v3.26.1
Basis of Presentation (Policies)
 6 Months Ended
Jun. 30, 2026
Accounting Policies [Abstract]  
Use of Estimates

Use of Estimates: The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.

 

 
Principles of Consolidation

Principles of Consolidation: The condensed consolidated financial statements include the accounts of QHSLab, Inc. and its wholly owned subsidiaries USAQ Corporation, Inc., and Medical Practice Income, Inc. All significant inter-company balances and transactions have been eliminated.

 
Cash and Cash Equivalents

Cash and Cash Equivalents: For financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents. Cash and cash equivalents are maintained at banks believed to be stable, occasionally at amounts in excess of federally insured limits, which represents a concentration of credit risk. The Company has not experienced any losses on deposits of cash and cash equivalents to date.

 
Accounts Receivable

Accounts Receivable: The Company extends unsecured credit to its customers on a regular basis. Management monitors the payments on outstanding balances and estimates future expected credit losses over the life of the receivables based on past experience, current information and forward-looking economic considerations and adjusts the reserve for uncollectible balances as necessary based on experience. The Company controls its credit risk related to accounts receivable through credit approvals and monitoring. The Company had no customers that generated 10% or more of its revenue during either the three or six-month periods ended June 30, 2026, or the three or six month periods ended June 30, 2025. As of June 30, 2026, three customers each comprised greater than 10% of the outstanding accounts receivable balance at 10.1%, 10.5% and 13.4%. As of December 31, 2025, two customers comprised greater than 10% of the outstanding accounts receivable balance at 16.7% and 10.2%.

 
Inventories

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 uses actual costs to determine its cost basis for inventories. Inventories consist of only finished goods. Management monitors inventory based on forecasted sales and existing inventory levels. Based on inventory turnover and low on-hand inventory levels, management has determined there was no need for a reserve for slow-moving and obsolete inventories as of June 30, 2026 and December 31, 2025.

 
Capitalized Software Development Costs

Capitalized Software Development Costs: Software development costs for internal-use software are accounted for in accordance with Accounting Standards Codification (“ASC”) 350-40, Internal-Use Software. Development costs that are incurred during the application development stage begin to be capitalized when two criteria are met: (i) the preliminary project stage is completed and (ii) it is probable that the software will be completed and used for its intended function. Capitalization ceases once the software is substantially complete and ready for its intended use.

 

Costs incurred during the preliminary project stage of software development and post-implementation operating stages are expensed as incurred. Amortization is calculated on a straight-line basis over three years which is the estimated economic life of the software and is included in the cost of revenue on the condensed consolidated statements of operations.

 

The estimated useful lives of software are reviewed at least annually and the software will be tested for impairment whenever events or changes in circumstances occur that could impact the recoverability of the assets.

 
Intangible Assets

Intangible Assets: Intangible assets represent the value the Company paid to acquire assets including a trademark, patent and web domain on June 23, 2021. The allocation of the purchase price to each of these assets was determined based on ASC 805-50-30, Business Combination, Related Issues, Initial Measurement. These assets are accounted for in accordance with ASC 350-30, Intangibles, General Intangibles Other Than Goodwill. The cost of the assets is amortized over the remaining useful life of the assets as follows:

 

U.S. Method Patent 13.4 years
   
Web Domain Indefinite life
   
Trademark Indefinite life

 

The estimated useful lives and carrying value of the assets are reviewed at least annually or whenever events or circumstances occur which may result in an impact to the value of the assets.

 

 
Convertible Notes Payable

Convertible Notes Payable: The Company accounts for convertible notes deemed conventional and conversion options embedded in non-conventional convertible notes which qualify as equity under Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including certain convertible instruments and contracts on an entity’s own equity. ASU 2020-06 removes the separation models required for convertible debt with cash conversion features and convertible instruments with beneficial conversion features. It also removes certain settlement conditions that were required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation for convertible instruments. Accordingly, the Company records, as a discount to convertible notes, the intrinsic value of such conversion options based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt.

 
Revenue Recognition

Revenue Recognition: Pursuant to ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) the Company recognizes revenue upon transfer of control of goods, in an amount that reflects the consideration that is expected to be received in exchange for those goods. The Company does not allow for the return of products and therefore does not establish an allowance for returns.

 

To determine the revenue to be recognized for transactions that the Company determines are within the scope of ASC 606, the Company follows the established five-step framework as follows:

 

  (i) identify the contract(s) with a customer;
  (ii) identify the performance obligations in the contract(s);
  (iii) determine the transaction price;
  (iv) allocate the transaction price to the performance obligations in the contract(s); and
  (v) recognize revenue when (or as) the Company satisfies a performance obligation.

 

The Company sells allergy diagnostic-related products and immunotherapy treatments to physicians. Revenue is recognized once the Company satisfies its performance obligation which occurs at the point in time when title and possession of products have transitioned to the customer. Beginning April 1, 2025, the Company changed its policy of when title transitions to its customers from upon delivery to upon shipment. Delivery typically occurred within one or two days of shipment, and the Company limited shipping ahead of the end of each reporting period to allow time for delivery. Revenue continues to be recorded when title passes to the customer and, as a result, the change did not have a material impact on the Company’s previously issued consolidated financial statements.

 

The Company includes shipping and handling fees billed to customers in revenue.

 

The Company also generates revenue through SaaS agreements whereby the Company provides physicians’ practices access to its proprietary internally-developed software that provides clinical decision support and patient monitoring. The agreements provide for either monthly or annual access to the software. The access to the system begins immediately and revenue is recognized over the agreement term.

 

The Company provides administrative, billing and clinical decision support services utilizing the Company’s internally-developed software. Revenue is recognized each month based on actual services provided during that month.

 

The Company has an agreement with a third party to provide clinical research services utilizing its proprietary internally-developed software. The agreement details the performance obligations of the Company and revenue is recognized as those obligations are met.

 

There are several practical expedients and exemptions allowed under ASC 606 that impact timing of revenue recognition and disclosures. The Company elected to treat similar contracts as a portfolio of contracts, as allowed under ASC 606. The contracts that fall within the portfolio have the same terms and management has the expectation that the result will not be materially different from the consideration of each individual contract.

 

 

The Company’s revenues consisted of the following:

 

   2026   2025   2026   2025 
   For the Three Months Ended   For the Six Months Ended 
   June 30,   June 30, 
   2026   2025   2026   2025 
Allergy Diagnostic Kit Sales  $196,058   $197,644   $424,828   $462,557 
Integrated Service Program   491,399    263,628    865,900    426,130 
Immunotherapy Treatment Sales   93,972    119,885    185,042    217,214 
Clinical Study Revenue   29,700    -    29,700    89,100 
Subscription Revenue   6,666    9,252    18,614    18,537 
Shipping and handling   10,914    10,091    22,554    20,061 
Training and Other Revenue   18,781    4,946    29,537    17,266 
Total revenue  $847,490   $605,446   $1,576,175   $1,250,865 

 
Research and Development

Research and Development: Research and development expense is primarily related to developing and improving methods related to the Company’s SaaS platform. Research and development expenses are expensed when incurred. For the three months ended June 30, 2026 and 2025, there was $114,621 and $112,364 of research and development expenses incurred, respectively. For the six months ended June 30, 2026 and 2025, there was $235,530 and $236,397 of research and development expenses incurred, respectively.

 
Stock-based Compensation

Stock-based Compensation: The Company applies the fair value method of ASC 718, Share Based Payment, in accounting for its stock-based compensation. The standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock-based compensation at the market price for the Company’s common stock and other pertinent factors at the grant date.

 
Earnings Per Common Share

Earnings Per Common Share: Basic net earnings or (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net earnings or (loss) per common share is computed using the weighted average number of common and dilutive equivalent shares outstanding during the period. Dilutive common equivalent shares consist of options and warrants to purchase common stock (only if those options and warrants are exercisable and at prices below the average share price for the period) and shares issuable upon the conversion of issued and outstanding preferred stock. For the three months ended June 30, 2026, 8,044,884 of common equivalent shares related to Preferred Shares A and A-2 were added to the basic weighted average shares outstanding to arrive at the diluted weighted average shares outstanding. Due to the net losses reported for the six months ended June 30, 2026 as well as three and six months ended June 30, 2025, dilutive common equivalent shares were excluded from the computation of diluted loss per share, as inclusion would be anti-dilutive for the period.

 
Income Taxes

Income Taxes: The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income tax is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized.

 

The Company has net operating loss carry forwards of $3,969,427 which begin to expire in 2027. Future utilization of currently generated federal and state NOL and tax credit carry forwards may be subject to a substantial annual limitation due to the ownership change limitations. The annual limitation may result in the expiration of NOL and tax credit carry-forwards before full utilization.

 
Recently Issued Accounting Standards

Recently Issued Accounting Standards

 

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which simplifies the estimation of credit losses on current accounts receivable and contract assets arising from transactions accounted for under ASC 606 through the use of a practical expedient. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, and interim reporting periods within that annual period, with early adoption permitted. The Company adopted this standard in 2026 and determined that it did not have a material impact on the Company’s financial statements.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires enhanced income tax disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 beginning with the Form 10-Q for the period ending March 31, 2025 with minimal impact. See Note 12 – Income Taxes.

 

This Quarterly Report on Form 10-Q does not discuss recent pronouncements that are not anticipated to have a current and/or future impact on or are unrelated to the Company’s financial condition, results of operations, cash flows or disclosures.