UEEC.OQBUnited Health Products, INC

10-K: United Health Products Reports Continued Losses, Focus Remains on FDA Approval for CelluSTAT

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United Health Products' 2024 10-K filing reveals ongoing efforts to secure FDA approval for its CelluSTAT hemostatic gauze while navigating financial challenges and operational adjustments.

Delay expectedThe FDA's 180-day PMA application review period is currently paused while UHP works to address the FDA's requests.
Capital raiseThe company will need additional financing to execute its business plan and fund operations.Future financings through equity investments are likely to be dilutive to existing shareholders.The company is pursuing required additional capital through various means, including commercial collaborations and debt or equity financings.
Worse than expectedThe company reported a net loss of $2,001,733 for the year ended December 31, 2024.The company had no revenues in 2024 and 2023.As of December 31, 2024, the company had a negative working capital of $1,449,469.The company's auditor has expressed substantial doubt about its ability to continue as a going concern.The company has identified material weaknesses in its internal control over financial reporting.

Summary

  • United Health Products, Inc. (UHP) is focused on developing, manufacturing, and marketing its patented hemostatic gauze, CelluSTAT.
  • The company is seeking FDA Premarket Approval (PMA) for CelluSTAT to enter the U.S. Class III human surgical market.
  • In March 2024, UHP submitted a full PMA application to the FDA, receiving a Deficiencies Letter in June 2024 with approximately 40 specific comments and requests for additional information.
  • UHP submitted a Submission Issue Request (SIR) to the FDA in August 2024, outlining its plan to address the FDA's comments.
  • The FDA requested more data to confirm the safety and effectiveness of CelluSTAT in surgical procedures, leading UHP to propose a multi-site study with 27 human subjects.
  • The FDA's 180-day PMA application review period is currently paused.
  • From September 23 through October 4, 2024, the FDA conducted a Bioresearch Monitoring Program (BIMO) Inspection of UHP's clinical study records and procedures.
  • UHP submitted its response to the FDA's observations on October 25, 2024.
  • UHP's primary strategy involves targeting the Class III human surgical markets due to less competition and premium pricing.
  • The company is evaluating potential commercial partnerships and licensing agreements, as well as a possible acquisition or merger.
  • For the year ended December 31, 2024, UHP reported a net loss of $2,001,733, compared to a net loss of $2,623,267 for the prior year.
  • The company had no revenues in 2024 and 2023.
  • As of December 31, 2024, UHP had a negative working capital of $1,449,469.
  • UHP's independent registered public accounting firm has expressed substantial doubt about its ability to continue as a going concern.
  • As of March 26, 2025, UHP had three personnel working under consulting agreements.
  • The company is subject to extensive regulation by the FDA and must comply with various federal and state laws.
  • UHP has identified material weaknesses in its internal control over financial reporting.
  • The company is seeking additional financing to execute its business plan and fund operations.
  • As of March 26, 2025, there were 252,408,222 shares of common stock issued and outstanding.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there's progress in addressing FDA concerns and a slight improvement in net loss, significant financial challenges, auditor concerns, and internal control weaknesses temper the outlook.

Positives

  • The company is actively addressing the FDA's concerns regarding CelluSTAT's safety and effectiveness.
  • The net loss decreased from $2,623,267 in 2023 to $2,001,733 in 2024.
  • UHP is exploring strategic alternatives to maximize shareholder value, including potential partnerships or a sale of the company.
  • The company has received approximately $3.2 million in proceeds from White Lion which the Company has used to pay for its operations and finalization of its Class III PMA application.
  • UHP had a $115,085 gain on settlement of debt in the current year.

Negatives

  • The company has a history of operating losses and expects to continue losing money in the future.
  • UHP has a negative working capital of $1,449,469 as of December 31, 2024.
  • The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
  • UHP has identified material weaknesses in its internal control over financial reporting.
  • The company is reliant on receiving Premarket Approval (PMA) from the FDA for its CelluSTAT product in order to implement its business strategy of targeting the surgical market.
  • The company generated no revenue during the years ended December 31, 2024 and 2023 due to focusing its capital and resources towards seeking a Class III PMA for its CelluSTAT technology.

Risks

  • The FDA may not approve UHP's Class III application for CelluSTAT.
  • UHP may not be able to obtain additional financing when needed.
  • There is no guarantee of market acceptance for CelluSTAT.
  • UHP may be dependent on commercial relationships to conduct its operations and implement its strategy.
  • UHP could experience difficulties in its supply chain.
  • The company is currently dependent on one hemostatic gauze product to generate income in the future.
  • UHP may not be able to adequately protect its technologies or intellectual property rights.
  • The company's stock price may be volatile.
  • There is currently no established market for UHP's common stock.
  • UHP is subject to extensive regulation by the FDA and must comply with various federal and state laws.
  • The healthcare industry is subject to extensive government regulation, which can result in increased costs, delays, limits on its operating flexibility and competitive disadvantages.

Future Outlook

The company is focused on obtaining FDA pre-market approval for CelluSTAT and is evaluating paths to rapidly develop and grow revenue and profits, including potential commercial partnerships, licensing agreements, or a possible acquisition/merger.

Management Comments

  • Management believes that the Class III surgical markets represent the most attractive market for their products.
  • Management is carefully evaluating the returns on investment to create shareholder value of each of these strategies.
  • The CEO and Principal Financial Officer have concluded that, as of December 31, 2024, the company had material weaknesses in its internal controls over financial reporting and that, as a result, its disclosure controls and procedures and its internal controls over financial reporting were not effective at such date.

Industry Context

The wound care products market is concentrated among large and established companies such as Baxter International, Becton Dickinson & Company, Johnson & Johnson (Ethicon), Teleflex and 3M Company, each of which have greater capital and operational resources than UHP.

Comparison to Industry Standards

  • The document mentions Ethicon's Surgicel Original as the standard of care in hemostasis, against which CelluSTAT showed statistically superior performance in a clinical trial.
  • The company acknowledges that it competes with larger, established companies like Baxter International, Becton Dickinson & Company, Johnson & Johnson (Ethicon), Teleflex and 3M Company, which have greater capital and operational resources.
  • The company is targeting the Class III surgical market, where there is limited competition from other Class III approved Oxidized Regenerated Cellulose (ORC) products.

Related Party Transactions

  • Convertible notes payable related parties totaled $500,000 as of December 31, 2024.
  • Brian Thom, the Company's Chief Executive Officer, converted $372,000 of a loan payable balance to a convertible note payable.
  • Robert Denser, a Director of the Company, loaned the Company $93,000 through a convertible note.
  • Kristofer Heaton, the Principal Financial Officer, loaned the Company $4,000 to pay for operating expenses.

Stakeholder Impact

  • Shareholders face potential dilution from future equity financings.
  • The company's ability to continue as a going concern is uncertain, which could impact stakeholders.
  • Employees and consultants are subject to insider trading policies.
  • The success of CelluSTAT could benefit patients and healthcare providers.

Next Steps

  • UHP will continue to address the FDA's comments and requests for additional information.
  • The company will submit an Investigational Device Exemption (IDE) for FDA approval for the multi-site study.
  • UHP will identify and contract suitable surgical sites for the multi-site study.
  • The company will enroll patients and collect data for the multi-site study.
  • UHP will evaluate potential commercial partnerships and licensing agreements.
  • The company will continue to consider a range of strategic alternatives, which include, without limitation, entering into one or more commercial and distribution partnerships, a sale of the Company or a standalone growth plan.

Key Dates

DateDescription
2012CelluSTAT received FDA 510(k) approval for superficial bleeding situations.
November 2014Robert J. Denser has served as a Director of the Company since November 2014.
June 25, 2015Validity of a June 25, 2015 Amendment to Philip Forman's November 10, 2014 Employment Agreement was settled.
April 29, 2022The Company settled the SECs investigation through the filing of a consent judgment on the terms described in the Companys Form 8-K filed on April 29, 2022.
June 15, 2022The Security and Exchange Commissions (SEC) investigation of the Company, initially reported in the Companys Annual Report on Form 10-K for the year ended December 31, 2021, was settled through the filing of a consent judgment.
September 1, 2022The Company entered into a common stock purchase agreement (the CSPA) with White Lion Capital, LLC (White Lion).
September 7, 2022The Company filed a registration statement on Form S-3 to register for resale up to 15,000,000 common shares.
September 19, 2022The Companys S-3 registration statement was declared effective by the SEC on September 19, 2022.
October 31, 2022The Company signed a 120-day lease for 600 square feet of space in Hammonton, New Jersey to install and test its medical device equipment.
January 25, 2023The Company and White Lion amended the CSPA (the 'First Amendment').
March 31, 2023A 2018 lawsuit filed by Philip Forman, against the Company and its former CEO relating to the validity of a June 25, 2015 Amendment to his November 10, 2014 Employment Agreement with the Company and claims for compensation on termination of his employment was settled.
May 2023The Company entered into 36-month operating lease, which provides for approximately 1,800 square feet of office space, that commenced on June 1, 2023 and ends on May 31, 2026.
June 1, 2023The Company entered into 36-month operating lease, which provides for approximately 1,800 square feet of office space, that commenced on June 1, 2023 and ends on May 31, 2026.
August 1, 2023The amended payment plan called for the Company to make three $50,000 payments with payments due on August 1, 2023, September 1, 2023 and October 1, 2023 with any remaining principal plus outstanding post-judgement interest to be paid on November 1, 2023.
September 1, 2023The amended payment plan called for the Company to make three $50,000 payments with payments due on August 1, 2023, September 1, 2023 and October 1, 2023 with any remaining principal plus outstanding post-judgement interest to be paid on November 1, 2023.
October 1, 2023The amended payment plan called for the Company to make three $50,000 payments with payments due on August 1, 2023, September 1, 2023 and October 1, 2023 with any remaining principal plus outstanding post-judgement interest to be paid on November 1, 2023.
November 1, 2023The amended payment plan called for the Company to make three $50,000 payments with payments due on August 1, 2023, September 1, 2023 and October 1, 2023 with any remaining principal plus outstanding post-judgement interest to be paid on November 1, 2023.
December 15, 2023The Company entered into amendments on the above convertible notes, which extended the maturity date to December 31, 2024 and increased the interest rate from 10% to 13%, effective January 1, 2024.
January 1, 2024The Company entered into amendments on the above convertible notes, which extended the maturity date to December 31, 2024 and increased the interest rate from 10% to 13%, effective January 1, 2024.
March 2024UHP submitted a full PMA application to the FDA.
June 2024UHP received a Deficiencies Letter from the FDA with approximately 40 specific comments and requests for additional information.
June 20, 2024The Company and White Lion amended the CSPA (the Second Amendment).
June 26, 2024The Company filed a registration statement on Form S-1 to register for resale an additional 15,000,000 common shares related to CSPA.
July 29, 2024The Company's S-1 registration statement was declared effective by the SEC on July 29, 2024.
August 5, 2024The Company entered into a $150,000 promissory note with a third-party lender, which was non-interest bearing and had a maturity date of 60 days.
August 2024UHP submitted a Submission Issue Request (SIR) to the FDA, outlining its plan to address the FDA's comments.
September 23 through October 4, 2024The FDA conducted a Bioresearch Monitoring Program (BIMO) Inspection of UHP's clinical study records and procedures.
October 25, 2024UHP submitted its response to the FDA's observations.
October 28, 2024The Company entered into an amendment to this promissory note, which extended the maturity date to 120 days.
December 16, 2024The Company rolled the $150,000 promissory note into a convertible note agreement with this third-party lender.
December 20, 2024The Company entered into amendments on the above convertible notes, which extended the maturity dates to December 31, 2026.
December 31, 2026The Company entered into amendments on the above convertible notes, which extended the maturity dates to December 31, 2026.
March 26, 2025As of March 26, 2025, UHP had three personnel working under consulting agreements.
May 31, 2026The Company entered into 36-month operating lease, which provides for approximately 1,800 square feet of office space, that commenced on June 1, 2023 and ends on May 31, 2026.

Keywords

CelluSTAT, hemostatic gauze, FDA approval, Premarket Approval, surgical market, wound care, financial results, going concern, internal control, White Lion Capital, operating loss, UEEC

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