Results of Operations

At the end of January 2022 we acquired from Predictive Biotech, Inc. all of the assets related to its business of developing and producing wound care treatments, including a placental membrane allograft designed to act as a covering or barrier for the protection of burns and non-healing wounds such as diabetic foot ulcers. Since acquiring those assets in our newly organized subsidiary, Healthtech Wound Care, Inc. ("HWC"), we have focused our immediate attention on achieving the regulatory approvals necessary for HWC to bring its allografts to market and initiating the marketing of our allografts. $1,391,194 (i.e. 96%) of the $1,448,596 that we devoted to research and development during the first nine months of 2022 was attributable to efforts of HWC to complete and test a market-ready version of its allograft.

Sales of our wound care allografts commenced in September 2022, as we delivered allografts to five customers for an aggregate purchase price, net of discounts, of $776,221. Payments for the sales did not commence until October, so we recorded accounts receivable from the sales of $720,777, representing the net sales revenue less an allowance for doubtful accounts of $55,444. After recording $51,834 in cost of goods sold (i.e. proportionate allocation to the products sold of the direct costs attributable to their production), we recorded gross profit of $720,175 for the three and nine months ended September 30, 2022. We expect that in future periods our gross margin ratio will be lower than the ratio we recorded in the periods ended September 30, 2022.

The cost of our operations is primarily classified as general and administrative, which totaled $1,113,908 (including $82,500 payable to related parties) during the quarter ended September 30, 2022 and $1,844,649 (Including $172,500 payable to related parties) during the nine months ended September 30, 2022. These expenses primarily involve insurance premiums, office expenses, legal and accounting expenses, compensation of consultants, and other expenses incurred in developing Healthtech Solutions into a viable incubator of development stage medical companies. In total, our operating expenses for the three and nine months ended September 30, 2022 were $1,569,308 and $3,350,452, respectively, resulting in net loss of $844,921 for the three months ended September 30, 2022 and $2,626,066 for the nine months ended September 30, 2022.

We expect that the manufacture and sale of allografts by HWC will become profitable in the foreseeable future. Our business plan, however, contemplates a breadth of operations in addition to wound care treatments. For that reason, our research and development expenses will rise significantly if we obtain the capital resources necessary to fully implement our business plan. In particular, expansion of the operations of HWC to include additional product lines and the effort to bring MediScan's and RevHeart's technology to market will require several million dollars of capital expense. For that reason, we cannot predict when we will achieve company-wide profitability.

Our loss from operations during the first nine months of 2021 was $2,973,242, the largest portion of which was related to the market value of common stock that we granted to attract management, research and development expertise and other individuals qualified to aid our projects. Of the $2,973,242 in operating expenses incurred during the nine months ended September 30, 2021, stock compensation represented $1,029,028 of the expense.

In the fall of 2020, prior to the reverse merger of Healthtech Solutions into MediScan, MediScan sold 7% Convertible Debentures to obtain capital. In connection with the reverse merger, the MediScan debentures were exchanged for 7% Convertible Debentures issued by Healthtech Solutions. Healthtech Solutions then sold additional Debentures, with the result that by during the first nine months of 2021 the greater portion of our net loss reflected "other expenses" related to the convertible debentures. In particular, during the six months ended June 30,2021, we incurred items of Other Expenses that added $3,300,879 to our net loss, specifically:



    · $367,144 in interest expense due to accretion of the debenture discount; and

    · A loss of $2,933,735 due to an increase in the fair value of derivative
      liabilities, related to the 7% Convertible Debentures.

We accounted for our convertible debt in accordance with ASC 815, Derivatives and Hedging as the conversion feature embedded in the convertible debentures could have resulted in the debenture principal and related accrued interest being converted to a variable number of our common shares. The conversion feature on these debentures was variable and based on trailing market prices. It therefore contained an embedded derivative. The fair value of the conversion feature was calculated when the debentures were issued, and we recorded a debenture discount and derivative liability for the calculated value. We recognized interest expense for accretion of the debenture discount over the term of the note. The conversion liability was valued at the end of the reporting period and resulted in income for the reduction in fair value. Among the reasons why we negotiated a cancellation of the Debentures in exchange for common stock was that the volatile price of our stock meant that the gain or loss realized due to the Debentures could often be material to our results.



  1

After taking Other Expenses into account, Healthtech Solutions realized a net loss of $844,921 ($0.01 per share) in the three months ended September 30, 2022. However, 30% of HWC and 18.75% of Medi-Scan were owned by minority investors during that period. Therefore, $105,398 of the net loss contributed by HWC and $3,448 of the net loss contributed by Medi-Scan during the three months ended September 30, 2022 were attributable to those minority interests. These are recorded on our Statement of Operations as "net loss attributable to non-controlling interest." The remainder, the "net loss attributable to controlling interest", was $736,075 for the three months ended September 30, 2022.

For the same reason, $448,473 of the net loss realized during the nine months ended September 30, 2022 was attributed to the minority interests, leaving a net loss of $2,177,592 attributable to the controlling interest.

For the three and nine months ended September 30, 2021, the net loss attributable to controlling interest was $1,201,764 and $6,269,511, respectively.

Liquidity and Capital Resources

Our company is designed to function as an incubator for development stage medical technology enterprises. During 2021 and 2020 our statements of cash flows reflected that design: in each year we raised capital from the sale of securities and used approximately the amount of cash raised to fund medical research. Our administrative expenses, albeit representing a large portion of our loss in each year, were primarily paid for by issuance of common stock.

During the first nine months of 2022 we modified the funding process. For the funds needed to sustain our operations in the first nine months of 2022, particularly the funds required by HWC to complete development of its allografts and bring them to market, we relied on loans from shareholders and from non-affiliated parties. During those nine months, we borrowed $1,024,631 from shareholders and $1,146,000 from non-affiliated parties.

In the first quarter of 2022, from the loans received from shareholders and non-affiliated parties, we advanced $349,432 to Predictive Biotech, Inc. and its parent as a prepayment of future commissions pursuant to the terms under which we purchased their wound care business. We also reclassified to prepaid commissions a loan of $168,000 that we made to Predictive Biotech, Inc. in December 2021. (Because two of our five customers during the third quarter of 2022 are commissionable to Predictive Biotech, Inc., we amortized $116,000 of the prepaid commissions in that quarter.) The remainder of the loan proceeds funded the net cash that we used in our operating activities during the first nine months of 2022.

In the first nine months of 2021, our sources and uses of funds differed somewhat from the first nine months of 2022. We entered 2021 with $128,996 in the bank (proceeds from the sale of convertible debentures). We added to that $1,792,500 proceeds from the sale of our common stock, $50,000 in debenture proceeds and $121,084 in proceeds of the initial loans from shareholders. That combination enabled us to fund the $1,570,582 that we used in operating activities and the $437,055 that we contributed to the operations of Varian while it was our subsidiary.

At December 31, 2021 Healthtech Solutions had a working capital deficit of $757,563. During the first nine months of 2022, we increased the working capital deficit by $1,970,294 to $2,727,857. The increase in the working capital deficit occurred primarily because we borrowed funds on a short-term basis and used the funds to pay our present expenses and prepay future expenses.

We expect HWC's wound care business to become profitable during the fourth quarter of 2022, which will alleviate some of the cash flow burden of that business. That revenue, occurring shortly after our acquisition of the wound care business, will likely be the exception to the norm for our portfolio companies. Our business plan contemplates that, to attract exciting additions to our portfolio, we will offer most the several million dollars of financing that is necessary to bring a medical technology to a stage where its sponsor can function independently. Since our ambition is to sustain a portfolio of such enterprises, our near term capital requirements (near term being the two to three years before we can anticipate initial returns on most of our investments) will be tens of millions of dollars.



  2

Note 3 to our consolidated financial statements discloses that the financial condition of Healthtech Solutions raises substantial doubt as to the Company's ability to continue as a going concern. Management intends to pursue one or more offerings of securities in order to obtain the funds that will be necessary for successful implementation of our business plan. At present, however, no commitments for future funding have been received.

Application of Critical Accounting Policies

In preparing our financial statements we are required to formulate working policies regarding valuation of our assets and liabilities and to develop estimates of those values. In our preparation of the financial statements for the three and nine month periods ended September 30, 2022, there were three estimates made which were (a) subject to a high degree of uncertainty and (b) material to our results. These were:



       ?  Our determination to record $60,000 as the fair value of the 5.5%
          interest in Varian Biopharmaceuticals, Inc. that we received in November
          2021. This determination was based on the financial condition of Varian
          Biopharmaceuticals at that time and the absence of objective criteria for
          attributing fair value to its technology. The fair value of Varian
          Biopharmaceuticals is included in the item on our Balance Sheets titled
          "Investment in and advance to non-consolidated affiliate."
      ?   Our determination to record an allowance of $257,432 with respect to the
          book value of the $517,432 prepaid commission that we advanced to
          Predictive Technology Group, Inc. ("PTG") in connection with our purchase
          of the wound care business carried on by PTG's subsidiary, Predictive
          Biotech, Inc. (See: Note 6 to the Consolidated Financial Statements.) Our
          determination was based on the fact that the prepaid commissions will be
          earned by PTG only as a result of sales to three specific customers and
          the fact that at the time of the acquisition Predictive Biotech, Inc. did
          not have a marketable product.
       ?  Our determination to record an allowance for bad debt totaling five
          percent of the gross revenue from sales of allografts. The determination
          was based on industry norms, as we have experienced only one month of
          sales.

Impact of Accounting Pronouncements

There were no recent accounting pronouncements that have or will have a material effect on the Corporation's financial position or results of operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.

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