CS DIAGNOSTICS CORP. Annual Report - How They Did This Year

I’ve put together this guide to help you understand CS Diagnostics Corp.’s latest annual report. My goal is to cut through the corporate jargon and help you decide if this company is a safe place for your money.

1. The Big Picture

CS Diagnostics Corp. develops medical technology for wound care and diagnostics. Their main products are the "CS Protect-Hydrogel" dressing and the "MEDUSA-SDP" rapid testing platform. The company is currently in the "pre-commercial" phase, meaning they have not yet received FDA or European approval for their devices. Consequently, they have no sales revenue and no market share. Their current operations are focused entirely on research and navigating government regulatory requirements.

2. The Money Talk: Don't Let the "Profit" Fool You

In 2025, the company reported a profit of $71,219, up from $761 in 2024. It is important to note that this is not revenue generated from their business operations. This "profit" comes entirely from a consulting agreement with an affiliate that pays them $17,000 a month to cover basic bills. Because either side can cancel this deal with just 30 days' notice, the company’s only source of income is highly unstable. If these payments stop, the company lacks the revenue to cover its basic operating costs.

3. Financial Health: The "Going Concern" Warning

The company’s finances are fragile and rely heavily on outside support:

• Cash Crunch: As of December 31, 2025, the company had only $6,813 in the bank. They are currently spending cash faster than they are bringing it in.
• The "Paper" Assets: While the company claims assets of about $498.7 million, 99% of this value is tied up in patents and intellectual property. These are not liquid assets; their value depends entirely on the company’s future ability to successfully commercialize its products.
• Going Concern: The auditors have expressed "substantial doubt" about the company’s ability to stay in business. Management has acknowledged that they need to secure additional cash—likely through debt or by selling more shares—to survive the next 12 months.

4. The "Watch Out" List

• Internal Controls: Management has identified "material weaknesses" in their financial reporting, citing a lack of staff and oversight. This increases the risk of accounting errors.
• Auditor Turnover: The company has changed accounting firms three times in two years, including one instance involving a firm previously banned by the SEC.
• Stock Volatility: The stock trades on the OTCQB market with very low volume, which leads to extreme price swings. In 2025, the price fluctuated from $5.64 down to $0.036. Because trading volume is so thin, even a small sale can cause the share price to drop significantly.
• Dilution Risk: Because the company does not generate revenue from operations, they will likely issue more shares to fund their survival. This would reduce your ownership percentage and the potential value of your investment.

5. The Bottom Line

CS Diagnostics is a speculative startup that has yet to prove its business model. They are currently surviving on "allowance money" from an affiliate rather than actual product sales. With less than $7,000 in cash, significant internal control weaknesses, and a history of changing auditors, this is a high-risk situation.

Before you invest: Ask yourself if you are comfortable with the high probability that the company may need to raise more capital, which could dilute your shares, or if you are prepared for the possibility that the company may not be able to continue operations at all. Given the "going concern" warning and the lack of commercial revenue, this investment carries a high risk of total loss.