UEEC 10-Q
United Health Products, Inc. (UEEC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to ____________
Commission file number:
(Exact name of Company as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
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(Address of Company’s principal executive offices) |
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(
(Company’s telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12 (b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the 12 preceding months (or such shorter period that the registrant was required to submit such file).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares issued and outstanding of the Registrant’s Common Stock, as of May 2, 2025 was
UNITED HEALTH PRODUCTS, INC.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION | ||||
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Item 1. | Financial Statements (Unaudited) | |||
| Condensed Balance Sheets as of March 31, 2025 (unaudited) and December 31, 2024 | 3 | ||
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 | |||
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UNITED HEALTH PRODUCTS, INC.
Condensed Balance Sheets
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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Prepaid and other current assets |
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Total current assets |
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Operating lease right-of-use asset |
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Security deposit |
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Patents, net |
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TOTAL ASSETS |
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Current Liabilities |
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Accounts payable and accrued expenses |
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Accrued liabilities - related parties |
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Accrued compensation |
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Operating lease liability - current |
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Total current liabilities |
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Convertible notes payable, net of debt discount |
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Convertible notes payable – related party, net of debt discount |
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Operating lease liability – long-term |
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TOTAL LIABILITIES |
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Commitments and Contingencies |
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Stockholders’ Deficit |
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Series A Convertible Preferred Stock - $ |
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Common Stock - $ |
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Additional Paid-In Capital |
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Accumulated Deficit |
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Total Stockholders' Deficit |
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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See notes to unaudited condensed financial statements.
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| Table of Contents |
UNITED HEALTH PRODUCTS, INC.
Condensed Statements of Operations
(Unaudited)
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Revenues |
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Operating Costs and Expenses |
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Selling, general and administrative expenses |
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Research and development |
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Total Operating Expenses |
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Income/(Loss) from Operations |
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Other Income (Expense) |
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Interest expense |
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Interest expense – related party |
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Total Other Income (Expense) |
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Net Income/(Loss) |
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Net Loss per Common Share: |
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Basic and diluted |
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Weighted average number of shares outstanding |
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See notes to unaudited condensed financial statements.
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UNITED HEALTH PRODUCTS, INC
Condensed Statement of Stockholders’ Deficiency
Three Months Ended March 31, 2025 and March 31, 2024
(Unaudited)
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Balance at December 31, 2023 |
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Sale of common stock |
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Amortization of deferred offering costs |
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Net Loss |
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Balance at March 31, 2024 |
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Balance at December 31, 2024 |
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Vesting of restricted stock units |
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Net Loss |
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Balance at March 31, 2025 |
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See notes to unaudited condensed financial statements.
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| Table of Contents |
UNITED HEALTH PRODUCTS, INC.
Condensed Statements of Cash Flows
(Unaudited)
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Cash Flows from Operating Activities: |
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Net (Loss) |
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Adjustments to Reconcile Net (Loss) to Net Cash Used In Operating Activities: |
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Amortization expense |
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Amortization of right-of-use asset |
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Changes in assets and liabilities: |
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Prepaid and other current assets |
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Accounts payable and accrued expenses |
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Accrued liabilities – related party |
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Accrued compensation |
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Net Cash Used In Operating Activities |
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Cash Flows from Investing Activities: |
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Net Cash Used in Investing Activities |
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Cash Flows from Financing Activities: |
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Proceeds from convertible notes payable |
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Advances from related party |
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Payment of offering costs |
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Proceeds from sale of common stock |
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Net Cash Provided by Financing Activities |
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Increase (Decrease) in Cash and Cash Equivalents |
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Cash and Cash Equivalents – Beginning of period |
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CASH AND CASH EQUIVALENTS – END OF PERIOD |
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Supplemental cash flow information: |
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Cash paid for interest |
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Cash paid for income taxes |
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Non-cash Investing & Financing Activities: |
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Amortization of deferred offering costs |
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See notes to unaudited condensed financial statements.
| 6 |
| Table of Contents |
UNITED HEALTH PRODUCTS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE QUARTERS ENDED MARCH 31, 2025 AND 2024
(Unaudited)
Note 1. Organization and Basis of Preparation
United Health Products, Inc. (the “Company”) develops, manufactures, and markets a patented hemostatic gauze for the healthcare and wound care sectors. Our gauze product, CelluSTAT® (formerly branded as HemoStyp), is derived from cotton and designed to absorb exudate/drainage from superficial wounds and help control bleeding. We are in the process of seeking regulatory approval to sell our hemostatic gauze product line into the U.S. Class III human surgical markets.
The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 28, 2025.
In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements for the interim period, have been included.
Note 2. Significant Accounting Policies
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred recurring net losses, negative working capital and operations have not provided cash flows. Additionally, the Company does not currently have sufficient revenue producing operations to cover its operating expenses and meet its current obligations. In view of these matters, there is substantial doubt about the Company’s ability to continue as a going concern. The Company intends to finance its future development activities and its working capital needs largely from the sale of equity securities with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Cash and Cash Equivalents
The Company considers all highly liquid debt investments purchased with a maturity of three months or less to be cash equivalents.
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Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported period. Changes in the economic environment, financial markets, as well as in the healthcare industry, and any other parameters used in determining these estimates, could cause actual results to differ.
Fair Value Measurements
Accounting principles generally accepted in the United States define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1. We value assets and liabilities included in this level using dealer and broker quotations, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2025 and December 31, 2024. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the sale of its CelluSTAT product by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company receives orders for its CelluSTAT products directly from its customers. Revenues are recognized based on the agreed upon sales or transaction price with the customer when control of the promised goods are transferred to the customer. The transfer of goods to the customer and satisfaction of the Company’s performance obligation will occur either at the time when products are shipped or when the products arrive and are received by the customer. No discounts are currently offered by the Company. The Company does not provide an estimate for returns as there is no anticipation for any returns in the normal course of business.
Trade Accounts Receivable and Concentration Risk
We record accounts receivable at the invoiced amount and we do not charge interest. We review the accounts receivable by amounts due from customers that are past due, to identify specific customers with known disputes or collectability issues. In determining the amount of the reserve, we make judgments about the creditworthiness of significant customers based on ongoing credit evaluations. We will also maintain a sales allowance to reserve for potential credits issued to customers. We will determine the amount of the reserve based on historical credit issued.
There were no provisions for doubtful accounts recorded at March 31, 2025 and December 31, 2024. The Company recorded $
| 8 |
| Table of Contents |
Stock Based Compensation
The Company accounts for stock-based compensation under the provisions of ASC 718, Compensation-Stock Compensation. Stock-based compensation expense for employees and non-employees is measured at the grant date fair value.
Per Share Information
Basic earnings per share are calculated using the weighted average number of common shares outstanding for the period presented. Diluted earnings per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. The dilutive effect of potential common shares is not reflected in diluted earnings per share because the Company incurred net losses for the three months ended March 31, 2025 and the three months ended March 31, 2024 and the effect of including these potential common shares in the net loss per share calculations would be anti-dilutive.
The total potential common shares as of March 31, 2025 included
| 9 |
| Table of Contents |
Patents
Patents are stated on the balance sheet at cost. Costs, such as filing fees with patent granting agencies and legal fees directly relating to those filings, incurred to file patent applications were capitalized when the Company believed that there was a high likelihood that the patent would be issued and there would be future economic benefit associated with the patent. These costs were amortized from the date of the patent application on a
Accumulated amortization as of March 31, 2025 and December 31, 2024 was $
Future Amortization Expense
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Impairment of Long-lived Assets
The Company applies the provisions of ASC 360, Property, Plant and Equipment, where applicable to all long-lived assets. ASC 360 addresses accounting and reporting for impairment and disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with ASC 360. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.
When long-lived assets are sold or retired, the related cost and accumulated depreciation or amortization are removed from the accounts and any gain or loss is included in the results of operations. During the three months ended March 31, 2025 and 2024, the Company determined no impairment was required.
| 10 |
| Table of Contents |
Deferred Offering Costs
Deferred offering costs represent specific incremental costs directly attributable to the offering of securities. The deferred offering costs are recorded as an offset to additional paid-in capital and charged against the proceeds received.
Advertising and Marketing Costs
Advertising and marketing expenses are expensed as incurred. The Company incurred $
Shipping and Handling Costs
The Company includes shipping and handling cost as part of cost of goods sold.
Research and Development
The Company charges research and development costs to expense when incurred. The Company incurred $
Segment Reporting
United Health Products, Inc. operates as a single operating segment, focusing on the development and commercialization of medical devices, particularly its patented hemostatic gauze, CelluSTAT™.
The accounting policies of the operating segment are the same as those described in the summary of significant accounting policies. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM assesses performance for the segment and decides how to allocate resources based on net income (loss) that is reported on the income statement. The measure of segment assets is reported on the balance sheet as total assets.
As the Company did not generate revenues in the current period, the CODM assessed Company performance through the achievement of target identification goals. In addition to the Company's Statement of Operations, the CODM regularly works with the Principal Financial Officer to develop budgeted and forecasted expense information which is used to determine the Company's liquidity needs and cash allocation.
Leases
The Company follows the provisions of ASC 842, and records right-of-use (“ROU”) assets and lease obligations for its operating leases, which are initially recognized based on the discounted future lease payments over the term of the lease. If the rate implicit in the Company's leases is not readily determinable, the Company's applicable incremental borrowing rate is used in calculating the present value of the sum of the lease payments.
The lease term is defined as the non-cancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. The Company has elected not to recognize ROU asset and lease obligations for its short-term leases, which are defined as leases with an initial term of 12 months or less.
New and Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the requirements for income tax disclosures in order to provide greater transparency. The amendments are effective for fiscal years beginning after December 15, 2024. The Company adopted the ASU for the fiscal year ended December 31, 2025. The amendments only impact disclosures and are not expected to have an impact on the Company's financial condition and results of operations.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires incremental disclosures about specific expense categories, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and selling expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted and the amendments may be applied either prospectively or retrospectively. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures. The amendments only impact disclosures and are not expected to have an impact on the Company's financial condition and results of operations.
The Company considers all new pronouncements and management has determined that there have been no recently adopted or issued accounting standards that had or will have a material impact on its financial statements.
| 11 |
| Table of Contents |
Note 3. Related Party Transactions
Convertible notes payable - related parties
As of March 31, 2025 and December 31, 2024, convertible notes payable – related parties (net of debt discount) totaled $
During the year ended December 31, 2022, Brian Thom, the Company’s Chief Executive Officer, converted $
During the year ended December 31, 2022, Robert Denser, a Director of the Company, loaned the Company $
On December 15, 2023, the Company entered into amendments on the above convertible notes, which extended the maturity date to December 31, 2024 and increased the interest rate from
Interest expense – related party on the above convertible notes payable was $
The following represents the future aggregate maturities as of March 31, 2025 of the Company’s Convertible Notes Payable – Related Parties:
|
| Amount |
| |
2025 (remaining) |
| $ |
| |
2026 |
|
|
| |
Total |
| $ |
| |
Accrued liabilities – related parties
During the three months ended March 31, 2025, the Company’s Chief Executive Officer advanced the Company $
| 12 |
| Table of Contents |
Note 4. Convertible Notes
During the year ended December 31, 2022, the Company issued a $
On December 15, 2023, the Company entered into amendments on the above convertible notes, which extended the maturity dates to December 31, 2024 and increased the interest rates from
During the year ended December 31, 2024, the Company issued a $
During the three months ended March 31, 2025, the Company issued $
Interest expense on the above convertible notes payable was $
The following represents the future aggregate maturities as of March 31, 2025 of the Company’s Convertible Notes Payable:
|
| Amount |
| |
2025 (remaining) |
| $ |
| |
2026 |
|
|
| |
Total |
| $ |
| |
Note 5. Notes Payable
On August 5, 2024, the Company entered into a $
| 13 |
| Table of Contents |
Note 6. Issuances of Securities
Share issuances 2024
During the three months ended March 31, 2024, the Company had the following common stock transactions:
| · |
Share issuances 2025
During the three months ended March 31, 2025, the Company did not have any common stock transactions other than those described under the restricted stock units section below.
White Lion Common Stock Purchase Agreement (CSPA)
On June 26, 2024, the Company filed a registration statement on Form S-1 to register for resale an additional
Restricted stock units
As of March 31, 2025 and December 31, 2024, the Company has
During the three months ended March 31, 2025, the Company terminated the services of one of its consultants who had an RSU agreement in place. Per the RSU agreement, all of the unvested RSU’s owed to the consultant vested immediately upon termination of services. This resulted in
During the three months ended March 31, 2025, the Board of Directors approved an amendment to a consultant’s RSU agreement. The amendment resulted in
Management is unable to predict if or when a Covered Transaction or Triggering Event under the RSU Agreements governing the restricted stock units will occur and as of March 31, 2025, there was $
| 14 |
| Table of Contents |
Activity related to our restricted stock units during the three months ended March 31, 2025 was as follows:
|
|
|
| Weighted |
| |||
|
|
|
| Average |
| |||
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|
|
| Grant |
| |||
|
| Number of |
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| Date Fair |
| ||
|
| Units |
|
| Value |
| ||
Total awards outstanding at December 31, 2024 |
|
|
|
| $ |
| ||
Units granted |
|
|
|
| $ | - |
| |
Units Exercised/Released |
|
| ( | ) |
| $ |
| |
Units Cancelled/Forfeited |
|
| - |
|
| $ | - |
|
Total awards outstanding at March 31, 2025 |
|
|
|
| $ |
| ||
Warrants
During the year ended December 31, 2024, the Company issued
Activity related to our warrants during the three months ended March 31, 2025 was as follows:
|
| Number of Warrants |
|
| Weighted Average Exercise Price |
| ||
Total warrants outstanding at December 31, 2024 |
|
|
|
| $ |
| ||
Granted |
|
|
|
| $ | - |
| |
Exercised |
|
|
|
| $ | - |
| |
Cancelled/Forfeited |
|
| - |
|
| $ | - |
|
Total warrants outstanding at March 31, 2025 |
|
|
|
| $ |
| ||
The fair value of each warrant on the date of grant is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used for the warrants granted during the year ended December 31, 2024:
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| Year Ended |
| |
|
| December 31, |
| |
|
| 2024 |
| |
Exercise price |
| $ |
| |
Expected term |
|
| ||
Expected average volatility |
|
| % | |
Expected dividend yield |
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|
| |
Risk-free interest rate |
|
| % | |
The following table summarizes information relating to outstanding and exercisable warrants as of March 31, 2025:
Warrants Outstanding |
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| Warrants Exercisable |
| ||||||||||||||
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|
| Weighted Average |
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| |||||
Number Warrants |
|
| Remaining Contractual |
|
| Weighted Average |
|
| Number |
|
| Weighted Average |
| |||||
|
|
| life (in years) |
|
| Exercise Price |
|
| of Shares |
|
| Exercise Price |
| |||||
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|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||
Note 7. Leases
Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. On the commencement date of the lease, the Company recorded $
| 15 |
| Table of Contents |
The components of lease expense and supplemental cash flow information related to the lease for the period are as follows:
|
| Three Months Ended March 31, 2025 |
|
| Three Months Ended March 31, 2024 |
| ||
Lease Cost |
|
|
|
|
|
| ||
Operating lease cost (included in general and administrative in the Company’s statement of operations) |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
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|
|
Other Information |
|
|
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|
|
Cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2025 and 2024 |
| $ |
|
| $ |
| ||
Weighted average remaining lease term – operating leases (in years) |
|
|
|
| ||||
Average discount rate – operating lease |
|
| % |
|
| % | ||
The supplemental balance sheet information related to leases for the period is as follows:
|
| At March 31, 2025 |
|
| At December 31, 2024 |
| ||
Operating leases |
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| ||
Remaining right-of-use assets |
| $ |
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| $ |
| ||
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|
|
Short-term operating lease liabilities |
| $ |
|
| $ |
| ||
Long-term operating lease liabilities |
| $ |
|
| $ |
| ||
Total operating lease liabilities |
| $ |
|
| $ |
| ||
Maturities of the Company’s undiscounted lease liabilities are as follows:
Year Ending |
| Operating Leases |
| |
2025 (remaining) |
|
|
| |
2026 |
|
|
| |
Total lease payments |
|
|
| |
Less: Imputed interest/present value discount |
|
| ( | ) |
Present value of lease liabilities |
| $ |
| |
Note 8. Subsequent Events
The Company has evaluated events from March 31, 2025, through the date whereupon the financial statements were issued and has determined that there are no material events that need to be disclosed.
| 16 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed financial statements and related notes appearing elsewhere in this quarterly report on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under ‘Risk Factors’ in our annual report on Form 10-K for the fiscal year ended December 31, 2024, filed with SEC on March 28, 2025.
Company Overview
UHP develops, manufactures, and markets a patented hemostatic gauze for the healthcare and wound care sectors. Our gauze product, CelluSTAT®, is derived from cotton and designed to absorb exudate/drainage from superficial wounds and help control bleeding. We are in the process of seeking regulatory approval to sell our hemostatic gauze product line into the U.S. Class III human surgical markets.
Developments
We are continuing on our path to seek FDA Premarket Approval (PMA) for our CelluSTAT Hemostatic Gauze products to implement our business strategy.
In March 2024, we submitted a full application for Premarket Approval to the FDA. The FDA responded in June 2024 with a “Deficiencies Letter” listing approximately 40 specific comments and requests for additional information covering the device description, sterility & shelf life, clinical & performance testing, and biocompatibility sections of the PMA application. In August 2024, we submitted a Submission Issue Request (SIR) to the FDA outlining our plan to address and respond to the FDA’s comments. Then, in August 2024, at the FDA’s request, the Company followed-up with a condensed list of questions relating to the prior SIR submission.
In October 2024, the Company and FDA conducted a virtual meeting to discuss the SIR and the follow-up questions. During the discussion, the Company noted the results of its 2019 clinical trial involving 232 patients (of whom 118 were treated with its hemostatic gauze) that showed statistically superior performance in time to hemostasis using CelluSTAT over Ethicon’s Surgicel Original, the standard of care. The study results also showed no evidence of heterogeneity of results across procedure categories, surgeons, or clinical sites, indicating both poolability and generalizability of study results. The Company also noted that none of the adverse events that occurred during the study were attributable to its hemostatic gauze product.
Notwithstanding the safety record from the original clinical study, the FDA requested more data to confirm the safety and effectiveness of CelluSTAT in surgical procedures in the intestinal and thoracic organ space, where organ movement can impact the post operative stability of a hemostat and where observation of post operative rebleeding is more difficult. To address this concern, we have proposed to enroll 27 human subjects in a multi-site study as an extension of the original pivotal study, with patients undergoing open surgical procedures within the organ space. The supplemental study process will consist of submitting an Investigational Device Exemption (IDE) for FDA approval, identifying and contracting suitable surgical sites, enrolling patents, and data collection and analysis.
The FDA's 180-day PMA application review period is on pause while we work to address the FDA’s requests and will resume once we submit all our responses.
From September 23 through October 4, 2024, the FDA conducted a Bioresearch Monitoring Program (BIMO) Inspection of our records and procedures relating to our clinical study, following which the FDA delivered its Inspectional Observations on Form 483. On October 25, 2024, we submitted our response to the FDA’s observations, which the FDA will consider in developing its final report on the BIMO Inspection.
There can be no assurance that our PMA application will be approved.
Our CelluSTAT Gauze Products
CelluSTAT Hemostatic Gauze (formerly branded as HemoStyp) is a natural substance created from chemically treated cellulose derived from cotton. It is an effective hemostatic agent registered with the FDA for superficial use under a 510(k) approval obtained in 2012 to help control bleeding from open wounds and body cavities. The CelluSTAT hemostatic material contains no chemical additives, thrombin, collagen or animal-derived products, and is hypoallergenic. When the product comes in contact with blood it expands slightly and quickly converts to a translucent gel that subsequently breaks down into cellulose and salts. Because of its benign impact on body tissue and the fact that it degrades to non-toxic end products, CelluSTAT does not impede the healing of body tissue as compared to certain competing hemostatic products.
CelluSTAT hemostatic gauze is a flexible, silk-like material that is applied by placing the gauze onto the bleeding tissue. The supple material can be easily folded and manipulated as needed to fit the size of the wound or incision. In surface bleeding and surgical situations, the product quickly converts to a translucent gel that allows the physician or surgeon to monitor the coagulation process. The gel maintains a neutral pH level, which avoids damaging the surrounding tissue. In superficial bleeding situations, CelluSTAT can be bonded to an adhesive plastic bandage or integrated into a traditional gauze component to address a broad range of needs, including traumatic bleeding injuries and prolonged bleeding following hemodialysis.
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| Table of Contents |
Potential Target Markets
Our CelluSTAT material is currently cut to several sizes and configuration and marketed as CelluSTAT Gauze. While we have paused our commercial activities to focus on our Class III PMA application, our potential customer base includes, without limitation, the following:
| · | Hospitals and Surgery Centers for all Internal Surgical usage (in the event we obtain FDA Class III approval) |
| · | Hospitals, Clinics and Physicians for external trauma |
| · | EMS, Fire Departments and other First Responders |
| · | Military Medical Care Providers |
| · | Hemodialysis centers |
| · | Nursing Homes and Assisted Living Facilities |
| · | Dental and Oral & Maxillofacial Surgery Offices |
| · | Veterinary hospitals |
Primary Strategy
Our CelluSTAT technology received an FDA 510(k) approval in 2012 for use in external or superficial bleeding situations and we believe there is an opportunity for CelluSTAT products to address unmet needs in several medical applications that represent attractive commercial opportunities. However, the Class III human surgical markets, both domestic and international, represent the most attractive market for our products due to the smaller number of competitors offering Class III approved hemostatic agents and the resulting premium pricing for products that can meet the demanding requirements of the human surgical environment. We believe that our extensive laboratory testing and our completed human trial indicate that the CelluSTAT technology could successfully compete against established Class III market participants, and could gain a significant market share. As described above, we are in the process of seeking FDA pre-market approval for our CelluSTAT product. There can be no assurance that an FDA PMA will be granted.
In anticipation of receiving a Class III PMA (which cannot be assured), we are evaluating paths to rapidly develop and grow our revenue and profits in all target market segments, with the objective of maximizing shareholder value. We do not intend to pursue the full commercialization of our products independently nor to remain an independent company in the long term. Options under consideration include (i) a sale or merger of the Company with an industry leader in the wound care and surgical device sectors, which may include a pre-sale collaboration on commercialization and distribution and (ii) one or more commercial partnerships with established market participants, without any specific, associated sale or merger transaction.
| 18 |
| Table of Contents |
The Company has been contacted by several medical technology companies that are active in the surgical equipment and hemostatic products sectors, and who have expressed an interest in the Company’s products and business strategy. We continue to evaluate the potential commercial partnerships in anticipation of an FDA decision on our Class III PMA application. No assurances can be given that the Company will identify any commercialization candidate(s) or enter into a transaction.
Manufacturing and Packaging of our Products
The Company’s products will be manufactured to our specifications through a contract manufacturing arrangement with an FDA certified supplier that maintains stringent quality control protocols to assure the uniformity and quality of all of our gauze products. Information on the manufacturing process and our manufacturer’s facility has been submitted as part of our PMA submission. Our gauze products are cut to size, packaged and sterilized by service providers in the United States.
Patents and Trademarks
Our hemostatic gauze technology is protected through patents granted by the U.S. Patent and Trademark Office, which protection currently runs through 2029.
The Company has registered trademarks and trademark applications for the following product formats:
| · | BooBoo Strips |
| · | HEMOSTYP |
| · | The Ultimate Bandage |
| · | HemoStrip |
| · | CelluSTAT |
| · | Nik Fix |
| 19 |
| Table of Contents |
Results of Operations for the three months ending March 31, 2025 and 2024
The following table sets forth a summary of certain key financial information for the three months ended March 31, 2025 and 2024:
|
| For the Three Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
|
|
|
|
|
|
| ||
Revenue |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Gross profit |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Operating (expenses) |
| $ | (1,489,216 | ) |
| $ | (425,094 | ) |
|
|
|
|
|
|
|
|
|
Operating (loss) |
| $ | (1,489,216 | ) |
| $ | (425,094 | ) |
|
|
|
|
|
|
|
|
|
Other income (expense) |
| $ | (42,443 | ) |
| $ | (26,844 | ) |
|
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | (1,531,659 | ) |
| $ | (451,938 | ) |
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and diluted |
| $ | (0.01 | ) |
| $ | (0.00 | ) |
Three Months ended March 31, 2025 versus Three Months ended March 31, 2024
During the three months ended March 31, 2025 and 2024, the Company had $0 of revenues, respectively. The Company did not generate any revenues in the current quarter due to the continued focus of the Company’s capital and resources towards obtaining a Class III PMA.
Operating Expenses
Total operating expenses for the three months ended March 31, 2025 and 2024 were $1,489,216 and $425,094, respectively.
The increase in operating expenses was primarily due to an increase of $1,120,125 in stock-based compensation offset by a decrease of approximately $57,350 in legal and professional expenses. The increase in stock-based compensation is due to the vesting of 4,725,000 RSUs and recording $1,120,125 as stock-based compensation. The decrease in legal and professional expenses is due to the Company terminating services with consultants.
Other income (expense)
Other income (expense) for the three months ended March 31, 2025 and 2024 was $(42,443) and $(26,844), respectively. The increase in other expense was due to an increase in interest expenses due to having larger outstanding loan balances.
Our net loss for the three months ended March 31, 2025 was $1,531,659 as compared to net loss of $451,938 for the comparable period of the prior year. The increase in the net loss is due to the Company having an increase in operating expenses of $1,064,122 and an increase in other expense of $15,599, as explained above.
| 20 |
| Table of Contents |
Financial Condition, Liquidity and Capital Resources
As of March 31, 2025, the Company had a negative working capital of $1,771,186. The Company has not yet attained a level of operations which will allow it to meet its current overhead expense obligations. The report of our independent registered public accounting firm on our 2024 financial statements includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The Company has been focusing its capital and resources towards seeking a Class III PMA for its CelluSTAT technology, and has funded its initial operations with private placements, and unsecured loans from related parties. There can be no assurance that adequate financing will continue to be available to the Company and, if available, on terms that are favorable to the Company. Our ability to continue as a going concern is also dependent on many events outside of our direct control, including, among other things, our ability to achieve our business goals and objectives, as well as improvement in the economic climate.
The Company entered into a common stock purchase agreement (“CSPA”) with White Lion, which gives the Company the right, but not the obligation, to require White Lion to purchase up to $10,000,000 of the Company’s common stock, subject to certain limitations and conditions set forth in the CSPA. As of the date of this filing, the Company has received approximately $3.2 million in proceeds from White Lion to pay for its operations and finalization of its Class III PMA application. The sale of additional equity or convertible debt securities would be dilutive to our shareholders. In addition, economic conditions and actions by policymaking bodies are contributing to rising interest rates and significant capital market volatility, which, along with increases in our borrowing levels, could increase our future borrowing costs.
Cash Flows
The Company’s cash on hand at March 31, 2025 and December 31, 2024 was $4,914 and $168,883, respectively.
The following table summarizes selected items from our statements of cash flows for the three months ended March 31, 2025 and 2024:
|
| For the Three Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Net cash used in operating activities |
| $ | (273,969 | ) |
| $ | (405,763 | ) |
Net cash used in investing activities |
|
| - |
|
|
| - |
|
Net cash provided by financing activities |
|
| 110,000 |
|
|
| 391,225 |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
| $ | (163,969 | ) |
| $ | (14,538 | ) |
Net Cash Used in Operating Activities
Net cash used in operating activities for the three months ended March 31, 2025 was $273,969. The Company had a net loss of $1,531,659 offset by stock for services and compensation of $1,120,125, amortization expense of $1,013, amortization of right-of-use asset of $4, an increase in accounts payable and accrued expenses of $39,197, an increase in accrued liabilities - related party of $21,731 and an increase in accrued compensation of $82,988. The Company also had an increase prepaid and other current assets of $7,368.
Net cash used in operating activities for the three months ended March 31, 2024 was $405,763. The Company had a net loss of $451,938 offset by amortization expense of $1,012, amortization of right-of-use asset of $346, a decrease in prepaid and other current assets of $7,632 and an increase in accrued liabilities - related party of $49,481. The Company also had a decrease in accounts payable and accrued expenses of $12,296.
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| Table of Contents |
Net Cash Used in Investing Activities
The Company did not have any investing activities during the three months ended March 31, 2025 and March 31, 2024.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the three months ended March 31, 2025 was $110,000. This was due to the result of the Company receiving proceeds of $90,000 from convertible notes and a $20,000 advance from a related party.
Net cash provided by financing activities for the three months ended March 31, 2024 was $391,225. This was due to the result of the Company receiving proceeds of $395,425 from the sale of stock offset by making payments of offering costs of $4,200.
Off-Balance Sheet Arrangements
As of March 31, 2025, we have no off-balance sheet arrangements.
Critical Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting principles of the United States (“GAAP”) requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses in the financial statements and accompanying notes. Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the Company. Based on this definition, we have the critical accounting estimates identified below. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results which are found in Note 2 – Significant Accounting Policies of our 2024 Annual Report on Form 10-K and Note 2 – Significant Accounting Policies in the accompanying financial statements. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.
Stock-Based Compensation
The Company accounts for stock-based compensation under the provisions of ASC 718, Compensation-Stock Compensation. Stock-based compensation expense for employees and non-employees is measured at the grant date fair value. Stock-based compensation for all stock-based awards to employees and directors is recognized as an expense over the requisite service period, which is generally the vesting period.
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| Table of Contents |
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company is in the process of implementing disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’), that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports are recorded, processed, summarized, and reported within the time periods specified in rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our Chief Executive Officer and Principal Financial Officer to allow timely decisions regarding required disclosure.
As of March 31, 2025, the Chief Executive Officer and the Principal Financial Officer carried out an assessment of the effectiveness of the design and operation of our disclosure controls and procedures and concluded that the Company’s disclosure controls and procedures were not effective.
Changes in Internal Control over Financial Reporting
During the quarter ended March 31, 2025, there were no changes in our system of internal controls over financial reporting.
| 23 |
| Table of Contents |
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Management does not believe there have been any material changes to the risk factors listed in Part I, “Item 1A, Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. These risk factors should be carefully considered with the information provided elsewhere in this report, which could materially adversely affect our business, financial condition or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the quarter ended March 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of Regulation S-K.
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| Table of Contents |
Item 6. Exhibits
The following exhibits are filed with this report, or incorporated by reference as noted:
Articles of Incorporation of the Company dated February 28, 1997 (1) | |||
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101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
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101.SCH |
| Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB |
| Inline XBRL Taxonomy Extension Labels Linkbase Document. |
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101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
___________
* Filed herewith.
(1) | Incorporated by reference to the Company’s Form 10-Q for the quarter ended September 30, 2014. |
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(2) | Incorporated by reference to the Company’s Form 10-Q for the quarter ended June 30, 2022. |
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(3) | Incorporated by reference to Form 8-K dated August 7, 2015 – date of earliest event filed on August 10, 2015. |
| 26 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
UNITED HEALTH PRODUCTS, INC. | |||
Dated: May 5, 2025 | By: | /s/ Brian Thom | |
Brian Thom | |||
Principal Executive Officer | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signatures | Title | Date | |||
By: | /s/ Brian Thom |
| May 5, 2025 | ||
Brian Thom | Chief Executive Officer, Principal Executive Officer and Director | ||||
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By: | /s/ Kristofer Heaton | Principal Financial Officer | May 5, 2025 | ||
Kristofer Heaton |
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By: | /s/ Robert Denser | Director | May 5, 2025 | ||
Robert Denser | |||||
| 27 |