in internal controls.

Key Dates

Date	Description
1983-09-01	QHSLab, Inc. was incorporated in Delaware.
2016-06	Troy Grogan became Chairman and CEO.
2019	The Company became engaged in value-based healthcare, informatics and algorithmic personalized medicine.
2020	Adoption of Equity Incentive Plan.
2020-Q4	Began shipping AllergiEnd diagnostic related products and immunotherapy treatments.
2021-05-07	Issued Convertible Promissory Note to a shareholder.
2021-06-21	Information Statement on Form 14-C filed.
2021-06-23	Entered into a purchase agreement to acquire certain assets from MedScience Research Group, Inc.
2021-09-23	Changed state of incorporation from Delaware to Nevada.
2021-11-11	Mercer Street Global Opportunity Fund, LLC converted $50,000 of the principal amount of the $806,000 Note into 76,923 shares of the Company's common stock.
2021-12-29	Report on Form 8-K filed.
2022-Q2	Began to enter into SaaS subscription agreements.
2022-Q4	Began entering into Integrated Service Program (ISP) agreements.
2022-04-19	Changed name to QHSLab, Inc.
2022-07-19	Entered into a Securities Purchase Agreement with Mercer Fund.
2022-07-27	Mercer Fund converted $50,000 of the principal amount of the $806,000 Note into 250,000 shares of the Company's common stock.
2023-07-22	Original Issue Discount Secured Convertible Promissory Note in the principal amount of $440,000 matured.
2023-08-10	Original Issue Discount Secured Convertible Promissory Note in the remaining principal amount of $695,500 matured.
2023-10-05	The Company agreed to reduce the conversion price with respect to $10,500 of the amounts payable pursuant to the $806,000 Note to two and one-half ($0.025) cents per share.
2024-03-04	The Company agreed to reduce the conversion price with respect to $12,000 of the amounts payable pursuant to the $806,000 Note to two and one-half ($0.025) cents per share.
2024-06-04	Accell Audit and Compliance, P.A. was dismissed as the Company's independent auditors.
2024-06-04	Astra Audit & Advisory LLC was appointed as the new independent registered auditor.
2024-06-30	The aggregate market value of our common stock held by non-affiliates was $1,742,479.
2024-08-12	The Company entered into a fixed-fee short-term loan with its merchant bank and received $88,555 in net loan proceeds.
2024-12-31	End of fiscal year.
2025-01-06	Mercer Street Global Opportunity Fund, LLC, converted $25,000 of the principal amount of the $806,000 Secured Convertible Promissory Note into 125,000 shares of the Company's common stock.
2025-01-13	Mercer Street Global Opportunity Fund, LLC, converted $50,000 of the principal amount of the $806,000 Secured Convertible Promissory Note into 250,000 shares of the Company's common stock.
2025-02-05	The Company entered into an Investor Relations Consulting Agreement with Hayden IR, LLC.
2025-02-19	The Company received the most recent notice from the manager of Mercer Fund, LLC that it agreed to forebear from exercising any rights it might have as a result of any defaults under the $440,000 Note and the related documents between the Company and the Fund, provided that it reserved all of its rights.
2025-02-20	The Company received a Notice of Default from Mercer Street Global Opportunity Fund, LLC in connection with the $806,000 Note and the $440,000 Note.
2025-03-28	The Registrant had 11,281,527 shares of common stock outstanding.

Keywords

QHSLab, revenue, convertible notes, going concern, AllergiEnd, internal controls, debt, healthcare, SaaS, medical device

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