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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K/A

(Amendment No. 1)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

☐ 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 333-260982

QUALIS INNOVATIONS, INC.

(Exact name of registrant as specified in its charter)

Nevada

84-2488498

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification Number)

6898 S. University Blvd., Suite 100, Centennial, CO		80122
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number (484) 483-2134

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 Par Value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☒ No ☐

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. Yes ☐ No ☒

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 preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions 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	☐
Non-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 pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 30, 2023 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the issued and outstanding common stock held by non-affiliates of the registrant was $1,915,000. For purposes of the above statement only, all directors, executive officers and 10% shareholders are assumed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for any other purpose.

As of April 11, 2024, there were 20,439,950 shares of common stock outstanding.

QUALIS INNOVATIONS, INC

TABLE OF CONTENTS

PART I
Item 1.	Business	5
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	11
Item 1C.	Cybersecurity	11
Item 2.	Properties	11
Item 3.	Legal Proceedings	11
Item 4.	Mine Safety Disclosures	11

PART II
Item 5.	Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Repurchases of Equity Securities	12
Item 6.	Selected Financial Data	12
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 8.	Financial Statements and Supplementary Data	23
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	23
Item 9A	Controls and Procedures	23
Item 9B	Other Information	24

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	24
Item 11.	Executive Compensation	27
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	30
Item 13.	Certain Relationships and Related Transactions, and Director Independence	31
Item 14.	Principal Accounting Fees and Services	32

PART IV
Item 15.	Exhibits, Financial Statement Schedules	33

EXPLANATORY NOTE

Qualis Innovations, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-K/A for the year ended December 31, 2023, to amend the Annual Report on Form 10-K that was originally filed on April 11, 2024 (the “Original 10-K”) to (i) reflect that the Company is not an emerging growth company and that the Company is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; (ii) amend Item 9A of the Original 10-K; and (iii) reflect that Mr. Conte was appointed as a member of the Board of Directors of the Company on December 7, 2023. No other changes have been made to the Original Report, and this amended Annual Report is presented as of the filing date of the Original Report and does not reflect events occurring after that date or modify or update disclosures in any way other than as described herein.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

This report contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Description of Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “seeks,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” below. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Such statements may include, but are not limited to, information related to: anticipated operating results; licensing arrangements; relationships with our customers; consumer demand; financial resources and condition; changes in revenues; changes in profitability; changes in accounting treatment; cost of sales; selling, general and administrative expenses; interest expense; the ability to secure materials and subcontractors; the ability to produce the liquidity or enter into agreements to acquire the capital necessary to continue our operations and take advantage of opportunities; legal proceedings and claims.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

USE OF CERTAIN DEFINED TERMS

Except as otherwise indicated by the context, references in this report to “we,” “us,” “our,” “our Company,” or “the Company” is of Sigyn Therapeutics, Inc.

In addition, unless the context otherwise requires and for the purposes of this report only:

	●	“Qualis” refers to Qualis Innovations, Inc., a Nevada corporation;
	●	“Commission” refers to the Securities and Exchange Commission;
	●	“Exchange Act” refers to the Securities Exchange Act of 1934, as amended; and
	●	“Securities Act” refers to the Securities Act of 1933, as amended.

PART I

Item 1. Business

Background

Description of Business

Qualis Innovations, Inc. (the “Company” or “Qualis”), formerly known as Hoopsoft Development Corp., Yellowstone Mining, Inc. and Sky Digital Holding Corp. was incorporated in the state of Nevada on March 23, 2006 under the name Hoopsoft Development Corp (“Hoopsoft”). On January 12, 2007, the Company entered into an agreement and plan of merger (“Agreement and Plan of Merger”) with Yellowcake Mining, Inc. (“Yellowcake”), a Nevada corporation and wholly-owned subsidiary of Hoopsoft Development Corp., incorporated for the sole purpose of effecting the merger. Pursuant to the terms of the Agreement and Plan of Merger, Yellowcake merged with and into Hoopsoft, with Hoopsoft carrying on as the surviving corporation under the name “Yellowcake Mining, Inc.”

On April 6, 2011, Yellowcake restated its articles of incorporation and changed its name to Sky Digital Stores Corp (“SKYC”). On May 5, 2011, the Company entered into a Share Exchange Agreement (“Exchange Agreement”) by and among SKYC and Hong Kong First Digital Holding Ltd. (“First Digital”), and the shareholders of First Digital (the “FDH Shareholders”) entered into a Share “FDH”), and the shareholders of FDH (the “FDH Shareholders”). The closing of the transaction (the “Closing”) took place on May 5, 2011 (the “Closing Date”). On the Closing Date, pursuant to the terms of the Exchange Agreement, the Company acquired all of the outstanding shares (the “Shares”) of FDH from the FDH Shareholders; and FDH Shareholders transferred and contributed all of their Shares to us. In exchange, the Company issued to the FDH Shareholders, their designees or assigns, an aggregate of 23,716,035 shares (the “Shares Component”) or 97.56% of the shares of common stock of the Company issued and outstanding after the Closing (the “Share Exchange”), at $0.20 per share.

Mr. Lin Xiangfeng planned, organized and executed the Share Exchange. Prior to the Share Exchange, Mr. Lin Xiangfeng was the largest shareholder and sole officer of FDH. He was also the CEO of SKYC but did not own any shares of the Company. The parties involved in the Share Exchange Agreement are SKYC, FDH and all FDH Shareholders. Mr. Lin Jinshui, an FDH Shareholder, is the father of Mr. Lin Xiangfeng and Mr. Lin Xiuzi, an FDH Shareholder, is the brother of Mr. Lin Xiangfeng. Other than Mr. Lin Xiangfeng, no third party played a substantial role in the agreement.

FDH owned (i) 100% of the issued and outstanding capital stock of Shenzhen Dong Sen Mobile Communication Technology Co., Ltd (also known and doing business as Shenzhen Donxon Mobile Communication Technology Co., Ltd, “Donxon”), a company organized under the laws of the People’s Republic of China (“China” or the “PRC”); and (ii) 100% of the issued and outstanding capital stock of Shenzhen Xing Tian Kong Digital Company Limited (“XTK”), a PRC company. XTK was the holder of 100% of the issued and outstanding capital stock of Shenzhen Da Sheng Communication Technology Company Limited (also known and do business as Shenzhen Dasen Communication Technology Company Limited, “Dasen”), a PRC company. Dasen is the holder of 70% of the issued and outstanding capital stock of Foshan Da Sheng Communication Chain Service Company Limited (also known and do business as Foshan Dasen Communication Chain Service Co. Ltd, “FDSC”), a PRC company. Pursuant to the Exchange Agreement, FDH became a wholly-owned subsidiary of the Company, and the Company owned 100% of Donxon, 100% of XKT, 100% of Dasen and 70% of FDSC indirectly through FDH.

On February 13, 2018, a change of control occurred, and new officers and directors of the Company were appointed. The name change of ‘Sky Digital Stores Corp.’ (SKYC) to Qualis Innovations, Inc. and the 1 – 1,000 reverse split was announced on FINRA’s Daily List. Echo Resources LLLP took over control of Qualis owning 232,689 of the 396,650 common shares outstanding. Since that event Qualis did not have any business operations or any assets or liabilities.

In July 2019, John Ballard and Charles Achoa, formed a new company named EMF Medical Devices Inc. for the development, maintenance, marketing and sale of an electronic device for the treatment of pain that would make use of certain intellectual property interests held by LCMD. In May 2021 the Company changed its name to mPathix Health Inc. Presently, John Ballard is the Chief Financial Officer and Charles Achoa does not participate in any management or board position.

On June 28, 2021, the Company entered into a Share Exchange Agreement (“Exchange Agreement”) by and among mPathix Health, Inc. (formerly EMF Medical Devices, Inc., a Delaware corporation) (“mPathix”) and Qualis. The closing of the transaction (the “Closing”) took place on June 29, 2021 (the “Closing Date”). On the Closing Date, pursuant to the terms of the Exchange Agreement, the Company acquired all of the outstanding shares (the “Shares”) of mPathix. In exchange, the Company issued to the mPathix shareholder’s, their designees or assigns, an aggregate of 6,988,300 shares of Company common stock (the “Shares Component”) or 93.36% of the shares of common stock of the Company issued and outstanding after the Closing (the “Share Exchange”), at a valuation of $0.50 per share, and the Company issued warrants to purchase an additional 1,098,830 shares (698,830 warrants issued to the Company’s previous CEO and 400,000 to CreoMed which is beneficially owned by Dr. Joseph Pergolizzi, the Company’s previous acting CEO and chairman of the board) of the Company’s common stock, exercisable for 10 years at a $0.50 per share exercise price, subject to adjustment. In connection with the closing of the mPathix acquisition, the officers and directors of mPathix were appointed as the officers and directors of the Company. On June 29, 2021, the Company issued 496,650 common shares for the recapitalization of Qualis in conjunction with the reverse acquisition for a net book value of $0.

The acquisition was accounted for as a “reverse merger’’ and recapitalization since the stockholders of mPathix owned a majority of the outstanding shares of the common stock immediately following the completion of the transaction assuming that holders of 10% of the Public Shares exercise their conversion rights. mPathix was deemed to be the accounting acquirer in the transaction and, consequently, the transaction was treated as a recapitalization of mPathix. As a result, Qualis was considered to be the continuation of the predecessor mPathix. Accordingly, the assets and liabilities and the historical operations that are reflected in the consolidated financial statements are those of mPathix and are recorded at the historical cost basis of mPathix. Qualis’s assets, liabilities and results of operations will be consolidated with the assets, liabilities and results of operations of mPathix after consummation of the acquisition.

The Company is now the holding company under which mPathix operates. mPathix is a clinical stage company focused on the development, production, and distribution of pain management and other central nervous system (CNS) based solutions.

We are developing a product designed to address the unmet needs of patients who seek alternatives to traditional pain medications and interventions or adjunctive therapies to their current treatment regimen. We believe that our product will provide clinicians and patients with new and differentiated set of pain management tools to meet the diversity of patient needs.

A key element to the Company’s growth strategy is to acquire the rights to or develop existing devices. Large device companies have increased the minimum market opportunity they require in order to commit marketing resources to their products. As a result, there are many products that are unsupported by such companies and are currently scheduled to be phased out or “sunsetted.” Qualis Innovations believes that it can create significant value by developing or acquiring rights to a portfolio of such products, expanding their therapeutic uses and/or markets, improving or enhancing such products and dedicating the appropriate amount of marketing and other resources to maximize the value of the Company’s portfolio.

There are several key criteria the Company uses when evaluating product opportunities:

	●	The disease or condition largely has been ignored due to lack of interest by other, larger companies and, as a result, overall competition in the space is limited.
	●	The device is not selling well for various reasons (including, among other things, poor management, poor reimbursement, improper or no available billing codes, inaccurate pricing, and limited and/or poor clinical outcomes) which, Qualis would attempt to eliminate, thereby increasing product revenues.
	●	The device should be easy to manufacture, thereby avoiding the need for costly investment by the Company develop products and complicated manufacturing facilities.
	●	There should be a large, underserved patient population. The device should have clear regulatory and reimbursement paths with the FDA and CMS, respectively (or already be approved).
	●	The device should be relatively easy to distribute/dispense and administer. Most importantly, the product must have a history of limited adverse events to patients.

Our planned product, which is our sole product and is in the development pipeline, is SOLACE, a non-invasive medical device that uses electromagnetic induction to generate deep heat below the surface of the skin to reduce and relieve pain. SOLACE™ delivers radio frequency (RF) energy continuously and thereby delivers thermal effects to the tissue and utilizes several differentiated features vs other radio frequency devices currently on the market. We have not yet finalized development of the planned SOLACE device and have not generated any cash flows from operations in connection with the planned device.

The SOLACE device is based on proprietary high-frequency magnetic induction technology, which we refer to as Electromagnetic Induction (“EMI”). Electromagnetic or magnetic induction is the use of electric currents or a derivative of a current in the form of a sound or an acoustic wave or an electromagnetic energy wave. Administered electric currents or their derivatives have two attributes: (1) pain relief and (2) regeneration of tissues.

Magnetic fields are induced beneath the skin surface to create localized, planar heat in the dermis and deeper muscle, while selectively avoiding sensitive structures in the epidermis and fat layers. By comparison, our SOLACE device creates currents in discreet planes beneath the tissue surface rather than directing energy through the planes and penetrating the epidermis. Therefore, our EMI technology may provide for shorter duration of treatments and a more comfortable patient experience vs. other energy-based technologies.

SOLACE™ delivers RF energy via a user-friendly hand-held applicator that allows for targeted and ergonomic application of RF energy to discrete areas of concern. In contrast, competitor diathermy devices utilize a large drum applicator wherein the RF energy is emitted across a large surface area. Diathermy is the controlled production of deep heating beneath the skin in the subcutaneous tissue, deep muscles and joints for therapeutic purposes. There are two types of diathermy devices on the market today: radio or high frequency and microwave. The drum applicator design limits the tissue targeting to larger joints, while smaller joints or tissue areas (e.g. acromion of the shoulder, plantar aspect of foot, neck) are largely unaddressed. The hand-held applicator from the SOLACE™ device provides a small surface area (approx. 3 cm²) which is coated in Teflon® that can easily be positioned to target smaller body parts providing a differentiation compared to large drum-type radio frequency devices fail to adequately treat.

Presently, the Company is in the process of preparing the documents necessary to submit an application to the FDA for clearance of our planned device. We plan on also filing a provisional patent for the changes and new development of our device over our previous licensed device from LCMD, The Company has an accumulated deficit of $4,430,308. It is anticipated that the total expected financial outlay to complete the development and FDA application is approximately $250,000, combined with operating expenses the Company may not be able to have enough cash flow to support the Company’s daily operations resulting in an opinion by the auditors of the Company continuing as a going concern.

We anticipate that our SOLACE device will be cleared by the FDA via the 510k process and that it will be deemed to be substantially equivalent to the identified predicate device called the Bebe device, The Bebe device was originally cleared by the FDA in 2014 by the Marchitto Entities and subsequently sold to LCMD via an Asset Purchase Agreement and an Intellectual Property License Agreement. The Bebe device is indicated for use in the treatment of selected medical conditions such as pain relief, muscle spasms, and joint contractures, but not for the treatment of malignancies.

Overview

Qualis Innovations, Inc. (hereinafter the “Company,” “We,” “Qualis”) was incorporated in the state of Nevada on March 23, 2006. On June 28, 2021, the Company entered into a Share Exchange Agreement by and among mPathix Health, Inc. (formerly known as EMF Medical Devices, Inc.), a Delaware corporation (“mPathix”), pursuant to which mPathix was acquired by the Company. Qualis is now the holding company under which mPathix operates. mPathix is a clinical stage company focused on the development, production, and distribution of pain management and other central nervous system (CNS) based solutions.

Competition

The medical device industry is constantly evolving, and scientific advances are expected to continue at a rapid pace. This results in intense competition among companies operating in the industry. Other, larger companies may have, or may be developing, products that compete with our product and may significantly limit the market acceptance of our product or render them obsolete. Our technical and/or business competitors would include major pharmaceutical companies, large and small medical device companies, universities and nonprofit research institutions and foundations. Most of these competitors have significantly greater research and development capabilities than we have, as well as substantial marketing, financial and managerial resources.

Our product is expected to primarily compete with manufacturers who develop and market alternative devices utilizing vastly different technology. There are many other companies, both public and private, that service the same markets as we do, all of which compete to some degree with our company. This includes medical device companies, drug companies and other companies and industries addressing the pain treatment market. These organizations are also expected to compete with us for acquisitions, joint ventures, or other collaborations and to attract qualified personnel. In addition, as current or new products gain market acceptance, we may experience increased competition for our product, and we may not be able to compete effectively. Failure to effectively compete could adversely affect our market share, financial condition, and growth prospects.

The primary competitive factors facing us include ease of use, safety, price, quality, innovative design and technical capability, breadth of product line, service, and distribution capabilities. Our current and future competitors may have greater resources, more widely accepted and innovative products, greater technical capabilities and stronger name recognition than we do. Our ability to compete is affected by our ability to:

	1.	obtain regulatory clearance and compliance for our product in regards to future modifications and design; This process of regulatory clearance involves getting FDA approval for our planned product which includes filing an application for 510(k) approval for our type of medical device. The application consists of safety testing, design review, modifications made to the device to ensure safety of those modifications, quality management systems, labeling, distribution manufacturing, sales, promotion and other compliance requirements associated with a Class II medical device which the SOLACE device is a part of. A Class II medical device are those devices that have a moderated to high risk to the patient, 43% of all medical devices fall under this category.

	2.	manufacture and sell or lease our product cost effectively;

	3.	meet all relevant quality standards for our product in their particular markets;

	4.	develop or acquire new products and innovative technologies;

	5.	respond to competitive pressures specific to each of our geographic and product markets;

	6.	protect the proprietary technology of our product and avoid infringement of the proprietary rights of others

	7.	market our product;

	8.	attract and retain skilled employees, including sales representatives; and

	9.	maintain and establish distribution relationships.

Competitors could develop products that are more effective, achieve more favorable reimbursement status from third-party payors, cost less or are ready for commercial introduction before our product. If our competitors are better able to develop and patent products earlier than we can or develop more effective and/or less expensive products that render our product obsolete or non-competitive, our business will be harmed and our commercial opportunities will be reduced or eliminated.

Currently, we are not a manufacturer. To the extent that we engage third party manufacturers to produce our product, our manufacturing capabilities may not be adequate or sufficient to compete with large scale, direct or third-party manufacturers, which may be able to secure inventory from vendors on more favorable terms, operate with a lower cost structure or adopt more aggressive pricing policies.

Manufacturing

We will use Shanghai Zhiting Intelligent Technology Co., Ltd (“SZIT”) as our CMO to manufacture the SOLACE device, and to warehouse our product in their facilities in the San Francisco. SZIT is ISO 13482:2016 certified. We also intend to identify a back-up manufacture to ensure the integrity of our product supply chain in case of natural disaster or political uncertainty.

We plan use Kanban inventory management by which our SOLACE inventory will be held by Supertech Medical Devices Inc.(“Supertech”) at their warehouse until customer orders are received. Devices will be shipped from Supertech’s warehouse.

Product Distribution

We plan to initially offer our SOLACE device via a purchase or leasing model and we will generate demand with a combination of direct and independent sales representatives in the United States. Field sales representatives will be engaged to sell in predefined geographic markets and will be compensated based on a commission amount of the revenues generated by the medical device. The focus will be to market our device to a target audience of professionals who specialize in the use of multi-modal, or multi-disciplinary, pain management techniques.

Our target audience includes chiropractors, physical therapists, and pain management specialists. However, our sales and promotional effort will be focused on using an account-based approach to further segment the market which will allow us to promote the SOLACE device in the most efficient manner. Our primary promotional targets will be multi-practitioner clinics and high throughput, solo-practitioner offices. We also intend to have a Corporate Accounts team to target large national and regional chiropractic and physical therapy chains. Examples of corporate accounts targets include The Joint, a national chiropractic franchise with over 500 locations, and ATI Physical Therapy with 900 locations across the US.

At launch, we will sell our SOLACE™ device directly to customers who will be able to either buy it outright or lease it via a third-party financing partner, Coastal Capital Group. If the device is to be leased, mPathix will be paid 50% of the purchase price upon leasing signing and 50% upon device delivery to the customer.

Although we plan to sell or lease the SOLACE™ device to target accounts at launch, we are also developing a proprietary method of revenue sharing that will allow for greater utilization of our device with customers, and thus expanding our market penetration into a broader subset of customers for whom purchasing or leasing the SOLACE device is not practical. Based on this approach, we may be able to accelerate the number of devices placed based on a greatly reduced acquisition cost for our customer. Further, it may be possible for mPathix to have real-time revenue recognition, which could lead to significantly lower days sales outstanding.

mPathix is also evaluating unique distribution models to fully maximize our reach with our target audience. Potential distribution models include “device sharing” or “on-demand” availability of the SOLACE™ device, allowing even the lowest patient throughput practices to access our technology. Such distribution models will be test marketed prior to any potential national implementation.

Regardless of which distribution model, or combination of models, is utilized, each account that accesses the SOLACE device will incorporate a monthly fee for device calibration and maintenance.

Reimbursement

Based on our target market (i.e., chiropractors and physical therapists), we believe many, if not most, patients will pay out of pocket for treatment with the SOLACE™ device. However, there will be certain practitioners, including medical doctors, who will treat patients with medical insurance plans and attempt get reimbursement for their service. In this revenue stream, revenue will be derived from patients with insurance plans held by private health insurance carriers, typically known as HMOs or PPOs, who pay on behalf of their insureds and worker’s compensation claims. This will continue to create revenue which will become recurring as patients are treated on a regular basis.

The Current Procedural Terminology (CPT) code 97024, as maintained by American Medical Association, is a medical procedural code under the category of Supervised Physical Medicine and Rehabilitation Modalities. CPT 97024 includes the application of a modality to 1 or more areas; Diathermy (e.g., microwave). This is the code healthcare professionals may be able to use for billing and reimbursement, in addition to the ICD-10 diagnosis code, for payment by insurers. The provider fee for 97024 is assumed to about $30.

Government Regulation

The Company cannot commence sales of our planned SOLACE device until the device has been approved by the FDA. The Company has not yet filed a 510(k) application with the FDA to receive approval for the planned SOLACE device. Once the Company has done so, and if and when the Company receives FDA approval of its 510(k) application for the SOLACE device, we would then be subject to extensive regulation by the FDA and foreign and state regulatory authorities. In the United States, medical device companies must comply with laws and regulations promulgated by the FDA. These laws and regulations require various authorizations prior to a product being marketed in the United States. Manufacturing facilities and practices are also subject to FDA regulations. The FDA regulates the clinical testing, manufacture, labeling, sale, distribution and promotion of medical devices in the United States. If and when we receive FDA approval for our planned SOLACE device, failure to comply with regulatory requirements, including any future changes to such requirements, could have a material adverse effect on our business, prospects, financial condition and results of operations as such failure could prevent us from selling or licensing our SOLACE device in the United States.

Even after clearance or approval of our planned device, we would still be subject to continuing regulation by the FDA, including the requirements of registering our facilities and listing our product with the FDA. We would be subject to medical device reporting regulations. These regulations would require us to report to the FDA if any of our products may have caused or contributed to a death or serious injury or has malfunctioned and such product or a similar product that we market would likely cause or contribute to a death or serious injury if the malfunction were to recur. We would also be required, unless an exemption applies, to report corrections and removals to the FDA where the correction or removal was initiated to reduce a risk to health posed by the device or to remedy a violation of the Federal Food, Drug and Cosmetic Act. Additionally, we would be required by the FDA to maintain records of corrections or removals, regardless of whether such corrections and removals are required to be reported to the FDA. In addition, the FDA would closely regulate any device promotion and advertising, and our future promotional and advertising activities with respect to our planned SOLACE device could come under scrutiny by the FDA.

We would also be subject to arbitrary impounding and inspections of our device shipments by the FDA, despite having FDA approval and 510(k) clearance. While we would expect after our first few initial shipments for this to be a less likely event, there is no assurance that the FDA may not arbitrarily impound our planned devices without notice and with no definitive timeline to provide a venue for the Company to prove our compliance and to have the product released to our distributor(s) or customer(s).

The FDA will also require that we, or our contract manufacturers, manufacture our product in accordance with its Quality System Regulation, or QSR. The QSR covers the methods and documentation of the design, testing, control, manufacturing, labeling, quality assurance, packaging, storage and shipping of our planned devices. Failure to maintain compliance with the QSR requirements could result in the shutdown of, or restrictions on, our future manufacturing operations and the recall or seizure of our product, which would be expected to have a material adverse effect on our future business. Similarly, in the event that one of our suppliers fails to maintain compliance with quality requirements, we would likely have to qualify a new supplier and could experience manufacturing delays as a result.

The FDA has broad enforcement powers. If we violate applicable regulatory requirements before or after we receive FDA approval for our planned SOLACE device, the FDA may bring enforcement actions against us, which may include the following sanctions:

	●	Form 483 deficiency observations, warning letters, fines, injunctions, consent decrees and civil penalties;
	●	mandatory repair, replacement, recall or seizure of our product, which may include refunds by us of the purchase price;
	●	operating restrictions, partial suspension or total shutdown of production;
	●	refusing or delaying our requests for 510(k) clearance or PMA of new products or new intended uses of our existing product;
	●	withdrawing 510(k) clearances, or PMAs that have already been granted; or
	●	criminal prosecution.

If any of these events were to occur, they would likely have a material adverse effect on our business, prospects, financial condition and results of operations.

Employees

As of the date of this filing, we have no full-time employees.

Where You Can Find our Reports

Any person or entity may read and copy our reports with the Commission at the Commission’s Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Room by calling the Commission toll free at 1-800-SEC-0330. The Commission also maintains an Internet site at http://www.sec.gov where reports, proxies and other disclosure statements on public companies may be viewed by the public.

Item 1A. Risk Factors

This item is not applicable because we are a “smaller reporting company” as defined in Exchange Act Rule 12b-2.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 1C. Cybersecurity

Our board of directors and senior management recognize the critical importance of maintaining the trust and confidence of our clients, business partners and employees. Our management, led by our Chief Executive Officer, are actively involved in oversight of our risk management efforts, and cybersecurity represents an important component of the Company’s overall approach to enterprise risk management (“ERM”). Our cybersecurity processes and practices are fully integrated into the Company’s ERM efforts. In general, we seek to address cybersecurity risks through a cross-functional approach that is focused on preserving the confidentiality, security and availability of the information that we collect and store by identifying, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.

Risk Management and Strategy

As one of the critical elements of our overall ERM approach, our cybersecurity efforts are focused on the following key areas:

	●	Governance: Management oversees cybersecurity risk mitigation and reports to the board of directors any cybersecurity incidents.
	●	Collaborative Approach: We have implemented a cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner.
	●	Technical Safeguards: We deploy technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence.

We have not engaged third-party service providers to conduct evaluations of our security controls, independent audits or consulting on best practices to address new challenges.

While we have not experienced any cybersecurity threats in the past in the normal course of business, in the future, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us.

Item 2. Properties

The Company has an office located at 6898 S. University Blvd., Suite 100, Centennial, Colorado 80122 with telephone number: (484) 483-2134. As of the date of this filing, the Company does not have any physical property other than its prototype medical device equipment.

Item 3. Legal Proceedings

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future. To the best our knowledge, none of our directors, officers or affiliates is involved in a legal proceeding adverse to our business or has a material interest adverse to our business.

Item 4. Mine Safety Disclosures

There is no information required to be disclosed by us under this Item.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

(a) Market Information

Our stock is quoted on the OTC markets under the symbol “QLIS.” We were listed on May 23, 2016. There are 20,439,950 shares outstanding as of April 11, 2024.

(b) Transfer Agent

The transfer agent and registrar for our common stock is Securities Stock Transfer Corporation located at 2901 N. Dallas Parkway, Suite 380, Plano, TX 75093 telephone number (469) 633-0088.

(b) Shareholders of Record

The number of beneficial holders of record of our common stock as of the close of business on December 31, 2023 was 150.

We do not expect to pay cash dividends in the next term. We intend to retain future earnings, if any, to provide funds for operation of our business. We currently have no restrictions affecting our ability to pay cash dividends.

(d) Equity Compensation Plans

In June 2021, the board of directors of the Company authorized the adoption and implementation of the Company’s 2021 Equity Incentive Plan (the “2021 Plan”). The principal purpose of the 2021 Plan is to attract, retain and motivate employees, officers, directors, consultants, agents, advisors and independent contractors of the Company and its related companies by providing them the opportunity to acquire a proprietary interest in the Company and to link their interests and efforts to the long-term interests of the Company’s shareholders. Under the 2021 Plan, an aggregate of 1,000,000 shares of the Company’s common stock have initially been reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock awards, restricted stock, restricted stock units and other stock and cash-based awards. The exercise price for each option may not be less than fair market value of the common stock on the date of grant, and shall vest as determined by the Company’s board of directors but shall not exceed a ten-year period.

Recent Sales of Unregistered Securities

In January 2024, the Company issued a total of 10,000,000 common shares valued at $500,000 (based on the estimated fair value of the stock on the date of grant) to two affiliates in settlement of a dispute.

In January 2024, the Company issued 2,000,000 common shares to two (2) affiliates for aggregate gross proceeds of $100,000.

Item 6. Selected Financial Data

Because we are a smaller reporting company, this Item 6 is not applicable.

Item 7. 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 consolidated financial statements and related notes included elsewhere in this filing. This discussion and other parts of this filing contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, intentions, and beliefs. Our actual results may differ materially from those discussed in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and in other parts of this filing, and you should not place undue certain on these forward-looking statements, which apply only as of the date of this filing. See “Disclosure Regarding Forward-Looking Statements”.

OVERVIEW:

Historical Development

Our Company

Qualis Innovations Inc. (hereinafter the “Company,” “We,” “Qualis”) was incorporated in the State of Nevada on March 23, 2006. On June 28, 2021, the Company entered into a Share Exchange Agreement by and among mPathix Health, Inc. (formerly known as EMF Medical Devices, Inc.), a Delaware corporation (“mPathix”), pursuant to which mPathix was acquired by the Company. Qualis is now the holding company under which mPathix operates. mPathix is a clinical stage company focused on the development, production, and distribution of pain management and other central nervous system (CNS) based solutions.

Recent Developments

We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Impairment of Assets

In the 4^th quarter of 2023, the Company determined that the third party manufacturer of its SOLACE device was unable to deliver the remaining SOLACE devices and that it may not be economically feasible to pursue the manufacturer for the return of the tooling and deposits. As a result, the Company determined that the value of the tooling and deposits related to its SOLACE device was $0 and recorded an impairment of assets totaling $76,008 in the year ended December 31, 2023 and is classified in other expenses in the consolidated Statements of Operations.

Financing Transactions

Short Term Note Payable

The Company borrows funds from the Company’s CEO for working capital purposes from time to time. The Company has recorded the principal balance due of $9,102 and $0 under short term note payable in the accompanying Balance Sheets at December 31, 2023 and 2022, respectively. The Company received advances of $9,102 and $0 and no repayments for the years ended December 31, 2023 and 2022. The advance from our CEO was not made pursuant to any loan agreements or promissory notes, are interest bearing at 10% per annum and due on demand.

Insurance Financing Agreement

On July 20, 2022, the Company entered into a loan to finance its directors and officer’s insurance policy effective June 28, 2022. The loan has a principal balance of $90,225, bears interest at 8.83% per annum, and is due and payable in nine monthly payments of $10,397. During the years ended December 31, 2023 and 2022, the Company made repayments of $18,456 and $59,033. In February 2023, the Company cancelled the insurance policy.

Acquisition of mPathix

On June 28, 2021, the Company entered into a Share Exchange Agreement (“Exchange Agreement”) by and among mPathix Health, Inc. (formerly EMF Medical Devices, Inc., a Delaware corporation) (“mPathix”) and Qualis. The closing of the transaction (the “Closing”) took place on June 29, 2021 (the “Closing Date”). On the Closing Date, pursuant to the terms of the Exchange Agreement, the Company acquired all of the outstanding shares (the “Shares”) of mPathix. In exchange, the Company issued to the mPathix shareholder’s, their designees or assigns, an aggregate of 6,988,300 shares of Company common stock (the “Shares Component”) or 93.36% of the shares of common stock of the Company issued and outstanding after the Closing (the “Share Exchange”), at a valuation of $0.50 per share, and the Company issued warrants to purchase an additional 1,098,830 shares (698,830 warrants issued to the Company’s previous CEO and 400,000 to CreoMed which is beneficially owned by Dr. Joseph Pergolizzi, the Company’s acting CEO and chairman of the board) of the Company’s common stock, exercisable for 10 years at a $0.50 per share exercise price, subject to adjustment. In connection with the closing of the mPathix acquisition, the officers and directors of mPathix were appointed as the officers and directors of the Company.

The acquisition was accounted for as a “reverse merger” and recapitalization since the stockholders of mPathix prior to the acquisition acquired a majority of the outstanding shares of the common stock of the Company immediately following the completion of the transaction. mPathix was deemed to be the accounting acquirer in the transaction, and, consequently, the transaction was treated as a recapitalization of mPathix. As a result, the Company was considered to be the continuation of the predecessor, mPathix. Accordingly, the assets and liabilities and the historical operations that are reflected in the Company’s consolidated financial statements are those of mPathix and are recorded at the historical cost basis of mPathix. The Company’s assets, liabilities and results of operations were consolidated with the assets, liabilities and results of operations of mPathix after consummation of the acquisition.

Stock Based Compensation

Employment Agreement

On March 1, 2021, Mr. Ahmet Demir Bingol, the Company’s CEO entered into an Employment Agreement with the Company, with an effective date of March 16, 2021, in which he receives an annual base salary of $250,000, plus bonus compensation not to exceed 80% of base salary. In addition, Mr. Bingol was granted 698,830 warrants to purchase 698,830 of the Company’s common stock, valued at $165,378 (based on the Black Scholes valuation model on the date of grant). The warrants are exercisable for a period of ten at $0.50 per share in whole or in part, as either a cash exercise or as a cashless exercise, and fully vest at grant date. Mr. Bingol’s employment also provides for medical insurance, disability benefits and one year of severance pay if his employment is terminated without cause or due to a change in control. Mr. Bingol’s compensation was approved by the Company’s Board of Directors on March 1, 2021.

On February 24, 2022, Mr. Bingol entered into a separation agreement whereby he will terminate his employment effective April 15, 2022. He received no severance payment and there were no disagreements between he or the Company. A total of 300,000 warrants have vested with the remaining 398,830 unvested warrants expiring. As a result of Mr. Bingol’s termination, the Company reversed the remaining warrant modification balance of $94,101 during the year ended December 31, 2022.

Consulting Agreement

On January 27, 2022 the Company hired an engineering consultant to assist in completing the design history file, updating new software, system design, pre 510(k) preparation, and testing of the SOLACE device. This work has been placed on hold and the cost of the contract is $77,850.

On October 3, 2022, the Company entered into an Independent Contractor Services Agreement (“Agreement”) with a third party to provide professional services to the Company. The Agreement terminates January 3, 2023. Under this Agreement, the contractor will be entitled to a monthly consulting fee of $6,000 and a total of 36,000 common shares, valued at $18,000 (based on the estimated fair value of the stock on the date of grant) for services rendered. In 2023, the Agreement was mutually cancelled with no consulting fees paid and the 36,000 common shares cancelled.

Common Stock

In January 2024, the Company issued 2,000,000 common shares to two (2) affiliates for aggregate gross proceeds of $100,000.

On July 20, 2022, the Company issued 200,000 common shares to an affiliate for aggregate gross proceeds of $100,000.

Warrants

On March 16, 2021, the Company granted 698,830 warrants to purchase 698,830 shares of the Company’s common stock to Ahmet Demir Bingol, valued at $166,141 (based on the Black Scholes valuation model on the date of grant), pursuant to his Employment Agreement. The warrants are exercisable for a period of ten years at $0.50 per share in whole or in part, as either a cash exercise or as a cashless exercise, and fully vest at grant date.

On February 1, 2022, the Company granted 30,000 warrants to purchase 30,000 of the Company’s common stock to a third party for consulting services, valued at $13,547 (based on the Black Scholes valuation model on the date of grant). The options are exercisable for a period of three years at $1.00 per share in whole or in part, and fully vest at grant date.

On March 29, 2022, the Board of Directors approved the granting of 400,000 warrants, with effect from April 1, 2022, convertible to the Company’s common shares with an exercise price of $1.10, valued at $290,276 (based on the Black Scholes valuation model on the date of grant), to our acting CEO and Chairman Joseph V. Pergolizzi Jr., MD through his company, CreoMed, Inc. with an expiration period of 10 years. These warrants were issued as compensation for the first quarter to Joseph V. Pergolizzi Jr., MD.

On August 1, 2022, based on a revised agreement signed by the relevant parties, the Company granted 60,000 warrants to purchase 60,000 of the Company’s common stock to a third party for consulting services, valued at $7,632 (based on the Black Scholes valuation model on the date of grant). The options are exercisable for a period of three years at $1.10 per share in whole or in part, and fully vest at grant date.

On September 1, 2022, the Company granted 300,000 warrants to purchase 300,000 of the Company’s common stock to a third party for consulting services, valued at $60,916 (based on the Black Scholes valuation model on the date of grant). The options are exercisable for a period of four years at $1.10 per share in whole or in part and vest 50% in six months and the remaining 50% in twelve months from the grant date.

On April 3, 2023, the Company granted 3,333,333 warrants to purchase 3,333,333 of the Company’s common stock to Jim Holt, the Company’s previous CEO, valued at $1,597,635 (based on the Black Scholes valuation model on the date of grant). The options are exercisable for a period of seven years at $0.03 per share in whole or in part and vest immediately. On December 13, 2023, Mr. Holt, entered into a cancellation agreement whereby a total of 100,000 warrants, valued at $45,763 (based on the Black Scholes valuation model on the date of grant) have vested with the remaining 3,233,333 warrants cancelled. The warrants are exercisable for a period of three years at $0.03 per share in whole or in part and vest immediately.

Limited Operating History; Need for Additional Capital

There is limited historical financial information about us on which to base an evaluation of our performance. We have not finalized development of our planned SOLACE device, nor have we generated any cash flow from operations. The Company’s cash position may not be sufficient to support the Company’s daily operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, and possible cost overruns due to increases in the cost of services. To become profitable and competitive, we must receive additional capital. We have no assurance that future financing will materialize. If that financing is not available, we may be unable to continue operations.

Overview of Presentation

The following Management’s Discussion and Analysis (“MD&A”) or Plan of Operations includes the following sections:

	●	Results of Operations

	●	Liquidity and Capital Resources

	●	Capital Expenditures

	●	Going Concern

	●	Critical Accounting Policies

	●	Off-Balance Sheet Arrangements

General and administrative expenses consist primarily of personnel costs and professional fees required to support our operations and growth.

Depending on the extent of our future growth, we may experience significant strain on our management, personnel, and information systems. We will need to implement and improve operational, financial, and management information systems. In addition, we are implementing new information systems that will provide better record-keeping. However, there can be no assurance that our management resources or information systems will be sufficient to manage any future growth in our business, and the failure to do so could have a material adverse effect on our business, results of operations and financial condition.

Results of Operations

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

The following discussion represents a comparison of our results of operations for the years ended December 31, 2023 and 2022. The results of operations for the periods shown in our audited consolidated financial statements are not necessarily indicative of operating results for the entire period. In the opinion of management, the audited consolidated financial statements recognize all adjustments of a normal recurring nature considered necessary to fairly state our financial position, results of operations and cash flows for the periods presented.

	Year Ended			Year Ended
	December 31, 2023			December 31, 2022

Net revenues	$	-		$	-
Cost of sales		-			-
Gross Profit		-			-
Operating expenses		230,241			920,515
Other expense		574,780			-
Net loss before income taxes	$	(805,021	)	$	(920,515	)

Revenues

For the years ended December 31, 2023 and 2022, we had no revenues.

Cost of Sales

For the years ended December 31, 2023 and 2022, we had no cost of sales.

Operating expenses

Operating expenses decreased by $690,274, or 75.0%, to $230,241 for year ended December 31, 2023 from $920,515 for the year ended December 31, 2022 primarily due to a decrease in stock based compensation of $171,812, compensation costs of $43,288, research and development costs of $74,860, consulting fees of $102,833, professional fees of $133,790, travel costs of $1,661, insurance costs of $123,935, and general and administration costs of $38,095 as a result of reorganizing our administrative infrastructure.

For the year ended December 31, 2023, we had research and development costs of $1,500, stock based compensation of $76,111, and general and administrative expenses of $152,630 primarily due to professional fees of $32,203, depreciation costs of $17,250, consulting fees of $85,061, insurance costs of $20,492, and general and administration costs of $(2,376) as a result of reorganizing our administrative infrastructure due to refocusing our personnel and marketing initiatives to generate anticipated sales growth.

For the year ended December 31, 2022, we had research and development costs of $76,360 and general and administrative expenses of $844,155 primarily due to professional fees of $165,993, compensation costs of $43,288, depreciation costs of $17,102, consulting fees of $187,894, insurance costs of $144,427, travel costs of $1,686, stock-based compensation of $247,923, and general and administration costs of $35,842.

Other Expense

Other expense for the year ended December 31, 2023 of $574,780 is comprised of impairment of assets of $76,008, inventory adjustment of $40,175, and settlement of dispute of $500,000, offset partially by a gain on settlement of shares for services of $18,000 and other income of $23,403. Other expense for the year ended December 31, 2022 was none.

Net loss before income taxes

Net loss before income for year ended December 31, 2023 totaled $805,021 primarily due to (increases/decreases) in professional fees, consulting fees, stock based compensation, depreciation, insurance costs, research and development costs, and general and administration costs compared to a loss of $920,515 for year ended December 31, 2022 primarily due to (increases/decreases) in compensation costs, professional fees, consulting fees, depreciation, insurance costs, research and development costs, and general and administration costs.

Assets and Liabilities

Assets were $2,431 as of December 31, 2023. Assets consisted primarily of cash of $2,431. Liabilities were $525,387 as of December 31, 2023. Liabilities consisted primarily of accounts payable and accrued expenses of $16,285, short-term note payable of $9,102, and short term – share settlement of $500,000.

Liquidity and Capital Resources

Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $4,430,308 at December 31, 2023, had working capital deficit of $522,956 at December 31, 2023, had net losses of $805,021 and $920,515 for the years ended December 31, 2023 and 2022, respectively, and net cash used in operating activities of $76,529 and $558,426 for the years ended December 31, 2023 and 2022, respectively, with no revenue earned since inception, and a lack of operational history. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

While the Company is attempting to expand operations and increase revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public offering or an asset sale transaction. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While management believes in the viability of its strategy to generate revenues and in its ability to raise additional funds or transact an asset sale, there can be no assurances to that effect or on terms acceptable to the Company. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.

The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

General – Overall, we had a decrease in cash flows for years ended December 31, 2023 of $67,427 resulting from cash used in operating activities of $76,529, offset partially by cash provided by financing activities of $9,102.

The following is a summary of our cash flows provided by (used in) operating, investing, and financing activities during the periods indicated:

	Year Ended			Year Ended
	December 31, 2023			December 31, 2022

Net cash provided by (used in):
Operating activities	$	(76,529	)	$	(558,426	)
Investing activities		-			-
Financing activities		9,102			100,000
	$	(67,427	)	$	(458,426	)

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Cash Flows from Operating Activities – For the year ended December 31, 2023, net cash used in operations was $76,529 compared to net cash used in operations of $558,426 for the year ended December 31, 2022. Net cash used in operations was primarily due to a net loss of $805,021 for the year ended December 31, 2023 and the changes in operating assets and liabilities of $59,123, primarily due to other current assets of $92,170 and inventory of $40,175, offset partially by short-term notes payable of $31,192 and accounts payable and accrued expenses of $42,030. In addition, net cash used in operating activities includes adjustments to reconcile net profit from depreciation expense of $17,250, impairment of assets of $76,008, issuance of common stock in settlement of dispute of $500,000, warrants issued for services of $30,348, and stock-based compensation – related party of $45,763.

Net cash used in operations was primarily due to a net loss of $920,515 for the year ended December 31, 2022 and the changes in operating assets and liabilities of $70,933, primarily due to other current assets of $8,974, inventory of $20,100, short-term notes payable of $31,192, and accounts payable and accrued expenses of $22,067, offset partially by other current liabilities of $11,400. In addition, net cash used in operating activities includes adjustments to reconcile net profit from depreciation expense of $17,102, warrants issued for services of $342,024, options issued for services of $8,131, issuance of common stock for services of $18,000, and warrants forfeited in conjunction with compensation – related parties of $94,101.

Cash Flows from Investing Activities – For the years ended December 31, 2023 and 2022, net cash used in investing was none.

Cash Flows from Financing Activities – For years ended December 31, 2023, net cash provided by financing was $9,102 due to advance from shareholder. For year ended December 31, 2022, cash flows provided by financing activities was $100,000 due to proceeds from issuance of common stock for cash.

Financing – We expect that our current working capital position, together with our expected future cash flows from operations will be insufficient to fund our operations in the ordinary course of business, anticipated capital expenditures, debt payment requirements and other contractual obligations for at least the next twelve months. However, this belief is based upon many assumptions and is subject to numerous risks, and there can be no assurance that we will not require additional funding in the future.

We have no present agreements or commitments with respect to any material acquisitions of other businesses, products, product rights or technologies or any other material capital expenditures. However, we will continue to evaluate acquisitions of and/or investments in products, technologies, capital equipment or improvements or companies that complement our business and may make such acquisitions and/or investments in the future. Accordingly, we may need to obtain additional sources of capital in the future to finance any such acquisitions and/or investments. We may not be able to obtain such financing on commercially reasonable terms, if at all. Due to the ongoing global economic crisis, we believe it may be difficult to obtain additional financing if needed. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our shareholders, in the case of equity financing.

Board of Directors Resolutions

On April 3, 2023, by unanimous written consent, the Company’s Board of Directors granted 3,333,333 warrants to purchase 3,333,333 shares of the Company’s common stock to Mr. Jim Holt, the Company’s previous CEO and Director as compensation. The warrants are exercisable for a period of seven years at $0.03 per share in whole or in part, as either a cash exercise or as a cashless exercise, and fully vest at grant date. On December 13, 2023, Mr. Holt, entered into a cancellation agreement whereby a total of 100,000 warrants, valued at $45,763 (based on the Black Scholes valuation model on the date of grant) have vested with the remaining 3,233,333 warrants cancelled. The warrants are exercisable for a period of three years at $0.03 per share in whole or in part and vest immediately.

Acquisition of mPathix

On June 28, 2021, the Company entered into a Share Exchange Agreement (“Exchange Agreement”) by and among mPathix Health, Inc. (formerly EMF Medical Devices, Inc., a Delaware corporation) (“mPathix”) and Qualis. The closing of the transaction (the “Closing”) took place on June 29, 2021 (the “Closing Date”). On the Closing Date, pursuant to the terms of the Exchange Agreement, the Company acquired all of the outstanding shares (the “Shares”) of mPathix. In exchange, the Company issued to the mPathix shareholder’s, their designees or assigns, an aggregate of 6,988,300 shares of Company common stock (the “Shares Component”) or 93.36% of the shares of common stock of the Company issued and outstanding after the Closing (the “Share Exchange”), at a valuation of $0.50 per share, and the Company issued warrants to purchase an additional 1,098,830 shares (698,830 warrants issued to the Company’s previous CEO and 400,000 to CreoMed which is beneficially owned by Dr. Joseph Pergolizzi, the Company’s acting CEO and chairman of the board) of the Company’s common stock, exercisable for 10 years at a $0.50 per share exercise price, subject to adjustment. In connection with the closing of the mPathix acquisition, the officers and directors of mPathix were appointed as the officers and directors of the Company.

The acquisition was accounted for as a “reverse merger” and recapitalization since the stockholders of mPathix prior to the acquisition acquired a majority of the outstanding shares of the common stock of the Company immediately following the completion of the transaction. mPathix was deemed to be the accounting acquirer in the transaction, and, consequently, the transaction was treated as a recapitalization of mPathix. As a result, the Company is considered to be the continuation of the predecessor, mPathix. Accordingly, the assets and liabilities and the historical operations that are reflected in the Company’s consolidated financial statements are those of mPathix and are recorded at the historical cost basis of mPathix. The Company’s assets, liabilities and results of operations were consolidated with the assets, liabilities and results of operations of mPathix after consummation of the acquisition.

Stock Based Compensation

Employment Agreement

On March 1, 2021, Mr. Ahmet Demir Bingol, the Company’s CEO entered into an Employment Agreement with the Company, with an effective date of March 16, 2021, in which he receives an annual base salary of $250,000, plus bonus compensation not to exceed 80% of base salary. In addition, Mr. Bingol was granted 698,830 warrants to purchase 698,830 of the Company’s common stock, valued at $165,378 (based on the Black Scholes valuation model on the date of grant). The warrants are exercisable for a period of ten years at $0.50 per share in whole or in part, as either a cash exercise or as a cashless exercise, and fully vest at grant date. Mr. Bingol’s employment also provides for medical insurance, disability benefits and one year of severance pay if his employment is terminated without cause or due to a change in control. Mr. Bingol’s compensation was approved by the Company’s Board of Directors on March 1, 2021.

On February 24, 2022, Mr. Bingol, the Company’s previous CEO, entered into a separation agreement whereby he will terminate his employment effective April 15, 2022. He received no severance payment and there were no disagreements between he or the Company. A total of 300,000 warrants have vested with the remaining 398,830 unvested warrants expiring. As a result of Mr. Bingol’s termination, the Company reversed the remaining warrant modification balance of $94,101 during the year ended December 31, 2022.

Consulting Agreement

On January 27, 2022 the Company hired an engineering consultant to assist in completing the design history file, updating new software, system design, pre 510(k) preparation, and testing of the SOLACE device. This work is expected to be completed by the end of September 2022 and the cost of the contract is $77,850.

Common Stock

In January 2024, the Company issued 2,000,000 common shares to two (2) affiliates for aggregate gross proceeds of $100,000.

On July 20, 2022, the Company issued 200,000 common shares to an affiliate for aggregate gross proceeds of $100,000.

Warrants

On March 29, 2022, the Board of Directors approved the granting of 400,000 warrants, with effect from April 1, 2022, convertible to the Company’s common shares with an exercise price of $1.10, valued at $290,276 (based on the Black Scholes valuation model on the date of grant), to our acting CEO and Chairman Joseph V. Pergolizzi Jr., MD through his company, CreoMed Inc with an expiration period of 10 years. These warrants were issued as compensation for the first quarter to Joseph V. Pergolizzi Jr., MD.

On August 1, 2022, the Company granted 60,000 warrants to purchase 60,000 of the Company’s common stock to a third party for consulting services, valued at $7,632 (based on the Black Scholes valuation model on the date of grant). The options are exercisable for a period of three years at $1.10 per share in whole or in part, and fully vest at grant date.

On April 3, 2023, the Company granted 3,333,333 warrants to purchase 3,333,333 shares of the Company’s common stock to Jim Holt, the Company’s previous CEO, valued at $1,597,635 (based on the Black Scholes valuation model on the date of grant). The warrants are exercisable for a period of seven years at $0.03 per share in whole or in part and vest immediately. On December 13, 2023, Mr. Holt, entered into a cancellation agreement whereby a total of 100,000 warrants, valued at $45,763 (based on the Black Scholes valuation model on the date of grant) have vested with the remaining 3,233,333 warrants cancelled. The warrants are exercisable for a period of three years at $0.03 per share in whole or in part and vest immediately.

Insurance Financing Agreement

Impairment of Assets

Capital Expenditures

Other Capital Expenditures

We expect to purchase approximately $30,000 of equipment in connection with the expansion of our business during the next twelve months.

Fiscal year end

Our fiscal year end is December 31.

Critical Accounting Policies

Refer to Note 3 in the accompanying notes to the consolidated financial statements for critical accounting policies.

Recent Accounting Pronouncements

Refer to Note 3 in the accompanying notes to the consolidated financial statements.

Contractual Obligations and Off-Balance Sheet Arrangements

Refer to Note 10 in the accompanying notes to the consolidated financial statements for future contractual obligations and commitments. Future contractual obligations and commitments are based on the terms of the relevant agreements and appropriate classification of items under U.S. GAAP as currently in effect. Future events could cause actual payments to differ from these amounts.

We incur contractual obligations and financial commitments in the normal course of our operations and financing activities. Contractual obligations include future cash payments required under existing contracts, such as debt and lease agreements. These obligations may result from both general financing activities and from commercial arrangements that are directly supported by related operating activities. Details on these obligations are set forth below.

Off-Balance Sheet Arrangements

As of December 31, 2023, we have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated under which it has:

	●	a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit;

	●	liquidity or market risk support to such entity for such assets;

	●	an obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument; or

	●	an obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by, and material to us, where such entity provides financing, liquidity, market risk or credit risk support to or engages in leasing, hedging, or research and development services with us.

Inflation

We do not believe that inflation has had a material effect on our results of operations.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary financial information which are required to be filed under this item are presented under Item 15. Exhibits, Financial Statement Schedules and Reports on Form 10-K in this document, and are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure Controls and Procedures. We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized, and reported accurately, in accordance with U.S. Generally Accepted Accounting Principles and within the required time periods, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, who is also our acting Chief Financial Officer, as appropriate, to allow for timely decisions regarding disclosure. As of the end of the period covered by this report (December 31, 2022), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, who is also our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)). Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that as of the end of the period covered by this Annual Report on Form 10-K our disclosure controls and procedures were not effective to enable us to accurately record, process, summarize and report certain information required to be included in the Company’s periodic SEC filings within the required time periods, and to accumulate and communicate to our management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in rule 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of the CEO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Internal controls over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records which in reasonable detail accurately and fairly reflect the transactions and disposition of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made in accordance with authorizations of management and directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

In evaluating the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, management used the criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the criteria established by COSO, management (the Company’s CEO and acting CFO) identified the following material weaknesses in the Company’s internal control over financial reporting as of December 31, 2023, which arose from the limited number of number of staff at the Company and the inability to achieve proper segregation of duties:

	●	The Company has not designed and maintained adequate controls over the documentation of accounting and financial reporting policies and procedures. Specifically, the Company has not designed and maintained a manual of policies and procedures, and the Company has not maintained a sufficient complement of accounting personnel to ensure proper procedures were executed and transactions were reviewed by management.
	●	The Company lacked effective controls for ensuring the accuracy of reporting over significant account balances, including the review, approval, and documentation of related transactions and account reconciliations and other complex accounting procedures.
	●	The Company lacked effective controls in part because its directors are not independent.

As a result of these material weaknesses, management concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2023, based on the criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

Limitations on the Effectiveness of Controls

The Company’s management, including the Company’s CEO and acting CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of the control system must reflect that there are resource constraints and that the benefits must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of the Registered Public Accounting Firm

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting since the Company is not an accelerated filer or a large accelerated filer.

Item 9B. Other Information

There have been no events required to be reported under this Item.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The following table sets forth the names, ages, and biographical information of each of our current directors and executive officers and the positions with the Company held by each person. Our executive officers are elected annually by the board of directors. The directors serve one-year terms until their successors are elected. The executive officers serve terms of one year or until their death, resignation or removal by the board of directors. Unless described below, there are no family relationships among any of the directors and officers.

Name	Age	Position	Director Since
Patrick Adams ⁽¹⁾	63	Acting CEO and Chairman of the Board	November 2023
Ulderico Conte ⁽²⁾	54	Director of Acquisitions and Board Member	December 2023

(1)	Mr. Adams was appointed Acting CEO and Chairman of the Board on November 17, 2023.
(2)	Mr. Conte was appointed Director of Acquisitions and Board Member on December 7, 2023

Patrick Adams – Mr. Adams is the Acting CEO and Chairman of the Board for Qualis. Mr. Adams has been an executive in the financial services industry for over 38 years. Since 2008, Mr. Adams has been the CEO of PVG Asset Management Corporation.

The Company believes that Mr. Adams is qualified to serve as a director due to his experience in the capital markets and/or the medical field and his general business experience and knowledge.

Ulderico Conte – Mr. Conte has been in the financial services sector for over 30 years and most recently, since 2017 he is the owner and CEO of CM Capital Partners, a wealth management firm. He was head of Capital markets for Aeon Capital Inc from 2018 until 2022, and then Managing Director of Investment Banking for CIM Securities LLC since September of 2022.

Board Composition

Our By-Laws provide that the Board of Directors shall consist of not less than one nor more than fifteen directors. Each director of the Company serves until his successor is elected and qualified, subject to removal by the Company’s majority shareholders. Each officer shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined by the Board of Directors, and shall hold his office until his successor is elected and qualified, or until his earlier resignation or removal. Presently, Board members receive 25,000 restricted common shares for their service and serve for a period of one year whereby through the annual meeting new directors may be elected. The role of the board is to advise on both financial and product matters. Additionally, the board must approve major decisions involving new products, potential acquisitions or funding matters.

No Committees of the Board of Directors; No Financial Expert

We do not presently have a separately constituted audit committee, compensation committee, nominating committee, executive committee or any other committees of our Board of Directors, nor do we have (i) any directors that would qualify as independent under relevant SEC or securities exchange rules, (ii) an audit committee, or (iii) a financial expert. Management has determined not to establish an audit committee at present because our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. As such, our entire Board of Directors acts as our audit committee. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Section 407 of the Sarbanes-Oxley Act of 2002 and Item 407(d) of Regulation S-K is beyond our limited financial resources and the financial skills of such an expert are not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in our consolidated financial statements at this stage of our development.

Advisory Board

The Company has also formed an Advisory Board of individuals with expertise relevant to the medical device, medical, and electronics industries. The advisory board was selected from individuals who were familiar with our medical device either through using the LCMD device or assisted in the development of our current medical device. The following members have had experience with the LCMD device in using the device in their practice these individuals include Dr. Ben Edwards and Vanessa Burbage. The Advisory Board’s role is to review our device design plans, and assist in the development of our medical device product the SOLACE. The members of our advisory board serve for a period of two years and are not compensated for being on the board but have received compensation for their consulting in the testing, engineering and designing of our product. The Advisory Board has no ability to bind the Company, nor are its members fiduciaries or other agents of the Company.

Dr. Ben Edwards – Dr. Edwards currently works as the medical director of Veritas Medical where he has been employed since 2010. Veritas Medical is a nutrition and lifestyle focused clinic. He graduated from Baylor University in 1993 with a B.A. in Biology and then received his Medical Degree from the University of Texas-Houston Medical School in 2002. He completed his family practice residency in 2005 at McLennan County Medical Education and Research Foundation in Waco, TX where he was Chief Resident. Upon completion of his medical training, Dr. Edwards was the sole physician in the county at Garza County Health Clinic, garnering notoriety from the Lubbock Avalanche Journal, Texas Monthly, and the Washington Post for his very successful operation of a rural county health clinic. In 2012, Dr. Edwards founded Veritas Medical where he and his team have successfully helped educate and support thousands of patients on their journey from chronically ill to well.

Vanessa Burbage – Ms. Burbage is an experienced and practicing electrologist, she currently owns her own medical spa since 1997. She started out as an electrologist in 1997 and then added laser and aesthetic services thereafter steadily building a loyal customer base. Dermatologist and Plastic surgeons refer patients to her because of the success of her skin detailing, hair removal, permanent makeup, and facial skincare.

Auditor

Our independent registered public accounting firm is:

Victor Mokuolu CPA PLLC

8990 Kirby Drive, Suite 220

Houston, TX 77054

Phone: (713) 588-6622

Code of Ethics

The Company currently does not have a Code of Ethics.

Potential Conflicts of Interest

Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors.

Director Independence

Our board of directors has undertaken a review of the independence of each director and considered whether any director has a material relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities. As a result of this review, our board of directors determined that our directors do not meet independence requirements, according to the applicable rules and regulations of the SEC.

Involvement in Legal Proceedings

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. Other than disclosed herein, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

Item 11. Executive Compensation

The following is a discussion and analysis of compensation arrangements of our named executive officers, or NEOs. This discussion contains forward looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt may differ materially from currently planned programs as summarized in this discussion.

Summary Compensation Table

The particulars of the compensation paid to the following persons: (1) our principal executive officer; and (2) each of our two most highly compensated executive officers who were serving as executive officers at the end of the fiscal year ended December 31, 2023, who we will collectively refer to as the “named executive officers” of the Company, are set out in the following summary compensation table:

Summary Compensation Table

							Stock		Option		All Other
	Fiscal		Salary		Bonus		Awards		Awards		Compensation		Total
Name and Principal Position	Year		(1)		(2)		(3)		(4)		(5)		($)

Mr. Patrick Adams^.(10)		2023	$	-	$	-	$	-	$	-	$	-	$	-
Acting CEO and Chairman of the Board		2022	$	-	$	-	$	-	$	-	$	-	$	-
		2021	$	-	$	-	$	-	$	-	$	-	$	-

Dr. Joseph V. Pergolizzi, Jr^.(8)		2023	$	-	$	-	$	-	$	-	$	-	$	-
Acting CEO and Chairman of the Board		2022	$	-	$	-	$	-	$	290,276	$	-	$	290,276
		2021	$	-	$	-	$	-	$	109,512	$	-	$	109,512

John Ballard⁽⁹⁾		2023	$	-	$	-	$	-	$	-	$	-	$	-
CFO & Director		2022	$	-	$	-	$	-	$	-	$	120,000	$	120,000
		2021	$	-	$	-	$	130,000	$	-	$	115,000	$	245,000

Demir Bingol⁽⁶⁾		2023	$	-	$	-	$	-	$	-	$	-	$	-
President		2022	$	-	$	-	$	-	$	-	$	-	$	-
		2021	$	210,562	$	-	$	-	$	166,141	$	-	$	376,703

Robert Bilkovski, MD		2023	$	-	$	-	$	-	$	-	$	-	$	-
Chief Scientific Officer		2022	$	-	$	-	$	-	$	-	$	-	$	-
		2021	$	-	$	-	$	-	$	9,161	$	-	$	9,161

Austin Adams⁽⁷⁾		2023	$	-	$	-	$	-	$	-	$	-	$	-
		2022	$	-	$	-	$	-	$	-	$	-	$	-
		20211	$	-	$	-	$	50,000	$	-	$	-	$	50,000

(1)	The dollar value of salary (cash and non-cash) earned.
(2)	The dollar value of bonus (cash and non-cash) earned.

(3)	The value of the shares of restricted stock issued as compensation for services computed in accordance with ASC 718 on the date of grant.
(4)	The value of all stock options computed in accordance with ASC 718 on the date of grant.
(5)	All other compensation received that could not be properly reported in any other column of the table.
(6)	Mr. Bingol was initially appointed Chairman of the Board and Chief Executive Officer in March 2021. His modified employment agreement on October 1, 2021, changed his position from CEO to President. On February 24, 2022, Mr. Bingol entered into a separation agreement whereby his employment was terminated effective April 15, 2022. He received no severance payment in connection with that termination, and there were no disagreements between him and the Company. A total of 300,000 warrants issued to Mr. Bingol have vested, with the remaining 398,830 unvested warrants expiring.
(7)	Mr. Austin Adams’s position as sole officer and director of the Company was terminated on June 29, 2021.
(8)	Dr. Pergolizzi resigned from all positions in the Company on December 30, 2022.
(9)	Mr. Ballard resigned from all positions in the Company on January 7, 2023.
(10)	Mr. Patrick Adams was appointed Acting CEO and Chairman of the Board on November 17, 2023

Long-Term Incentive Plans. The Company does not provide its officers or employees with pension, stock appreciation rights, long-term incentive or other plans, nor does it provide non-qualified deferred compensation to its officers or employees, and therefore, the Summary Compensation Table above does not include columns for nonequity incentive plan compensation and nonqualified deferred compensation earnings, since there were none.

Employee Pension, Profit Sharing or other Retirement Plans. The Company does not have a defined benefit, pension plan, profit sharing or other retirement plan, although it may adopt one or more of such plans in the future.

Compensation Committee Interlocks and Insider Participation. During the year ended December 31, 2020, none of the Company’s officers was also a member of the compensation committee or a director of another entity, which other entity had one of its executive officers serving as one of the Company’s directors.

Outstanding Equity Awards

Our directors and officers do not have any unexercised options, stock that has not vested, or equity incentive plan awards.

Compensation of Directors

Director Compensation Table

	Fiscal		Fees Earned or Paid in Cash		Stock Awards		Option Awards		All Other Compensation		Total
Name	Year		(1)		(3)		(4)		(5)		($)

Mr. Patrick Adams		2023	$	-	$	-	$	-	$	-	$	-
Acting CEO and Chairman of the Board ⁽¹⁰⁾		2022	$	-	$	-	$	-	$	-	$	-
		2021	$	-	$	-	$	-	$	-	$	-

Ulderico Conte		2023	$	-	$	-	$	-	$	-	$	-
Director of Acquisitions and Board Member ⁽¹¹⁾		2022	$	-	$	-	$	-	$	-	$	-
		2021	$	-	$	-	$	-	$	-	$	-

Dr. Joseph V. Pergolizzi, Jr.		2023	$	-	$	-	$	-	$	-	$	-
Acting CEO and Chairman of the Board ^{(6), (7)}		2022	$	-	$	-	$	290,276	$	-	$	290,276
		2021	$	-	$	-	$	109,512	$	-	$	109,512

John Ballard		2023	$	-	$	-	$	-	$	-	$	-
CFO and Director ^{(6), (8)}		2022	$	-	$	-	$	-	$	120,000	$	120,000
		2021	$	-	$	130,000	$	-	$	115,000	$	245,000

Madding King		2023	$	-	$	-	$	-	$	-	$	-
Director ^{(6), (9)}		2022	$	-	$	-	$	-	$	-	$	-
		2021	$	-	$	5,000	$	-	$	-	$	5,000

Jim Holt		2023	$	-	$	-	$	45,736	$	-	$	45,763
Director ⁽⁶⁾		2022	$	-	$	-	$	-	$	-	$	-
		2021	$	-	$	5,000	$	-	$	-	$	5,000

(1)	The dollar value of salary (cash and non-cash) earned.
(2)	The dollar value of bonus (cash and non-cash) earned.
(3)	The value of the shares of restricted stock issued as compensation for services computed in accordance with ASC 718 on the date of grant.
(4)	The value of all stock options computed in accordance with ASC 718 on the date of grant.
(5)	All other compensation received that could not be properly reported in any other column of the table.
(6)	Mr. Holt was appointed as a member of the Company’s Board of Directors on June 29, 2021 and resigned from all positions in the Company on August 16, 2023.
(7)	Dr. Pergolizzi resigned from all positions in the Company on December 30, 2022.
(8)	Mr. Ballard resigned from all positions in the Company on January 7, 2023.
(9)	Mr. King resigned from all positions in the Company on November 15, 2022.
(10)	Mr. Patrick Adams was appointed Acting CEO and Chairman of the Board on November 17, 2023.
(11)	Mr. Ulderico Conte was appointed Director of Acquisitions and Board member on December 7, 2023.

Indebtedness of Directors, Senior Officers, Executive Officers and Other Management

None of our directors or executive officers or any associate or affiliate of the Company during the last two fiscal years, is or has been indebted to the Company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.

Outstanding Equity Awards at Fiscal Year-End Table

The following table sets forth certain information concerning outstanding stock awards held by the Named Executive Officers for our year ended December 31, 2023:

Option Awards						Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)

None.	-0-	-0-	-0-	-0-	-0-	-0-	-0-	-0-	-0-

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table lists, as of April 11, 2024, the number of shares of voting capital stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding class of stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using beneficial ownership concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

The percentages below are calculated based on 20,439,950 shares of our common stock issued and outstanding as of April 11, 2024. We do not have any other outstanding options, warrants exercisable for, or other securities convertible into shares of our common stock within the next 60 days. Unless otherwise indicated, the address of each person listed below is in care of Qualis Innovations, Inc., 225 Wilmington West Chester Pike, Suite 200 #145, Chadds Ford, Pennsylvania.

Name of Beneficial Owner	Title of Class	Amount and Nature of Beneficial Ownership		Percent of Class
Hill Blalock Jr.	Common Stock		7,221,045		35.3	%
Jim Holt ⁽¹⁾	Common Stock		1,913,955		9.4	%
Sharon Adams ⁽²⁾	Common Stock		1,132,689		5.5	%
Austin Adams ⁽³⁾	Common Stock		600,000		2.9	%
John Ballard ⁽⁴⁾	Common Stock		424,500		2.1	%
Dr. Joseph Pergolizzi ⁽⁵⁾	Common Stock		650,000		3.2	%
Madding King ⁽⁶⁾	Common Stock		35,000		-	%
All Officers and Directors as a Group	Common Stock		9,732,689		47.5	%

⁽¹⁾Jim Holt currently serves as the sole officer and director of Life Care Medical Devices Limited and is the previous CEO of Qualis Innovations, Inc. Mr. Holt is deemed to be the beneficial owner of 1,878,955 shares held in the name of Life Care Medical Devices Limited. Mr. Holt resigned from all positions in the Company on August 16, 2023.

⁽²⁾Ms. Sharon Adams is deemed to be the beneficial owner of 1,132,689 shares held in the name of Echo Resources LLP. Ms. Adams is the mother of Austin Adams, the former sole officer and director of Qualis Innovations, Inc.

⁽³⁾Mr. Austin Adams is deemed to be the beneficial owner of 450,000 shares held in the name of Cynergy Brookline Healthcare Fund, LLC, and 150,000 shares held in the name of Cynergy Healthcare Investors Emerging Bridge LLC. Mr. Adams is a former officer and director of Qualis Innovations, Inc.

⁽⁴⁾John Ballard is the previous CFO and Director of the Company. Mr. Ballard resigned from all positions in the Company on January 7, 2023.

⁽⁵⁾Dr. Joseph Pergolizzi, our acting CEO and Chairman of the Board of Directors, is deemed to be the beneficial owner of 250,000 shares held in the name of the CreoMed Inc. Dr. Joseph Pergolizzi is sole officer and director of CreoMed Inc. CreoMed Inc. also has 400,000 warrants to purchase common stock exercisable at $0.50 per share for ten years. Dr. Pergolizzi resigned from all positions in the Company on December 30, 2022.

⁽⁶⁾Madding King, a director of Qualis Innovations, Inc. is deemed to be the beneficial owner of the shares held in the name of Brookline Special Situations Fund LLC, where he is an officer and director. Mr. King resigned from all positions in the Company on November 15, 2022.

Equity Compensation Plans

The following represents a summary of the Equity Compensation grants and options awards outstanding at December 31, 2023 and 2022 and changes during the years then ended:

2023 and 2022
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders		-0-	$	-0-		-0-
Equity compensation plans not approved by security holders		-0-	$	-0-		-0-
Total		-0-	$	-0-		-0-

Item 13. Certain Relationships and Related Transactions, and Director Independence

Other than compensation arrangements, we describe below transactions and series of similar transactions, since January 1, 2020 (i.e., the last two completed fiscal years), to which we were a party or will be a party, in which the amounts involved exceeded or will exceed the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years; and any of our directors, executive officers, or holders of more than 5% of our capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest. Compensation arrangements, including employment agreements, for our directors and named executive officers are described elsewhere in “Executive Compensation - Agreements with Executive Officers.” Neither of our directors is independent.

Employment Contracts

On March 16, 2021, the Company granted 698,830 warrants to purchase 698,830 of the Company’s common stock to Ahmet Demir Bingol, valued at $165,378 (based on the Black Scholes valuation model on the date of grant), pursuant to his Employment Agreement. The warrants are exercisable for a period of ten years at $0.50 per share in whole or in part, as either a cash exercise or as a cashless exercise, and fully vest at grant date.

On February 24, 2022, Mr. Bingol entered into a separation agreement whereby he will terminate his employment effective April 15, 2022. He received no severance payment and there were no disagreements between he or the Company. A total of 300,000 warrants have vested with the remaining 398,830 unvested warrants expiring. As a result of Mr. Bingol’s termination, the Company reversed the amount of $94,101 against the 398,830 unvested warrants as of March 31, 2022.

Indemnification Agreements

We have entered or intend to enter into indemnification agreements with each of our directors and executive officers. These agreements, among other things, will require us to indemnify each individual to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the individual in any action or proceeding, including any action or proceeding by or in right of us, arising out of the person’s services as a director, officer or other employee.

Policies and Procedures for Related Party Transactions

Given our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval or ratification of transactions with our executive officer(s), director(s) and significant shareholders. We rely on our board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our board reviews a transaction in light of the affiliations of the director, officer or employee and the affiliations of such person’s immediate family. Transactions are presented to our board for approval before they are entered into or, if this is not possible, for ratification after the transaction has occurred. If our board finds that a conflict of interest exists, then it will determine the appropriate remedial action, if any. Our board approves or ratifies a transaction if it determines that the transaction is consistent with the best interests of the Company. We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional directors, so that such transactions will be subject to the review, approval or ratification of our board of directors, or an appropriate committee thereof.

Item 14. Principal Accounting Fees and Services

The aggregate fees billed for the most recently completed fiscal period for the audit of our annual consolidated financial statements and services normally provided by the independent registered public accounting firm for this fiscal period were as follows:

	FY 2023		FY 2022
Audit Fees - Paris, Kreit & Chiu LLP (formerly Benjamin & Ko)	$	-	$	59,805
Audit Fees - Victor Mokuolu CPA PLLC		25,500		17,000-
Total Fees	$	25,500	$	76,805

In the above table, “audit fees” are fees billed by our external auditor for services provided in auditing our annual consolidated financial statements for the subject year. All of the services described above were approved in advance by the Board of Directors or the Company’s Audit Committee.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)	The following documents are filed as a part of this Annual Report:

1.	Financial Statements. The following consolidated financial statements of the Company are included below:

	Report of Independent Registered Public Accounting Firm.	F-2

	Consolidated Balance Sheets as of December 31, 2023 and 2022.	F-4

	Consolidated Statement of Operations for the Years ended December 31, 2023 and 2022.	F-5

	Consolidated Statements of Changes in Stockholders’ (Deficit) Equity for the Years ended December 31, 2023 and 2022.	F-6

	Consolidated Statements of Cash Flows for the Years ended December 31, 2023 and 2022.	F-7

	Notes to Consolidated Financial Statements.	F-8

2.	Financial Statement Schedule(s):

All schedules are omitted for the reason that the information is included in the consolidated financial statements or the notes thereto or that they are not required or are not applicable.

Exhibits.

31. Certification of CEO and CFO.

32. Certification pursuant to 18 U.S.C. Section 1350 of CEO and CFO

101. INS Inline XBRL Instance Document

101. SCH Inline XBRL Taxonomy Extension Schema Document

101. CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101. DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101. LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101. PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	QUALIS INNOVATIONS, INC.

Dated: July 17, 2024	By:	/s Patrick Adams
		Patrick Adams
		Acting CEO and Chairman

QUALIS INNOVATIONS, INC.

Index to Financial Statements

CONTENTS

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID NO. 6651)	F-2
Consolidated Balance Sheets	F-4
Consolidated Statements of Operations	F-5
Consolidated Statements of Changes in Stockholders’ (Deficit) Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Qualis Innovations Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Qualis Innovations Inc. (the “Company”) as of December 31, 2023, and December 31, 2022, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years ended December 31, 2023, and December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and December 31, 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s ability to continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses, had a working capital deficit of $522,956 as of December 31, 2023, and had accumulated deficit of $4,430,308 and $3,625,287 as of December 31, 2023 and December 31, 2022 respectively. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

The financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

F-2

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Stock based compensation - warrants Issued for Services

During the year ended December 31, 2023, the Company recognized $45,763 in expenses related to warrants issued for services. As discussed in Note 6 and 9 to the consolidated financial statements, the Company has issued 100,000 warrants to former management, with total outstanding warrants of 1,590,000 as of December 31, 2023. Warrants issued for services were recorded at their fair value on their measurement dates based upon the Black-Scholes options pricing model. Our audit procedures to evaluate the appropriateness and accuracy of the accounting and fair value determined by management included reviewing the agreements supporting the issuances as well as independently recomputing the valuations made by Management.

Victor Mokuolu CPA PLLC


We have served as the Company’s auditor since 2023.

Houston, Texas

April 11, 2024 PCAOB ID: 6771

F-3

QUALIS INNOVATIONS, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,
	2023			2022

ASSETS
Current assets:
Cash	$	2,431		$	69,858
Inventory		-			40,175
Deposits		-			54,000
Other current assets		-			92,170
Total current assets		2,431			256,203

Property and equipment, net		-			39,258
Total assets	$	2,431		$	295,461

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	16,285		$	40,315
Short-term – share settlement		500,000			-
Short-term note payable		9,102			31,192
Total current liabilities		525,387			71,507
Total liabilities		525,387			71,507

Stockholders’(deficit) equity
Preferred stock, $0.001 par value, 25,000,000 shares authorized, no shares issued and outstanding at December 31, 2023 and 2022, respectively		-			-
Common stock, $0.001 par value, 750,000,000 shares authorized; 8,439,950 and 8,475,950 shares issued and outstanding at December 31, 2023 and 2022, respectively		8,440			8,476
Additional paid-in-capital		3,898,912			3,840,765
Accumulated deficit		(4,430,308	)		(3,625,287	)
Total stockholders’ (deficit) equity		(522,956	)		223,954
Total liabilities and stockholders’ (deficit) equity	$	2,431		$	295,461

See accompanying notes to consolidated financial statements.

F-4

QUALIS INNOVATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS


	For the Years Ended December 31,
	2023			2022

Net revenue	$	-		$	-

Gross Profit	$	-			-

Operating expenses:
Research and development		1,500			76,360
Warrants issued for services		30,348			342,024
Stock based compensation - related party		45,763			(94,101	)
General and administrative		152,630			596,232
Total operating expenses		230,241			920,515
Loss from operations		(230,241	)		(920,515	)

Operating (income) expenses:
Settlement of dispute		500,000			-
Impairment of assets		76,008			-
Inventory adjustment		40,175			-
Gain on cancellation of shares for services		(18,000	)		-
Other income		(23,403	)		-
Total other expenses		574,780			-

Loss before income taxes		(805,021	)		(920,515	)
Income taxes		-			-

Net loss	$	(805,021	)	$	(920,515	)

Net loss per share, basic and diluted	$	(0.09	)	$	(0.11	)

Weighted average number of shares outstanding
Basic and diluted		8,475,950			8,333,660

See accompanying notes to consolidated financial statements.

F-5

QUALIS INNOVATIONS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY


	Common Stock						Additional Paid			Accumulated			Total Stockholders’
	Shares			Amount			in Capital			Deficit			(Deficit) Equity
Balance as of January 1, 2022		8,239,950		$	8,240		$	3,466,947		$	(2,704,772	)	$	770,415
Warrants issued to third parties in conjunction with services		-			-			342,024			-			342,024
Stock based compensation - related party		-			-			(94,101	)		-			(94,101	)
Options issued to third parties in conjunction with services		-			-			8,131			-			8,131
Issuance of common stock for cash		200,000			200			99,800			-			100,000
Issuance of common stock for services		36,000			36			17,964			-			18,000
Net loss		-			-			-			(920,515	)		(920,515	)
Balance as of December 31, 2022		8,475,950		$	8,476		$	3,840,765		$	(3,625,287	)	$	223,954

Balance as of January 1, 2023		8,475,950		$	8,476		$	3,840,765		$	(3,625,287	)	$	223,954
Balance		8,475,950		$	8,476		$	3,840,765		$	(3,625,287	)	$	223,954
Warrants issued to third parties in conjunction with services		-			-			30,348			-			30,348
Stock based compensation - related party		-			-			45,763			-			45,763
Cancellation of common stock for services		(36,000	)		(36	)		(17,964	)					(18,000	)
Net loss		-			-			-			(805,021	)		(805,021	)
Balance as of December 31, 2023		8,439,950		$	8,440		$	3,897,485		$	(4,430,308	)	$	(522,956	)
Balance		8,439,950		$	8,440		$	3,897,485		$	(4,430,308	)	$	(522,956	)

See accompanying notes to consolidated financial statements

F-6

QUALIS INNOVATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Years Ended December 31,
	2023			2022

Cash flows from operating activities:
Net loss	$	(805,021	)	$	(920,515	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		17,250			17,102
Impairment of assets		76,008			-
Warrants issued for services		30,348			342,024
Options issued for services		-			8,131
Stock based compensation - related parties		45,763			(94,101	)
Issuance of common stock for services		-			18,000
Issuance of common stock in settlement of dispute		500,000			-
Changes in operating assets and liabilities:
Inventory		40,175			20,100
Other current assets		92,170			8,974
Accounts payable and accrued expenses		(42,030	)		22,067
Short-term note payable		(31,192	)		31,192
Other current liabilities		-			(11,400	)
Net cash used in operating activities		(76,529	)		(558,426	)

Cash flows from investing activities:
None		-			-
Net cash used in investing activities		-			-

Cash flows from financing activities:
Advance from shareholder		9,102			-
Issuance of common stock for cash		-			100,000
Net cash provided by financing activities		9,102			100,000

Net (decrease) increase in cash		(67,427	)		(458,426	)

Cash at beginning of period		69,858			528,284
Cash at end of period	$	2,431		$	69,858

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	-		$	-
Income taxes	$	-		$	-

Non-cash investing and financing activities:
Insurance policy financed by short-term note payable	$	-		$	62,384

See accompanying notes to consolidated financial statements

F-7

QUALIS INNOVATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES

Corporate History and Background

In July, 2019, John Ballard and Charles Achoa, formed a new company named EMF Medical Devices Inc. for the development, maintenance, marketing and sale of an electronic device for the treatment of pain that would make use of certain intellectual property interests held by LCMD. In May 2021 the Company changed its name to mPathix Health Inc. John Ballard is the Company’s previous Chief Financial Officer and Charles Achoa does not participate in any management or board position.

F-8

On June 28, 2021, the Company entered into a Share Exchange Agreement (“Exchange Agreement”) by and among mPathix Health, Inc. (formerly EMF Medical Devices, Inc., a Delaware corporation) (“mPathix”) and Qualis. The closing of the transaction (the “Closing”) took place on June 29, 2021 (the “Closing Date”). On the Closing Date, pursuant to the terms of the Exchange Agreement, the Company acquired all of the outstanding shares (the “Shares”) of mPathix. In exchange, the Company issued to the mPathix shareholder’s, their designees or assigns, an aggregate of 6,988,300 shares of Company common stock (the “Shares Component”) or 93.36% of the shares of common stock of the Company issued and outstanding after the Closing (the “Share Exchange”), at a valuation of $0.50 per share, and the Company issued warrants to purchase an additional 1,098,830 shares (698,830 warrants issued to the Company’s previous CEO and 400,000 to CreoMed which is beneficially owned by Dr. Joseph Pergolizzi, the Company’s acting CEO and chairman of the board) of the Company’s common stock, exercisable for 10 years at a $0.50 per share exercise price, subject to adjustment. In connection with the closing of the mPathix acquisition, the officers and directors of mPathix were appointed as the officers and directors of the Company. On June 29, 2021, the Company issued 496,650 common shares for the recapitalization of Qualis in conjunction with the reverse acquisition for a net book value of $0.

NOTE 2 – BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and stated in U.S. dollars. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The Company currently operates in one business segment. The Company is not organized by market and is managed and operated as one business. A single management team reports to the chief operating decision maker, the Chief Executive Officer, who comprehensively manages the entire business. The Company does not currently operate any separate lines of businesses or separate business entities.

Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $4,430,308 at December 31, 2023, had a working capital deficit of $522,956 and working capital of $184,696 at December 31, 2023 and December 31, 2022, respectively, had a net loss of $805,021 and $920,515 for years ended December 31, 2023 and 2022, respectively, and net cash used in operating activities of $76,529 and $558,426 or years ended December 31, 2023 and 2022, respectively, with no revenue earned since inception, and a lack of operational history. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

While the Company is attempting to expand operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While management believes in the viability of its strategy to generate revenues and in its ability to raise additional funds or transact an asset sale, there can be no assurances to that effect or on terms acceptable to the Company. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.

F-9

The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to GAAP and have been consistently applied in the preparation of the consolidated financial statements.

Use of Estimates

The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Actual results may differ from those estimates and such differences may be material to the consolidated financial statements. The more significant estimates and assumptions by management include among others: common stock valuation, amortization of intangible assets, depreciation of property and equipment, the recoverability of intangibles. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.

For the year ended December 31, 2023, the accompanying consolidated financial statements includes a change in accounting estimate of accrued expenses that resulted in a $41,403 reduction in expenses from operations comprised of accounts payable of $23,403, common stock of $36, and additional paid in capital of $17,964 (due to the cancellation of 36,000 common shares). The Financial Accounting Standards Board’s, ASC 250-10-45-17 requires specific financial statement disclosures to include the effect on income from operations, net income, and any related per-share amounts.

Cash

The Company’s cash is held in bank accounts in the United States and is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Company has not experienced any cash losses.

Related Parties

The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions. Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company.

Income Taxes

Income taxes are accounted for under an asset and liability approach. This process involves calculating the temporary and permanent differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences result in deferred tax assets and liabilities, which would be recorded on the Balance Sheets in accordance with ASC 740, which established financial accounting and reporting standards for the effect of income taxes. The likelihood that its deferred tax assets will be recovered from future taxable income must be assessed and, to the extent that recovery is not likely, a valuation allowance is established. Changes in the valuation allowance in a period are recorded through the income tax provision in the consolidated Statements of Operations.

F-10

ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an entity’s consolidated financial statements and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740-10, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC 740-10 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company does not have a liability for unrecognized income tax benefits.

Advertising and Marketing Costs

Advertising and marketing expenses are recorded as marketing expenses when they are incurred. The Company had no advertising and marketing expense for the years ended December 31, 2023 and 2022, respectively.

Research and Development

All research and development costs are expensed as incurred. Research and development expenses comprise costs incurred in performing research and development activities, including clinical trial costs, manufacturing costs for both clinical and pre-clinical materials as well as other contracted services, license fees, and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is made, in accordance with ASC 730, Research and Development.

With respect to the current status of the patent, there has been no movement during the period ended December 31, 2023 and to date. The Company has a disagreement with the specific vendor and the project relating to collection of data, testing and filing the patent application has been kept on hold. The Company and the vendor are trying to resolve this disagreement, about achieving a particular milestone, which they expect to be completed later in fiscal 2023.

General and Administrative Expenses

General and administrative expenses consisted of professional service fees, and other general and administrative overhead costs. Expenses are recognized when incurred.

Inventories

Inventories are valued at the lower of cost or net realizable value. The Company’s inventories are valued under the first in, first out (FIFO) method or average cost method. Net realizable value is estimated based on current selling prices. The Company records a provision for excess and obsolete inventory based primarily on forecasted product demand and production requirements. Once inventory provisions are established, the written-down value of the inventory becomes its new cost basis.

Deposits

Deposits consist of amounts paid to a vendor in advance to manufacture pain treatment products. Deposits are included in current assets in the accompanying Condensed Consolidated Balance Sheets.

Property and Equipment

Property and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets, generally five years. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. Fixed assets are examined for the possibility of decreases in value when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

F-11

Impairment of Long-lived Assets

The Company periodically evaluates whether the carrying value of property, equipment and intangible assets has been impaired when circumstances indicate the carrying value of those assets may not be recoverable. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is not recoverable, the impairment loss is measured as the excess of the asset’s carrying value over its fair value.

The Company’s impairment analyses require management to apply judgment in estimating future cash flows as well as asset fair values, including forecasting useful lives of the assets, assessing the probability of different outcomes, and selecting the discount rate that reflects the risk inherent in future cash flows. If the carrying value is not recoverable, we assess the fair value of long-lived assets using commonly accepted techniques, and may use more than one method, including, but not limited to, recent third-party comparable sales and discounted cash flow models. If actual results are not consistent with the Company’s assumptions and estimates, or the assumptions and estimates change due to new information, the Company may be exposed to an impairment charge in the future.

Fair Value of Financial Instruments

The provisions of accounting guidance, FASB Topic ASC 825 requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of December 31, 2023, there were no financial instruments requiring fair value.

Fair Value Measurements

Fair value is defined 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 on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:

	●	Level 1 – Quoted prices in active markets for identical assets or liabilities.

	●	Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

	●	Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities

The carrying value of financial assets and liabilities recorded at fair value are measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. There were no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. There have been no transfers between levels.

Basic and diluted earnings per share

The computation of net profit (loss) per share included in the Statements of Operations, represents the net profit (loss) per share that would have been reported had the Company been subject to ASC 260, “Earnings Per Share as a corporation for all periods presented.

F-12

Diluted earnings (loss) per share are computed on the basis of the weighted average number of common shares (including common stock subject to redemption) plus dilutive potential common shares outstanding for the reporting period. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.

Potentially dilutive securities were excluded from the calculation of diluted net loss per share because the effects were anti-dilutive based on the application of the treasury stock method and because the Company incurred net losses during the period.

There were 1,710,000 and 1,610,000 dilutive securities outstanding for the years ended December 31, 2023 and 2022, respectively. These potential dilutive securities outstanding have not been considered as the inclusion would be anti-dilutive.

Employee Stock Based Compensation

Stock based compensation issued to employees and members of our board of directors is measured at the date of grant based on the estimated fair value of the award, net of estimated forfeitures. The grant date fair value of a stock-based award is recognized as an expense over the requisite service period of the award on a straight-line basis.

For purposes of determining the variables used in the calculation of stock-based compensation issued to employees, the Company performs an analysis of current market data and historical data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, we use these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of stock options granted any fluctuations in these calculations could have a material effect on the results presented in our consolidated statements of operations. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on our consolidated financial statements.

Non-Employee Stock Based Compensation

Issuances of the Company’s common stock or warrants for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a “performance commitment” which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete. Although situations may arise in which counter performance may be required over a period of time, the equity award granted to the party performing the service is fully vested and non-forfeitable on the date of the agreement. As a result, in this situation in which vesting periods do not exist as the instruments fully vested on the date of agreement, the Company determines such date to be the measurement date and will record the estimated fair market value of the instruments granted as a prepaid expense and amortize such amount to general and administrative expense in the accompanying statement of operations over the contract period. When it is appropriate for the Company to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates.

Non-Cash Equity Transactions

Shares of equity instruments issued for non-cash consideration are recorded at the fair value of the consideration received based on the market value of services to be rendered, or at the value of the stock given, considered in reference to contemporaneous cash sale of stock.

Concentrations, Risks, and Uncertainties

Business Risk

Substantial business risks and uncertainties are inherent to an entity, including the potential risk of business failure.

F-13

The Company is headquartered and operates in the United States. To date, the Company has generated no revenues from operations. There can be no assurance that the Company will be able to raise additional capital and failure to do so would have a material adverse effect on the Company’s financial position, results of operations and cash flows. Also, the success of the Company’s operations is subject to numerous contingencies, some of which are beyond management’s control. Currently, these contingencies include general economic conditions, price of components, competition, and governmental and political conditions.

Interest rate risk

Financial assets and liabilities do not have material interest rate risk.

Credit risk

The Company is not exposed to credit risk.

Seasonality

The business is not subject to substantial seasonal fluctuations.

Major Suppliers

The Company has not entered into any contracts that obligate it to purchase a minimum quantity or exclusively from any supplier.

Recent Accounting Pronouncements

Recently issued accounting updates are not expected to have a material impact on the Company’s consolidated financial statements.

NOTE 4 –PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of:

SCHEDULE OF PROPERTY AND EQUIPMENT

		December 31,			December 31,
	Estimated Life	2023			2022

Tooling	5 years	$	82,530		$	82,530
Computer Equipment	3 years		1,787			1,787
Impairment of tooling			(22,008	)		-
Accumulated depreciation			(62,309	)		(45,059	)
Total		$	-		$	39,258

Depreciation expense was $17,250 and $17,102 for the years ended December 31, 2023 and 2022, respectively, and is classified in general and administrative expenses in the consolidated Statements of Operations.

NOTE 5 – SHORT TERM LOAN

F-14

NOTE 6 – STOCKHOLDERS’ (DEFICIT) EQUITY

The Company has authorized 25,000,000 preferred stock with a par value of $0.001 with no preferred shares outstanding at December 31, 2023 and December 31, 2022.

The Company has authorized 750,000,000 shares of par value $0.001 common stock, of which 8,439,950 and 8,475,950 shares are outstanding at December 31, 2023 and December 31, 2022, respectively.

Common Stock

On July 20, 2022, the Company issued 200,000 common shares to an affiliate for aggregate gross proceeds of $100,000.

Warrants

On March 29, 2022, the Board of Directors approved the granting of 400,000 warrants, with effect from April 1, 2022, convertible to the Company’s common shares with an exercise price of $1.10, valued at $290,276 (based on the Black Scholes valuation model on the date of grant), to our acting CEO and Chairman Joseph V. Pergolizzi Jr., MD through his company, CreoMed Inc with an expiration period of 10 years. These warrants were issued as compensation for the first quarter to Joseph V. Pergolizzi Jr., MD.

F-15

On April 3, 2023, the Company granted 3,333,333 shares warrants to purchase 3,333,333 of the Company’s common stock to Jim Holt, the Company’s previous CEO, valued at $1,597,635 (based on the Black Scholes valuation model on the date of grant). The warrants are exercisable for a period of seven years at $0.03 per share in whole or in part and vest immediately. On December 13, 2023, Mr. Holt, entered into a cancellation agreement whereby a total of 100,000 warrants, valued at $45,763 (based on the Black Scholes valuation model on the date of cancellation) have vested with the remaining 3,233,333 warrants cancelled. The warrants are exercisable for a period of three years at $0.03 per share in whole or in part and vest immediately.

The following represents a summary of the warrants outstanding at December 31, 2023 and changes during the periods then ended:

SUMMARY OF WARRANTS OUTSTANDING

	Warrants			Weighted Average Exercise Price		Weighted Average Contract Life (in Years)		Aggregate Intrinsic Value *
Outstanding at January 1, 2022		1,098,830		$	0.50		8.4	$	769,181
Granted		790,000			0.82		6.7		-
Exercised		-			-		-		-
Expired/Forfeited		(398,830	)		0.50		-		(538,421	)
Outstanding at December 31, 2022		1,490,000		$	0.50		8.4	$	-
Granted		100,000			0.05		3.0		52,000
Exercised		-			-		-		-
Expired/Forfeited		-			-		-		-
Outstanding at December 31, 2023		1,590,000		$	0.77		5.5	$	101,000
Exercisable at December 31, 2023		1,590,000		$	0.77		5.5	$	101,000
Expected to be vested		1,590,000		$	0.77		5.5	$	101,000

Based on the fair value of the Company’s stock on December 31, 2023 and December 31, 2022, respectively

Options

The following represents a summary of the options outstanding at December 31, 2023 and changes during the periods then ended:

SUMMARY OF STOCK OPTIONS OUTSTANDING

	Options		Weighted Average Exercise Price		Weighted Average Contract Life (in Years)		Aggregate Intrinsic Value *
Outstanding at January 1, 2022		120,000	$	0.50		5.2	$	84,000
Granted		-		-		-		-
Exercised		-		-		-		-
Expired/Forfeited		-		-		-		-
Outstanding at December 31, 2022		120,000	$	0.50		4.2	$	-
Granted		-		-		-		-
Exercised		-		-		-		-
Expired/Forfeited		-		-		-		-
Outstanding at December 31, 2023		120,000	$	0.50		3.2	$	8,400
Exercisable at December 31, 2023		120,000	$	0.50		3.2	$	8,400
Expected to be vested		120,000	$	0.50		4.0	$	-

Based on the fair value of the Company’s stock on December 31, 2023 and 2022, respectively

F-16

NOTE 7 – RELATED PARTY TRANSACTIONS

Other than as set forth below, and as disclosed in Notes 5, 6 and 10, there have not been any transaction entered into or been a participant in which a related person had or will have a direct or indirect material interest.

NOTE 8 – INCOME TAXES

At December 31, 2023, net operating loss carry forwards for Federal and state income tax purposes totaling approximately $617,000 are available to reduce future income which under the Tax Cuts and Jobs Act of 2018, allows for an indefinite carryforward period, with carryforwards limited to 80% of each subsequent year’s net income. There is no income tax affect due to the recognition of a full valuation allowance on the expected tax benefits of future loss carry forwards based on uncertainty surrounding realization of such assets.

A reconciliation of the statutory income tax rates and the effective tax rate is as follows:

	Year Ended			Year Ended
	December 31, 2023			December 31, 2022

Statutory U.S. federal rate		21.0	%		21.0	%
State income tax, net of federal benefit		3.7	%		3.7	%
Permanent differences		0.0	%		0.0	%
Valuation allowance		(24.7	)%		(24.7	)%
Provision for income taxes		0.0	%		0.0	%

The tax effects of the temporary differences and carry forwards that give rise to deferred tax assets consist of the following:

SCHEDULE OF DEFERRED TAX ASSETS

	2023			2022
	December 31,
	2023			2022

Deferred tax assets:
Net operating loss carry forwards	$	617,573		$	470,354
Depreciation and amortization		253,712			249,495
Impairment of Intangible asset		63,964			35,316
Stock based compensation		157,163			138,748
Valuation allowance		(1,092,412	)		(893,912	)
Deferred tax assets, net	$	-		$	-

Major tax jurisdictions are the United States and Delaware All of the tax years will remain open three and four years for examination by the Federal and state tax authorities, respectively, from the date of utilization of the net operating loss. There are no tax audits pending.

NOTE 9 – EARNINGS PER SHARE

FASB ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share (EPS) computations.

Basic earnings (loss) per share are computed by dividing net earnings available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.

F-17

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share because the effects were anti-dilutive based on the application of the treasury stock method and because the Company incurred net losses during the period:

	2023		2022
	For the Years Ended December 31,
	2023		2022
Options to purchase shares of common stock		120,000		120,000
Warrants to purchase shares of common stock granted on February 14, 2021 to CreoMed, Inc.*		400,000		400,000
Warrants to purchase shares of common stock granted on March 16, 2021 to Demir Bingol*		300,000		300,000
Warrants to purchase shares of common stock granted on April 1, 2022 to CreoMed, Inc.		400,000		400,000
Warrants to purchase shares of common stock		490,000		390,000
Total potentially dilutive shares		1,710,000		1,610,000

*	The Company has cancelled and regranted these warrants to purchase 1,098,830 shares (698,830 warrants issued to the Ahmet Demir Bingol and 400,000 to CreoMed Inc.) of the Company’s common stock on June 29, 2021 in conjunction with the share exchange agreement.

The following table sets forth the computation of basic and diluted net income per share:

	2023			2022
	For the Years Ended December 31,
	2023			2022
Net loss attributable to the common stockholders	$	(805,021	)	$	(920,515	)

Basic weighted average outstanding shares of common stock		8,475,950			8,333,660
Dilutive effect of options and warrants		-			-
Diluted weighted average common stock and common stock equivalents		8,475,950			8,333,660

Loss per share:
Basic and diluted	$	(0.09	)	$	(0.11	)

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Legal

From time to time, various lawsuits and legal proceedings may arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any legal proceedings or claims that it believes will have a material adverse effect on its business, financial condition or operating results.

2021 Equity Incentive Plan

F-18

Employment Agreement

On March 1, 2021, Mr. Ahmet Demir Bingol, the Company’s Chief Executive Officer (“CEO”) entered into an Employment Agreement with the Company, with an effective date of March 16, 2021, in which he receives an annual base salary of $250,000, plus bonus compensation not to exceed 80% of salary. In addition, Mr. Bingol was granted 698,830 warrants to purchase 698,830 of the Company’s common stock, valued at $165,378 (based on the Black Scholes valuation model on the date of grant). The warrants are exercisable for a period of ten years at $0.50 per share in whole or in part, as either a cash exercise or as a cashless exercise, and fully vest at grant date. Mr. Bingol’s employment also provides for medical insurance, disability benefits and one year of severance pay if his employment is terminated without cause or due to a change in control. Mr. Bingol’s compensation was approved by the Company’s Board of Directors on March 1, 2021.

Consulting Agreement

On January 27, 2022 the Company hired an engineering consultant to assist in completing the design history file, updating new software, system design, pre 510(k) preparation, and testing of the SOLACE device. This work is expected to be completed by the end of September 2022 and the cost of the contract is $77,850.

NOTE 11 – SUBSEQUENT EVENTS

The Company evaluated all events or transactions that occurred after December 31, 2023 up through the date the consolidated financial statements were available to be issued. During this period, the Company did not have any material recognizable subsequent events required to be disclosed as of and for the period ended December 31, 2023.

In January 2024, the Company issued 2,000,000 common shares to two (2) affiliates for aggregate gross proceeds of $100,000.

F-19

Qualis Innovations, Inc. 10-K/A