{"url_path":"/sec/usaq/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 FINANCIAL STATEMENTS (unaudited)**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-14","source_url":"https://www.sec.gov/Archives/edgar/data/856984/0001493152-26-022888-index.html","accession_number":"0001493152-26-022888","cik":"0000856984","ticker":"USAQ","issuer_name":"QHSLab, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/856984/0001493152-26-022888-index.html","primary_entity_key":"0000856984","primary_entity_name":"QHSLab, Inc."},"word_count":6385,"has_tables":true,"body_markdown":"**ITEM\n1. FINANCIAL STATEMENTS (unaudited)**\n\n \n\n[Condensed Consolidated Balance Sheets – March 31, 2026 (unaudited) and December 31, 2025](#HK_002)\n5\n\n[Condensed Consolidated Statements of Operations – Three Months Ended March 31, 2026 and 2025 (unaudited)](#HK_005)\n6\n\n[Condensed Consolidated Statements of Stockholders’ Equity (Deficit) – Three Months Ended March 31, 2026 and 2025 (unaudited)](#HK_006)\n7\n\n[Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2026 and 2025 (unaudited)](#HK_007)\n8\n\n[Notes to the Condensed Consolidated Financial Statements (unaudited)](#HK_008)\n9\n\n \n\n4\n\n \n\n** **\n\n**QHSLab,\nInc.**\n\nCondensed\nConsolidated Balance Sheets\n\n \n\n  \nMarch\n31, 2026  \nDecember\n31, 2025 \n\n  \n(Unaudited)  \n  \n\nAssets \n    \n   \n\nCurrent\nAssets: \n    \n   \n\nCash\nand cash equivalents \n$362,088  \n$636,157 \n\nAccounts\nreceivable, net \n 201,202  \n 190,610 \n\nInventory \n 27,517  \n 35,790 \n\nPrepaid\nexpenses and other current assets \n 28,251  \n 20,452 \n\nTotal\ncurrent assets \n 619,058  \n 883,009 \n\nNon-current\nassets: \n    \n   \n\nIntangible\nassets, net \n 1,269,969  \n 1,287,997 \n\nTotal\nassets \n$1,889,027  \n$2,171,006 \n\n  \n    \n   \n\nLiabilities\nand Stockholders’ Equity (Deficit) \n    \n   \n\nCurrent\nLiabilities: \n    \n   \n\nAccounts\npayable \n$218,136  \n$326,431 \n\nOther\ncurrent liabilities \n 19,688  \n 17,858 \n\nDue to related party \n \n93,304\n  \n \n-\n \n\nLoans\npayable \n 36,877  \n 85,571 \n\nConvertible\nnotes payable \n -  \n 20,000 \n\nTotal\ncurrent liabilities \n 368,005  \n 449,860 \n\nNon-current\nLiabilities: \n    \n   \n\nLoans\npayable, non-current portion \n -  \n 96,218 \n\nTotal\nnon-current liabilities \n -  \n 96,218 \n\nTotal\nliabilities \n 368,005  \n 546,078 \n\n  \n    \n   \n\nCommitments\nand contingencies (Note 14) \n -   \n -  \n\n  \n    \n   \n\nStockholders’\nEquity (Deficit): \n    \n   \n\nPreferred\nstock, 10,000,000 shares authorized \n    \n   \n\nPreferred\nstock Series A, $0.0001 par value; 1,080,092 shares issued and outstanding \n 108  \n 108 \n\nPreferred\nstock Series A-2, $0.0001 par value; 2,644,424 shares issued and outstanding \n 264  \n 264 \n\nPreferred\nstock value \n 264  \n 264 \n\n  \n    \n   \n\nCommon\nstock, 900,000,000 shares authorized, $0.0001 par value; 15,032,788 shares issued and outstanding  \n 1,503  \n 1,503 \n\nAdditional\npaid-in capital \n 5,526,604  \n 5,526,604 \n\nAccumulated\ndeficit \n (4,007,457) \n (3,903,551)\n\nTotal\nstockholders’ equity \n 1,521,022  \n 1,624,928 \n\nTotal\nliabilities and stockholders’ equity \n$1,889,027  \n$2,171,006 \n\n \n\nSee\naccompanying notes to the unaudited condensed consolidated financial statements.\n\n \n\n5\n\n \n\n \n\n**QHSLab,\nInc.**\n\nCondensed\nConsolidated Statements of Operations\n\n \n\n  \n\nThree\nMonths Ended\n\nMarch\n31, 2026\n  \n\nThree\nMonths Ended\n\nMarch\n31, 2025\n \n\n  \n(Unaudited)  \n(Unaudited) \n\nRevenue \n$728,685  \n$645,419 \n\n  \n    \n   \n\nCost\nof revenue \n 257,882  \n 215,475 \n\n  \n    \n   \n\nGross\nprofit \n 470,803  \n 429,944 \n\n  \n    \n   \n\nOperating\nExpenses: \n    \n   \n\nGeneral\nand administrative \n 207,822  \n 155,523 \n\nSales\nand marketing \n 218,424  \n 144,399 \n\nResearch\nand development \n 120,909  \n 124,033 \n\nAmortization \n 18,028  \n 18,028 \n\nTotal\nOperating Expenses \n 565,183  \n 441,983 \n\n  \n    \n   \n\nNet\noperating loss \n (94,380) \n (12,039)\n\n  \n    \n   \n\nOther\nincome (expense): \n    \n   \n\nInterest\nexpense \n (9,526) \n (67,570)\n\nLoss\nbefore income taxes \n (103,906) \n (79,609)\n\nProvision\non income taxes \n -  \n - \n\nNet\nloss \n$(103,906) \n$(79,609)\n\n  \n    \n   \n\nBasic\nand diluted net loss per share \n$(0.00) \n$(0.01)\n\n  \n    \n   \n\nWeighted\naverage shares outstanding (basic and diluted) \n 15,032,788  \n 11,191,527 \n\n \n\nSee\naccompanying notes to the unaudited condensed consolidated financial statements.\n\n \n\n6\n\n \n\n \n\n**QHSLab,\nInc.**\n\nCondensed\nConsolidated Statements of Stockholders’ Equity (Deficit)\n\n(Unaudited)\n\n \n\n  \nShares  \nAmount  \nShares  \nAmount  \nShares  \nAmount  \nCapital  \nDeficit  \n(Deficit) \n\n  \nPreferred\nStock-\nSeries A  \nPreferred\nStock -\nSeries A-2  \nCommon\nStock  \nAdditional\nPaid-In  \nAccumulated  \nTotal\nStockholders’ Equity \n\n  \nShares  \nAmount  \nShares  \nAmount  \nShares  \nAmount  \nCapital  \nDeficit  \n(Deficit) \n\nBalance\nat January 1, 2025 \n 1,080,092  \n$108  \n 2,644,424  \n$264  \n 10,806,527  \n$1,081  \n$3,722,141  \n$(4,331,350) \n$(607,756)\n\nShares\nissued for services \n -  \n -  \n -  \n -  \n 100,000  \n 10  \n 20,990  \n -  \n 21,000 \n\nConversion\nof notes payable \n -  \n -  \n -  \n -  \n 375,000  \n 37  \n 74,963  \n -  \n 75,000 \n\nNet\nloss \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n (79,609) \n (79,609)\n\nBalance\nat March 31, 2025 \n 1,080,092  \n$108  \n 2,644,424  \n$264  \n 11,281,527  \n$1,128  \n$3,818,094  \n$(4,410,959) \n$(591,365)\n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nBalance\nat January 1, 2026 \n 1,080,092  \n$108  \n 2,644,424  \n$264  \n 15,032,788  \n$1,503  \n$5,526,604  \n$(3,903,551) \n$1,624,928 \n\nBalance \n 1,080,092  \n$108  \n 2,644,424  \n$264  \n 15,032,788  \n$1,503  \n$5,526,604  \n$(3,903,551) \n$1,624,928 \n\nNet\nloss \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n (103,906) \n (103,906)\n\nBalance\nat March 31, 2026 \n 1,080,092  \n$108  \n 2,644,424  \n$264  \n 15,032,788  \n$1,503  \n$5,526,604  \n$(4,007,457) \n$1,521,022 \n\nBalance \n 1,080,092  \n$108  \n 2,644,424  \n$264  \n 15,032,788  \n$1,503  \n$5,526,604  \n$(4,007,457) \n$1,521,022 \n\n \n\nSee\naccompanying notes to the unaudited condensed consolidated financial statements.\n\n \n\n7\n\n \n\n \n\n**QHSLab,\nInc.**\n\nCondensed\nConsolidated Statements of Cash Flows\n\n(Unaudited)\n\n \n\n  \nFor\nthe Three Months Ended March 31, 2026  \nFor\nthe Three Months Ended\nMarch 31, 2025 \n\n  \n   \n  \n\nOperating\nactivities \n    \n   \n\nNet\nloss \n$(103,906) \n$(79,609)\n\nAdjustments\nto reconcile net loss to net cash from operating activities: \n    \n   \n\nAllowance\nfor doubtful accounts \n -  \n 7,276 \n\nAmortization of intangible assets and capitalized software \n 18,028  \n 36,644 \n\nShares\nissued for services \n -  \n 21,000 \n\nChanges\nin net assets and liabilities: \n    \n   \n\nAccounts\nreceivable \n (10,592) \n (6,165)\n\nInventory \n 8,273  \n 12,587 \n\nPrepaid\nexpenses and other current assets \n (7,799) \n (14,788)\n\nAccounts\npayable \n (108,295) \n (22,194)\n\nOther\ncurrent liabilities \n 4,049  \n (4,300)\n\nCash\nflows from operating activities \n (200,242) \n (49,549)\n\n  \n    \n   \n\nFinancing\nactivities: \n    \n   \n\nRepayments\nof loan borrowings \n (73,827) \n (46,554)\n\nCash\nflows from financing activities \n (73,827) \n (46,554)\n\n  \n    \n   \n\nNet\nchange in cash \n (274,069) \n (96,103)\n\nCash\nand cash equivalents – beginning of year \n 636,157  \n 157,168 \n\nCash\nand cash equivalents - end of period \n$362,088  \n$61,065 \n\n  \n    \n   \n\nSupplemental\ndisclosures of cash flow activity: \n    \n   \n\nCash\npaid for interest \n$7,307  \n$75,493 \n\nCash\npaid for taxes \n$-  \n$- \n\nSupplemental\nnoncash investing and financing activity: \n    \n   \n\nDebt\nand accrued interest converted to shares of common stock \n$-  \n$75,000 \n\n \n\nSee\naccompanying notes to the unaudited condensed consolidated financial statements.\n\n \n\n8\n\n \n\n \n\n**QHSLab,\nInc.**\n\nNotes\nto the Condensed Consolidated Financial Statements\n\n(Unaudited)\n\n \n\n**Note\n1. The Company**\n\n \n\nQHSLab,\nInc. (the “Company”) was incorporated in Delaware on September 1, 1983. In 2019, the Company became engaged in value-based\nhealthcare, informatics and algorithmic personalized medicine including digital therapeutics, behavior based remote patient monitoring,\nchronic care and preventive medicine. On September 23, 2021, the Company changed its state of incorporation from Delaware to Nevada.\nOn April 19, 2022, the Company changed its name to QHSLab, Inc.\n\n \n\nThe\nCompany is a medical device technology and software-as-a-service (“SaaS”) company focused on enabling primary care physicians\n(“PCPs”) to increase their revenues by providing them with relevant, value-based tools to evaluate and treat chronic disease\nas well as provide preventive care through reimbursable procedures and providing physicians’ offices with agreed-upon clinical\ndecision support, digital health assessments, administrative workflow, and reimbursement support services.\n\n \n\n**Note\n2. Going Concern**\n\n \n\nThe\naccompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern.\nThe Company had an accumulated deficit of $4,007,457\nat March 31, 2026, generated a net loss of $103,906\nfor the three months ended March 31, 2026 and generated net income of $457,417\nfor the year ended December 31, 2025, principally as a result of a gain of $1,145,695\non the extinguishment of debt. The Company used cash in operations of $200,242\nin the quarter ended March 31, 2026, and generated cash from operations of $178,118\nin the year ended December 31, 2025. Despite the extinguishment of much of the Company’s debt, the Company’s history of losses combined with the amount\nof its revenues, raise substantial doubt about the Company’s ability to continue as a going concern. The continuation of the\nCompany’s business is dependent upon its ability to achieve and maintain positive cash flows and continual profitability and,\npending such achievement, future issuances of equity or other financings to fund ongoing operations. However, access to such funding\nmay not be available on commercially reasonable terms, if at all. These consolidated financial statements do not include any\nadjustments that might be necessary if the Company is unable to continue as a going concern.\n\n \n\n**Note\n3. Basis of Presentation**\n\n \n\nThe\ncondensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles\nin the United States of America (“U.S. GAAP”). In the opinion of management, the accompanying unaudited condensed consolidated\nfinancial statements include all adjustments, consisting of only normal recurring accruals, necessary for a fair statement of financial\nposition, results of operations, and cash flows. The information included in this Quarterly Report on Form 10-Q should be read in conjunction\nwith the consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December\n31, 2025.\n\n \n\nThe\naccounting policies are described in the “Notes to the Consolidated Financial Statements” in the 2025 Annual Report on Form\n10-K and updated, as necessary, in this Form 10-Q. The year-end balance sheet data presented for comparative purposes was derived from\naudited consolidated financial statements but does not include all disclosures required by U.S. GAAP. The results of operations for the\nthree months ended March 31, 2026 are not necessarily indicative of the operating results for the full year or for any other subsequent\ninterim period.\n\n \n\n**Segment\nInformation**\n\n \n\nThe\nCompany operates as a single operating segment and single reportable segment. Operating segments are defined as components of a business\nthat can earn revenue and incur expenses and for which discrete financial information is evaluated regularly by the chief operating decision\nmaker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s CODM, the Chief Executive\nOfficer (“CEO”), allocates resources and assesses performance based upon condensed consolidated financial information due\nto the interconnected relationship of the Company’s products to the same customers, therefore manages its business as a single\noperating segment. See Note 13 - Segment Information for additional information.\n\n \n\n**Accounting\nPolicies**\n\n \n\n*Use\nof Estimates:* The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to\nmake estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities\nat the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting\nperiod. Actual results could differ from the estimates.\n\n \n\n9\n\n \n\n \n\n*Principles\nof Consolidation*: The condensed consolidated financial statements include the accounts of QHSLab, Inc. and its wholly owned subsidiaries\nUSAQ Corporation, Inc., and Medical Practice Income, Inc. All significant inter-company balances and transactions have been eliminated.\n\n \n\n*Cash\nand Cash Equivalents:* For financial statement presentation purposes, the Company considers those short-term, highly liquid investments\nwith original maturities of three months or less to be cash or cash equivalents. Cash and cash equivalents are maintained at banks believed\nto be stable, occasionally at amounts in excess of federally insured limits, which represents a concentration of credit risk. The Company\nhas not experienced any losses on deposits of cash and cash equivalents to date.\n\n \n\n*Accounts\nReceivable:* The Company extends unsecured credit to its customers on a regular basis. Management monitors the payments on\noutstanding balances and estimates future expected credit losses over the life of the receivables based on past experience, current\ninformation and forward-looking economic considerations and adjusts the reserve for uncollectible balances as necessary. The Company\ncontrols its credit risk related to accounts receivable through credit approvals and monitoring. The Company had no customers that\ngenerated 10%\nor more of its revenue during the three-month period ended March 31, 2026. The Company had one customer that generated 10% or more\nof its revenue during the three-month period ended March 31, 2025 with 13.8% of revenue. As of March 31, 2026, one customer\ncomprised greater than 10%\nof the outstanding accounts receivable balance at 16.3%. As of December 31, 2025, two customers comprised greater than 10% of the outstanding accounts receivable balance\nat 16.7% and 10.2%.\n\n \n\n*Inventories:*Inventories are stated at the lower of cost or estimated net realizable value, on a first-in, first-out, or FIFO, basis. The Company\nuses actual costs to determine its cost basis for inventories. Inventories consist of only finished goods. Management monitors inventory\nbased on forecasted sales and existing inventory levels. Based on inventory turnover and low on-hand inventory levels, management has\ndetermined there was no need for a reserve for slow-moving and obsolete inventories as of March 31, 2026 and December 31, 2025.\n\n \n\n*Capitalized\nSoftware Development Costs:* Software development costs for internal-use software are accounted for in accordance with Accounting\nStandards Codification (“ASC”) 350-40, *Internal-Use Software*. Development costs that are incurred during the application\ndevelopment stage begin to be capitalized when two criteria are met: (i) the preliminary project stage is completed and (ii) it is probable\nthat the software will be completed and used for its intended function. Capitalization ceases once the software is substantially complete\nand ready for its intended use.\n\n \n\nCosts\nincurred during the preliminary project stage of software development and post-implementation operating stages are expensed as incurred.\nAmortization is calculated on a straight-line basis over three years which is the estimated economic life of the software and is included\nin the cost of revenue on the consolidated statements of operations.\n\n \n\nThe\nestimated useful lives of software are reviewed at least annually and will be tested for impairment whenever events or changes in circumstances\noccur that could impact the recoverability of the assets.\n\n \n\n*Intangible\nAssets:* Intangible assets represent the value the Company paid to acquire assets including a trademark, patent and web domain on\nJune 23, 2021. The allocation of the purchase price to each of these assets was determined based on ASC 805-50-30, *Business Combination,\nRelated Issues, Initial Measurement*. These assets are accounted for in accordance with ASC 350-30, *Intangibles, General Intangibles\nOther Than Goodwill*. The cost of the assets is amortized over the remaining useful life of the assets as follows:\n\n \n\nSchedule\nof Indefinite-Lived Intangible Assets\n\nU.S.\nMethod Patent\n \n13.4\nyears\n\n \n \n \n\nWeb\nDomain\n \nIndefinite\nlife\n\n \n \n \n\nTrademark\n \nIndefinite\nlife\n\n \n\nThe\nestimated useful lives and carrying value of the assets are reviewed at least annually or whenever events or circumstances occur which\nmay result in an impact to the value of the assets.\n\n \n\n10\n\n \n\n \n\n*Convertible\nNotes Payable:* The Company accounts for convertible notes deemed conventional and conversion options embedded in non-conventional\nconvertible notes which qualify as equity under Accounting Standards Update (“ASU”) No. 2020-06, *Debt—Debt with\nConversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):\nAccounting for Convertible Instruments and Contracts in an Entity’s Own Equity* (“ASU 2020-06”), which simplifies\nthe accounting for certain financial instruments with characteristics of liabilities and equity, including certain convertible instruments\nand contracts on an entity’s own equity. ASU 2020-06 removes the separation models required for convertible debt with cash conversion\nfeatures and convertible instruments with beneficial conversion features. It also removes certain settlement conditions that were required\nfor equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation for convertible\ninstruments. Accordingly, the Company records, as a discount to convertible notes, the intrinsic value of such conversion options based\nupon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective\nconversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt.\n\n \n\n*Revenue\nRecognition:* Pursuant to ASC Topic 606, *Revenue from Contracts with Customers*(“ASC 606”) the Company recognizes\nrevenue upon transfer of control of goods, in an amount that reflects the consideration that is expected to be received in exchange for\nthose goods. The Company does not allow for the return of products and therefore does not establish an allowance for returns.\n\n \n\nTo\ndetermine the revenue to be recognized for transactions that the Company determines are within the scope of ASC 606, the Company follows\nthe established five-step framework as follows:\n\n \n\n \n(i)\nidentify\nthe contract(s) with a customer;\n\n \n(ii)\nidentify\nthe performance obligations in the contract(s);\n\n \n(iii)\ndetermine\nthe transaction price;\n\n \n(iv)\nallocate\nthe transaction price to the performance obligations in the contract(s); and\n\n \n(v)\nrecognize\nrevenue when (or as) the Company satisfies a performance obligation.\n\n \n\nThe\nCompany sells allergy diagnostic-related products and immunotherapy treatments to physicians. Revenue is recognized once the Company\nsatisfies its performance obligation which occurs at the point in time when title and possession of products have transitioned to the\ncustomer. Beginning April 1, 2025, the Company changed its policy of when title transitions to its customers from upon delivery to upon\nshipment. Delivery typically occurred within one or two days of shipment, and the Company limited shipping ahead of the end of each reporting\nperiod to allow time for delivery. Revenue continues to be recorded when title passes to the customer and, as a result, the change did\nnot have a material impact on the Company’s previously issued consolidated financial statements.\n\n \n\nThe\nCompany includes shipping and handling fees billed to customers in revenue.\n\n \n\nThe\nCompany also generates revenue through SaaS agreements whereby the Company provides physicians’ practices\naccess to its proprietary internally-developed software QHSLab that provides clinical decision support and patient monitoring. The agreements\nprovide for either monthly or annual access to the software. The access to the system begins immediately and revenue is recognized over\nthe agreement term.\n\n \n\nThe\nCompany provides administrative, billing and clinical decision support services utilizing QHSLab. Revenue is recognized each month based\non actual services provided during that month.\n\n \n\nThe\nCompany has entered into an agreement with a third party to provide clinical research services utilizing QHSLab. The agreement details\nthe performance obligations of the Company and revenue is recognized as those obligations are met.\n\n \n\nThere\nare several practical expedients and exemptions allowed under ASC 606 that impact timing of revenue recognition and disclosures. The\nCompany elected to treat similar contracts as a portfolio of contracts, as allowed under ASC 606. The contracts that fall within the\nportfolio have the same terms and management has the expectation that the result will not be materially different from the consideration\nof each individual contract.\n\n \n\nThe\nCompany’s revenues consisted of the following:\n\n \n\nSchedule\nof Revenue Recognition\n\n  \n2026  \n2025 \n\n  \n\nFor the Three Months\n\nEnded\n\nMarch 31,\n \n\n  \n2026  \n2025 \n\nAllergy Diagnostic Kit Sales \n$228,770  \n$264,913 \n\nIntegrated Service Program \n 374,501  \n 162,502 \n\nImmunotherapy Treatment Sales \n 91,070  \n 97,329 \n\nClinical Study Revenue \n -  \n 89,100 \n\nSubscription Revenue \n 11,948  \n 9,285 \n\nShipping and handling \n 11,640  \n 9,970 \n\nTraining and Other Revenue \n 10,756  \n 12,320 \n\nTotal Revenue \n$728,685  \n$645,419 \n\n \n\n*Research\nand Development:* Research and development expense is primarily related to developing and improving methods related to the Company’s\nSaaS platform. Research and development expenses are expensed when incurred. For the three months ended March 31, 2026 and 2025, there\nwas $120,909 and $124,033 of research and development expenses incurred, respectively.\n\n \n\n11\n\n \n\n* *\n\n*Stock-based\nCompensation:*The Company applies the fair value method of ASC 718, *Share Based Payment*, in accounting for its stock-based\ncompensation. The standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized\nover the service period, which is usually the vesting period. The Company values stock-based compensation at the market price for the\nCompany’s common stock and other pertinent factors at the grant date.\n\n \n\n*Earnings\nPer Common Share:* Basic net earnings or (loss) per share is computed using the weighted average number of common shares outstanding\nduring the period. Diluted net earnings or (loss) per common share is computed using the weighted average number of common and dilutive\nequivalent shares outstanding during the period. Dilutive common equivalent shares consist of options and warrants to purchase common\nstock (only if those options and warrants are exercisable and at prices below the average share price for the period) and shares issuable\nupon the conversion of issued and outstanding preferred stock. Due to the net losses reported for the three month periods ended March\n31, 2026 and 2025, dilutive common equivalent shares were excluded from the computation of diluted loss per share, as inclusion would\nbe anti-dilutive for those periods. There were no common equivalent shares required to be added to the basic weighted average shares\noutstanding to arrive at diluted weighted average shares outstanding as of March 31, 2026 or 2025.\n\n \n\n*Income\nTaxes:* The Company accounts for income taxes in accordance with ASC 740, *Income Taxes,* which requires recognition of estimated\nincome taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to\ntemporary differences and carry-forwards. Measurement of deferred income tax is based on enacted tax laws including tax rates, with the\nmeasurement of deferred income tax assets being reduced by available tax benefits not expected to be realized.\n\n \n\nThe\nCompany has net operating loss carry forwards of $4,007,457 which begin to expire in 2027. Future utilization of currently generated\nfederal and state NOL and tax credit carry forwards may be subject to a substantial annual limitation due to the ownership change limitations.\nThe annual limitation may result in the expiration of NOL and tax credit carry-forwards before full utilization.\n\n \n\n*Recently\nIssued Accounting Standards*\n\n \n\nIn July 2025, the FASB issued ASU 2025-05, *Financial Instruments—Credit\nLosses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets* (“ASU 2025-05”), which simplifies\nthe estimation of credit losses on current accounts receivable and contract assets arising from transactions accounted for under ASC 606\nthrough the use of a practical expedient. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, and interim reporting\nperiods within that annual period, with early adoption permitted. The Company adopted this standard in 2026 and determined that it did\nnot have a material impact on the Company’s financial statements.\n\n \n\nIn\nDecember 2023, the FASB issued ASU 2023-09, *Income Taxes (Topic 740): Improvements to Income Tax Disclosures*(“ASU 2023-09”),\nwhich requires enhanced income tax disclosures, including specific categories and disaggregation of information in the effective tax\nrate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income\ntax expense or benefit, and income tax expense or benefit from continuing operations. ASU 2023-09 is effective for annual periods beginning\nafter December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 beginning with the Form 10-Q for the period ending\nMarch 31, 2025 with minimal impact. See Note 12 – Income Taxes.\n\n \n\nThis\nQuarterly Report on Form 10-Q does not discuss recent pronouncements that are not anticipated to have a current and/or future impact\non or are unrelated to the Company’s financial condition, results of operations, cash flows or disclosures.\n\n \n\n12\n\n \n\n \n\n**Note\n4. Accounts Receivable**\n\n \n\nAccounts\nreceivable is recorded in the condensed consolidated balance sheets when customers are invoiced for revenue to be collected and there\nis an unconditional right to receive payment. Timing of revenue recognition may differ from the timing of invoicing customers resulting\nin deferred revenue until the Company satisfies its performance obligation.\n\n \n\nAccounts\nreceivable is presented net of an allowance for doubtful accounts that represents future expected credit losses over the life of the\nreceivables based on past experience, current information and forward-looking economic considerations. The beginning and ending balances\nof accounts receivable, net of allowance, are as follows:\n\n \n\nSchedule\nof Accounts Receivable\n\n  \nMarch 31,\n2026  \nDecember 31,\n2025 \n\nAccounts receivable \n$231,202  \n$220,610 \n\nAllowance for doubtful accounts \n (30,000) \n (30,000)\n\nAccounts receivable, net \n$201,202  \n$190,610 \n\n \n\n**Note\n5. Capitalized Software and Intangible Assets**\n\n \n\nNon-current\nassets consist of the following at March 31, 2026 and December 31, 2025:\n\n \n\nSchedule\nof Intangible Assets\n\n  \nEstimated\nUseful Life\n(in years)  \nMarch 31,\n2026  \nDecember 31,\n2025 \n\nCapitalized software \n 3.0  \n$223,390  \n$223,390 \n\nAccumulated amortization \n    \n (223,390) \n (223,390)\n\nCapitalized software, net \n    \n$-  \n$- \n\nIntangible Assets: \n    \n    \n   \n\nU.S. Method Patent \n 13.4  \n$967,500  \n$967,500 \n\nWeb Domain \n N/A  \n 161,250  \n 161,250 \n\nTrademark \n N/A  \n 483,750  \n 483,750 \n\nTotal Intangible assets \n    \n$1,612,500  \n$1,612,500 \n\nAccumulated amortization \n    \n (342,531) \n (324,503)\n\nIntangible assets, net \n    \n$1,269,969  \n$1,287,997 \n\n \n\nCapitalized\nsoftware represents the development costs for the Company’s internal-use QHSLab platform software. The Company completed testing\nof its QHSLab platform software application at the end of the first quarter of 2022 and began to amortize the capitalized expenses on\na straight-line basis over the useful life of the software. During the three months ended March 31, 2026 and 2025 there was $0 and $18,616\nof amortization expense respectively. Amortization related to the QHSLab platform is recorded within cost of revenue on the Company’s\ncondensed consolidated statements of operations. There were no impairments recognized during the three-month period ended March 31, 2026\nand the year ended December 31, 2025.\n\n \n\nThe\nintangible assets represent the value the Company paid to acquire the trademark “AllergiEnd”, the web domain “AllergiEnd.com”\nalong with the U.S. Method Patent registration relating to the allergy testing kit and related materials the Company distributes to physician\nclients. The Company acquired the intangible assets from MedScience Research Group as of June 23, 2021 for total consideration of $1,612,500\nwhich was financed through a combination of restricted stock and a promissory note. The allocation of the purchase price to each of these\nassets was determined based on ASC 805-50-30, *Business Combination, Related Issues, Initial Measurement.*The assets are being\namortized over their useful lives beginning July 1, 2021. The Trademark and Web Domain are determined to have an indefinite life and\nwill be tested annually for impairment in accordance with ASC 350-30-35, *Intangibles, General Intangibles Other Than Goodwill*.\nThere was $18,028 of amortization expense during each of the quarters ended March 31, 2026 and 2025.\n\n \n\nThe\nCompany evaluates intangible assets with infinite lives for impairment at least annually and evaluates intangible assets with finite\nlives when events or circumstances indicate an impairment may exist. No impairments or changes in useful lives were recognized during\nthe three-month period ended March 31, 2026 and the year ended December 31, 2025.\n\n \n\n**Note\n6. Loans Payable**\n\n \n\nOn\nNovember 12, 2025, the Company entered into a fixed-fee short-term loan with its merchant bank and received $114,400 in net loan proceeds.\nThe loan is repaid by the merchant bank withholding an agreed-upon percentage of payments they process on behalf of the Company with\na minimum of $14,262 paid every 60 days. The loan payable is due in May 2027. As of March 31, 2026, the loan balance was $36,877 and\nis recorded in current liabilities on the condensed consolidated balance sheet. As of December 31, 2025, the loan balance was $90,704\nand is split between current and non-current liabilities on the condensed consolidated balance sheets.\n\n \n\nSee\nadditional discussion of loans payable in Note 11 – Related Party Transactions.\n\n \n\n13\n\n \n\n** **\n\n**Note\n7. Convertible Notes Payable**\n\n \n\nConvertible\nnotes payable at March 31, 2026 and December 31, 2025 consist of the following:\n\n \n\nSchedule\nof Convertible Notes Payable\n\n  \nMarch 31,\n2026  \nDecember 31,\n2025 \n\nNote 1 – Shareholder \n$-  \n$20,000 \n\nConvertible notes payable\ngross \n -  \n 20,000 \n\nLess: current portion \n -  \n 20,000 \n\nNon-current portion \n$-  \n$- \n\n \n\nNote\n1 – Effective May 7, 2021, the Company issued a Convertible Promissory Note in the original principal amount of $100,000 to a shareholder\n(Note 1). The Note bears interest at a rate of ten percent (10%) per annum. The terms and conditions of the Note may not be indicative\nof those that a third-party investor may agree to. The Note was originally scheduled to mature on September 30, 2022. The maturity date\nwas subsequently extended to December 31, 2023, further extended to December 31, 2024 during the quarter ended March 31, 2024, and further\nextended to December 31, 2025 during the quarter ended March 31, 2025. Pursuant to the terms of the Note, the outstanding principal and\naccrued interest were convertible, at the option of the holder, into shares of the Company’s common stock at a conversion price\nequal to the greater of (i) a twenty-five percent (25%) discount to the fifteen-day average market price of the Company’s common\nstock or (ii) $0.50 per share.\n\n \n\nOn\nDecember 31, 2025, the Company entered into a Promissory Note Modification and Partial Conversion Agreement (“Modification Agreement”)\nwith the holder of the Note. As of that date, the outstanding balance of the Note, including accrued interest, was $146,548. Pursuant\nto the Modification Agreement, the holder elected to convert $126,548 of outstanding principal and accrued interest into shares of the\nCompany’s common stock at a conversion price of $0.30 per share. As a result of the conversion, the Company issued 421,827 shares\nof common stock. The converted portion of the Note was extinguished upon issuance of the shares.\n\n \n\nFollowing\nthe partial conversion, a remaining balance of $20,000 continued to be outstanding under the Note as of December 31, 2025 and the maturity\ndate was extended to December 31, 2026. The remaining balance continued to bear interest at ten percent (10%) per annum and remained\nconvertible at the option of the holder under the terms of the original Convertible Promissory Note. The Company could prepay the remaining\nbalance, in whole or in part, at any time prior to maturity without penalty.\n\n \n\nThe\nbalance of the Note was paid off in February 2026. The balance of the Note, including accrued interest, was $0\nand $20,000\nas of March 31, 2026 and December 31, 2025, respectively, and were included in other current liabilities on the accompanying\ncondensed consolidated balance sheets.\n\n \n\n14\n\n \n\n \n\n**Note\n8. Preferred Stock and Private Placement Offering of Common Stock**\n\n \n\n**Issuance\nof Common Stock and Warrants in a Private Placement Offering**\n\n** **\n\nOn\nDecember 26, 2025, the Company accepted subscription agreements from two accredited investors for the purchase of $499,998 of the Company’s\ncommon stock and warrants in a private placement offering. Pursuant to the subscription agreements, the Company issued an aggregate of\n1,666,663 shares of common stock, par value $0.0001 per share, at a purchase price of $0.30 per share, together with an aggregate of\n416,666 warrants to purchase shares of common stock. Each warrant is exercisable at an exercise price of $0.60 per share and expires\non December 31, 2030.\n\n** **\n\n**Issuance\nof Series A Preferred Stock**\n\n \n\nThe\nshares of Series A Preferred Stock have a stated value of $0.25 per share and are initially convertible into shares of common stock at\na price of $0.05 per share (subject to adjustment upon the occurrence of certain events). The Series A Preferred Stock does not accrue\ndividends and ranks prior to the common stock upon a liquidation of the Company. The Series A Preferred Stock votes on all matters brought\nbefore the shareholders together with the common stock as a single class and each share of Series A Preferred Stock has a number of votes,\ninitially 5, equal to the number of shares of common stock into which it is convertible as of the record date for any vote.\n\n \n\n**Issuance\nof Series A-2 Preferred Stock**\n\n \n\nThe\nshares of Series A-2 Preferred Stock have a stated value of $0.16 per share and are convertible into shares of common stock at a price\nof $0.16 per share (subject to adjustment upon the occurrence of certain events). The rights of holders of the Company’s common\nstock with respect to the payment of dividends and upon liquidation are junior in right of payment to holders of the Series A-2 Convertible\nPreferred Shares. The rights of the holders of the Company’s Series A-2 Preferred Shares are pari passu to the rights of the holders\nof the Company’s Series A Preferred Shares currently outstanding.\n\n \n\nHolders\nof the Series A-2 Convertible Preferred Stock will vote on an as converted basis with the holders of the Company’s common stock\nand Series A Preferred Stock as to all matters to be voted on by the holders of the common stock. Each Series A-2 Preferred Share shall\nbe entitled to a number of votes equal to five times the number of shares of common stock into which it is then convertible on the applicable\nrecord date.\n\n \n\nHolders\nof the Series A-2 Convertible Preferred Stock are entitled to receive cumulative dividends at an annual rate of 7% and payable annually\nin cash or shares of common stock at the election of the Company in accordance with the Series A-2 Convertible Stock agreement. As of\nDecember 31, 2025, the holders of the Series A-2 Preferred Stock had received 94,339 shares of common stock in satisfaction of dividends\naccrued through December 31, 2025.\n\n \n\n15\n\n \n\n \n\n**Note\n9. Income and (Loss) Per Common Share**\n\n \n\nThe\nCompany calculates net income or loss per common share in accordance with ASC 260, *Earnings Per Share*. Basic and diluted net income\n(loss) per common share were determined by dividing net income (loss) applicable to common stockholders by the weighted average number\nof common shares outstanding during the period.\n\n \n\nThe\nCompany’s potentially dilutive shares include shares issuable upon exercise or conversion of outstanding common stock options,\ncommon stock warrants, convertible debt and preferred shares, if those options, warrants, debt and preferred shares are exercisable or\nconvertible and at prices below the average share price for the period.\n\n \n\nFor\nthe year ended December 31, 2025, 8,044,884 of common equivalent shares related to Preferred Shares A and A-2 were added to the basic\nweighted average shares outstanding to arrive at the diluted weighted average shares outstanding while other potentially dilutive shares\nwere excluded from the calculation based on the exercises price of those shares. For the periods ended March 31, 2026 and 2025, the Company’s\npotentially dilutive shares were excluded from the computation of diluted loss per share, as inclusion would be anti-dilutive since the\nCompany incurred a loss in such period.\n\n \n\nSchedule of Anti-dilutive Securities Excluded from Calculation of Earnings Per Share\n\n  \n2026  \n2025 \n\n  \n\nThree Months Ended\n\nMarch 31,\n \n\n  \n2026  \n2025 \n\nCommon equivalent shares \n 8,044,884  \n 8,044,884 \n\nStock options \n -  \n 600,000 \n\nStock warrants \n 416,666  \n 550,000 \n\nTotal shares excluded from calculation \n 416,666  \n 1,150,000 \n\nAntidilutive\nsecurities \n 416,666  \n 1,150,000 \n\n \n\n**Note\n10. Stock-based Compensation**\n\n \n\nDuring\nthe three-month periods ended March 31, 2026 and 2025, there was no stock-based compensation associated with stock options included in\nresearch and development expense. The Company issued 100,000 shares of common stock for services during each of the years ended December\n31, 2025 and 2024. A portion of these shares related to services that had not yet been performed at the time of issuance and were recorded\nas prepaid expenses. Such prepaid amounts were subsequently recognized as expense as the related services were performed. Accordingly,\nthe Company recognized $1,888 of expense in each three-month period ended March 31, 2026 and 2025 associated with shares issued for services\nin research and development, and $1,750 and $3,500, respectively, in general and administrative expense.\n\n \n\nThere\nwere no options granted during the three months ended March 31, 2026 and 2025. There were no options exercised, forfeited or cancelled\nduring either period but all options did expire during the year ended December 31, 2025.\n\n \n\n16\n\n \n\n \n\nOptions\noutstanding at March 31, 2025 consist of:\n\n \n\nSchedule of Options Outstanding and Exercisable\n\nDate Issued \nNumber\nOutstanding  \nNumber\nExercisable  \nExercise Price  \nExpiration Date\n\nJune 27, 2020 \n 150,000  \n 150,000  \n$0.40  \nJune 27, 2025\n\nJanuary 1, 2021 \n 450,000  \n 450,000  \n$0.65  \nDecember 31, 2025\n\nTotal \n 600,000  \n 600,000  \n    \n \n\n \n\nDuring\nthe quarter ended March 31, 2025, 500,000 outstanding options expired.\n\n \n\nWarrants\noutstanding at March 31, 2026 consist of:\n\n \n\nSchedule of Warrants Outstanding and Exercisable\n\nDate Issued \nNumber\nOutstanding  \nNumber\nExercisable  \nExercise Price  \nExpiration Date\n\nDecember 31, 2025 \n 416,666  \n 416,666  \n$0.60  \nDecember 31, 2030\n\nTotal \n 416,666  \n 416,666  \n    \n \n\n \n\nWarrants\noutstanding at March 31, 2025 consist of:\n\n \n\nDate Issued \nNumber\nOutstanding  \nNumber\nExercisable  \nExercise Price  \nExpiration Date\n\nJuly 19, 2022 \n 550,000  \n 550,000  \n$0.50  \nJuly 18, 2025\n\nTotal \n 550,000  \n 550,000  \n    \n \n\n \n\n**Note\n11. Related Party Transactions**\n\n \n\n*Due\nto Related Parties:* Amounts due to related parties consist of cash advances received from the Company’s principal shareholder.\nSome advances bear no interest and are due on demand while a portion has been converted into a loan to the principal shareholder that\nprovides interest at a rate of 10% per annum and matures on March 31, 2027. These terms and conditions may not be indicative of what\na third-party investor may agree to. As of March 31, 2026, $93,304 is included in current liabilities on the condensed consolidated balance\nsheet as a $90,000 loan and accrued interest that matures on March 31, 2027. As of December 31, 2025, the balance was $91,085 and included\nin non-current liabilities on the condensed consolidated balance sheet.\n\n \n\nThe\nCompany’s CEO and principal shareholder is a shareholder of MedScience. In addition, the CEO provides services to MedScience for\nwhich he is compensated.\n\n \n\n**Note\n12. Income Taxes**\n\n \n\nThe\nCompany accounts for income taxes in accordance with ASC 740, Income Taxes, which requires recognition of estimated income taxes payable\nor refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences\nand carry-forwards. Measurement of deferred income tax is based on enacted tax laws including tax rates, with the measurement of deferred\nincome tax assets being reduced by available tax benefits not expected to be realized. Given its history of net operating losses, the\nCompany has determined that it is more likely than not that it will not be able to realize the tax benefit of its net operating loss\ncarryforwards. Accordingly, the Company has not recognized a deferred tax asset for this benefit.\n\n \n\nThe\nvaluation allowance at March 31, 2026 and December 31, 2025 was $815,993 and $794,639, respectively. The net change in valuation allowance\nfor the quarter ended March 31, 2026 was an increase of $21,354 and for the year ended December 31, 2025 was a decrease of $96,285. In\nassessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all\nof the deferred income tax assets will not be realized. That realization is dependent upon the future generation of taxable income during\nthe period in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred income tax\nliabilities, projected future taxable income and tax planning strategies in making this assessment. Based on these considerations, the\nCompany has determined that enough uncertainty exists regarding the realization of the deferred tax asset balance to apply a full valuation\nallowance against these assets as of March 31, 2026 and December 31, 2025. All tax years remain open for examination by taxing authorities.\n\n \n\n17\n\n \n\n \n\nReconciliation\nbetween the provision for income taxes and the expected tax benefit using the federal statutory rate of 21% for 2026 and 2025 are as\nfollows:\n\n \n\nSchedule of Effective Income Tax Reconciliation\n\n  \n\n**March 31,**\n\n**2026**\n  \n\n**December 31,**\n\n**2025**\n \n\n  \n   \n  \n\nIncome tax at federal statutory rate \n 21.00% \n 21.00%\n\nValuation allowance \n (21.00)% \n (21.00)%\n\nIncome tax expense \n —  \n — \n\n \n\nThe\nCompany has net operating losses of $4,007,457 which begin to expire in 2027. Future utilization of currently generated federal and state\nNOL and tax credit carry forwards may be subject to a substantial annual limitation due to the ownership change limitations. The annual\nlimitation may result in the expiration of NOL and tax credit carry-forwards before full utilization.\n\n \n\nFor\nthe three-month period ended March 31, 2026, the Company did not record a tax provision. The Company continues to maintain a valuation allowance against its net deferred tax\nassets, which will be reassessed as additional information becomes available.\n\n \n\n**Note\n13. Segment Information**\n\n \n\nThe\nCompany’s CEO is the CODM and allocates resources and assesses performance based upon consolidated\nnet loss that is included in the accompanying consolidated condensed statements of operations. Accordingly, the Company operates as a\nsingle operating segment. The measure of segment assets is reflected as total assets in the accompanying consolidated condensed balance\nsheets. The Company’s revenue is derived from providing PCPs with relevant value-based\ntools to enable them to diagnosis and treat their patients. See additional discussion of revenue in Note 3 - Basis of Presentation.\n\n \n\n**Note\n14. Commitments and Contingencies**\n\n \n\nThere\nare no pending or threatened legal proceedings as of March 31, 2026. The Company has no non-cancellable operating leases.\n\n \n\n**Note\n15. Subsequent Events**\n\n \n\nManagement\nhas evaluated subsequent events through the date of this filing.\n\n \n\n18"}