Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See "Cautionary Note Regarding Forward-Looking Statements" below. We have no obligation to update any of these forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements due to many factors, including, but not limited to, those set forth under the heading "Risk Factors" in this Quarterly Report. Factors that could cause or contribute to such differences include, but are not limited to, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this Quarterly Report.

Cautionary Statement Regarding Forward-Looking Information

This Quarterly Report contains statements that constitute forward-looking statements that are subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Some of the statements in this Quarterly Report constitute forward-looking statements because they relate to future events or the future performance or future financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our industry, our beliefs and our assumptions. These forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future, including our proposed transaction with EOS Technology Holdings, Inc., Scilex Holding Company, Datavault AI Inc., and HealthBridge Advisors, LLC, and our collaboration with Kare Rx Hub, LLC and Kare Pharmtech, LLC. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "ongoing," "plan," "potential," "predict," "project," "seek," "should," "target," or the negative of these terms or other similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

Forward-looking statements in this Quarterly Report may include, for example, statements about:

	●	A shift in pharmacy mix toward lower margin plans, margin compression on branded medications, or the increased offering of specialty products, direct and indirect remuneration fees, mail order pharmacy steering, and programs;
	●	Wellgistics Health deriving a portion of its sales from prescription drug sales reimbursed by pharmacy benefit management companies;
	●	Wellgistics Health being adversely affected by a decrease in the introduction of new brand name and generic prescription drugs as well as increases in the cost to procure prescription drugs;
	●	changes in economic conditions that adversely affect consumer/client buying practices and market adoption of our mobile application and the accompanying revenues to premium access/services;
	●	Wellgistics Health's relationships with its primary wholesaler for pharmacy operations and Wellgistics Health's manufacturer relationships of its wholesale and hub technology platform subsidiaries;
	●	changes in the healthcare industry and regulatory environments;
	●	the effects of competition on Wellgistics Health's future business;
	●	Wellgistics Health's ability to execute its business plans and strategy; and
	●	other risks and uncertainties described in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on March 20, 2026, and those risks described in the section entitled "Risk Factors" of this Quarterly Report.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There can be no assurance that future developments affecting us will be those that we have anticipated. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statements in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved.

These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

We have based the forward-looking statements included in this Quarterly Report on information available to us on the date of this Quarterly Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this Quarterly Report, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file in the future with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Overview

DataMeds AI, Inc. (formerly Wellgistics Health, Inc.) ("DataMeds," the "Company," "we," "us" or "our") was incorporated in 2022 as a holding company for operating companies centered around healthcare technology and pharmaceutical services. We seek to be a micro health ecosystem, with a portfolio of companies consisting of a technology platform, pharmacy, and wholesale operations that provide novel prescription hub and clinical services. We strive to shift the dynamic of pharmaceutical care to revolve around the patient for a range of therapeutic conditions by offering various integrated solutions through leveraging our business segments to address access, care coordination, dispensing, delivery, and clinical management of certain pharmaceutical products. On July 22, 2026, the Company changed its name from Wellgistics Health, Inc. to DataMeds AI, Inc. and its trading symbol on The Nasdaq Capital Market from "WGRX" to "MEDS," as described further under "Recent Developments" below.

Currently, we own one direct operating company, Wellgistics, LLC, and two indirect operating companies, Wellgistics Tech & Hub, LLC dba DelivMeds (f/k/a Alliance Pharma Solutions, LLC) ("Wellgistics Tech & Hub") and Wellgistics Pharmacy, LLC (f/k/a Community Specialty Pharmacy, LLC) ("Wellgistics Pharmacy"), through an intermediary-Wood Sage, LLC.

Wellgistics, LLC

Founded in 2013, Wellgistics, LLC serves as the wholesale arm of our healthcare ecosystem as a 50-state FDA licensed and NABP-accredited pharmaceutical wholesaler distributor, bridging the gap between small- to mid-size pharmaceutical manufacturers and independent retail pharmacies. Serving over 5,000 registered pharmacies nationwide, Wellgistics, LLC provides significant value by offering competitive pricing, unique products, and exceptional service, while also promoting manufacturers' products to a diverse range of pharmacies. Wellgistics, LLC's primary focus is on supporting independent retail pharmacies in search of better products, prices, and services, thereby ensuring their growth and sustainability in the competitive pharmaceutical sector.

Wellgistics, LLC provides distribution and third party logistics services to both pharmaceutical manufacturers and independent retail pharmacies. With over 60 manufacturing relationships, Wellgistics, LLC identifies niche therapeutic products and work with its manufacturing clients to increase market access and visibility of its client relationships with product awareness and support campaigns. Specifically, Wellgistics, LLC helps promote product distribution through its network of pharmacy buyers by providing sales and marketing support. These services include providing product education, identifying opportunities for therapeutic substitution when clinically relevant, and cost savings opportunities for pharmacies and their patients. Wellgistics, LLC's portfolio of products is comprised of 65% topical generics with a primary focus on the dermatology market, 20% oral generic formulations primarily in the non-narcotic pain category, 10% oral and topical brand formulations, and 5% in the over-the-counter market space. Its investments in cold chain infrastructure will position this division to compete in the specialty-lite therapy category while also expanding our ability to house additional branded products.

We acquired Wellgistics, LLC in August 2024.

Wellgistics Tech & Hub, LLC dba DelivMeds (f/k/a Alliance Pharma Solutions, LLC)

Founded in 2017 under the name Alliance Pharma Solutions, LLC and doing business as DelivMeds, Wellgistics Tech & Hub serves as the middleware technology arm of our healthcare ecosystem by facilitating prescription transfer and clinical concierge services to a network of independent pharmacies. After conducting an extensive market research survey focusing on competition, Wellgistics Tech & Hub identified several key differentiators from other healthcare technology solutions, including various integrations of the hub with pharmacy management software systems and pharmacy point of sale systems, among others. This suggests that Wellgistics Tech & Hub could serve as an end-to-end patient-centric solution automating the prescription journey. Powered by Wellgistics Pharmacy as the backend pharmacy, Wellgistics Tech & Hub is the frontend technology serving as the middleware between all key stakeholders referenced in what we refer to as the 5P-Model: patients, providers, pharmacies, payors or pharmacy Benefit Managers, and pharmaceutical manufacturing companies.

Through Wellgistics Tech & Hub, we aim to preserve patient autonomy, improve price transparency, and aid in making a meaningful impact on patient outcomes by eliminating barriers to therapy while simultaneously boosting adherence. We work with channel partners such as pharmaceutical manufacturers, provider groups and accountable care organizations, telehealth companies, and employer groups to offer full suite of patient-centered pharmacy services. Wellgistics Tech & Hub's business-to-business strategy approach enables prescriptions to be sent directly to Wellgistics Pharmacy and subsequently transferred to an eligible in-network independent pharmacy. Each channel partner is equipped with de-identified data to improve its respective business operation and or improve its renumeration from the value-based services the clinical concierge arm provides.

We acquired Wellgistics Tech & Hub through our acquisition of Wood Sage in June 2024.

Wellgistics Pharmacy, LLC (f/k/a Community Specialty Pharmacy, LLC)

Founded in 2011, Wellgistics Pharmacy serves as the backbone dispensing pharmacy of our healthcare ecosystem. First operating as a retail community specialty pharmacy, Wellgistics Pharmacy provides general and specialty pharmacy services dedicated to servicing the needs of patients, as well as clinical expertise, technology-driven innovation tools, and administrative efficiencies that support physicians, payers, and pharmaceutical manufacturers. Initially focusing on providing HIV/AIDS products, Wellgistics Pharmacy has expanded its business operations to perform 340B services by partnering with local clinics and provider groups. It has pursued pharmacy state licenses to convert its business into a mail order pharmacy. Currently, Wellgistics Pharmacy is licensed in 32 states and the District of Columbia, with superb license coverage along the east coast. While Wellgistics Pharmacy voluntarily forfeited its specialty accreditations, Wellgistics Pharmacy maintains specialty internal standard operating procedures and performs all of the functions of a specialty pharmacy.

Wellgistics Pharmacy purchases pharmaceuticals including specialty medications from manufacturers and wholesale distributors, fills prescriptions, labels, packages and delivers these pharmaceuticals to patients' homes or physicians' offices through contract couriers or carriers. It maintains a call center and customer support within its pharmacy located in Tampa, Florida. Wellgistics Pharmacy has several 340B relationships, acting as the dispensing pharmacy for these healthcare facilities that help drive revenue and prescription volume. Wellgistics Pharmacy's relationship with Wellgistics, LLC and other wholesalers enables it to offer a competitive cash-based formulary for the uninsured and underinsured patient populations. Given its low-cost business model, Wellgistics Pharmacy believes there is an opportunity to gain market share with small- to medium-size employer groups in a partnership model with other consumer driven healthcare companies to the extent that more patients elect to pay out of pocket for prescriptions.

We acquired Wellgistics Pharmacy through our acquisition of Wood Sage in June 2024.

DataMeds AI, Inc.

As a micro health ecosystem, our portfolio of companies consists of a pharmacy, wholesale operations, and a technology division with a novel platform for hub and clinical services. We are focused on improving the lives of patients while delivering unique solutions for pharmacies, providers, pharmaceutical manufacturers, and payors. Our patient-centric approach combined with innovative healthcare applications positions us to shift the dynamic of care to revolve around the patient for a wide range of therapeutic conditions. We offer a full spectrum of integrated solutions by leveraging the synergies of our business segments to address access, care coordination, dispensing, delivery, and clinical management of pharmaceutical products ranging from "specialty-lite" to general maintenance conditions.

Prior to acquiring Wood Sage, LLC, we did not generate revenue. As discussed above, we acquired Wellgistics Tech & Hub and Wellgistics Pharmacy through our acquisition of Wood Sage, LLC in June 2024, and acquired Wellgistics, LLC in August 2024. Currently, our revenues are derived from (i) pharmaceutical dispensing of products, (ii) care management services we deliver to patients and offer to pharmaceutical manufacturing clients, (iii) SaaS fees for use of our platform technology services, and (iv) product procurement and distribution to independent pharmacies.

We expect that our ability to source and distribute pharmaceutical products to our pharmacy and network of independent pharmacy partners throughout the U.S. will adequately position us to negotiate greater discounts based on market share. Our management believes that our digital pharmacy, including its hub and clinical services technology platform, is poised to add significant value in the key specialty-lite market by providing patients access and convenience, while providing partners with ready-to-go market solutions with big data.

Data released from the Centers for Medicare & Medicaid Services illustrates that the National Health Expenditure Data for 2022 grew to $4.5 trillion and accounted for 17.3% of gross domestic product ("GDP"), with an expected increase in the health spending share of GDP to 19.7% by 2032. A deeper dive of this report reveals that total retail prescription drug spending from 2021 to 2022 increased by 8.4% to $405.9 billion. IQVIA'S 2024 report on medicine spending trends found that overall spending in the U.S. market for medicines reached $435 billion in 2023. It is well documented in the literature that the specialty drug market accounts for less than 10% of total drugs in the market but is responsible for greater than 50% of the prescription drug spend per annum. After evaluating reasons for increased healthcare expenditure, poor medication adherence continues to be a challenge that causes unnecessary strain on the healthcare system, including, but not limited to, increased hospital admissions and readmissions rates from medication non-compliance and adverse events. Many of these factors are preventable by empowering patient autonomy in their healthcare journey, identifying cost savings opportunities, and providing access to clinical resources and support.

We believe that our business model primely positions us to address the prescription spend in the "specialty lite" therapy area while improving patient health outcomes by equipping patients with our innovative digital health tools. We seek to expand the service coverage area of our pharmacy operations while strengthening its clinical expertise in several key therapeutic categories, including services such as care coordination and patient financial assistance. Furthermore, we expect that our partner relationships will enable us to offer a competitive cash formulary as an alternative option when high insurance deductibles make it economically feasible. We anticipate expanding our wholesale operations as we continue to partner and establish new manufacturer relationships. With many of these new relationships, we intend to provide sales and clinical education support to the pharmacies purchasing these products. We have strategically identified opportunities to wholesale products that are normally not carried by the three largest wholesalers in the United States, and will seek to carve out exclusivity or semi- exclusive relationships based on a time period to ensure we are maximizing our revenues. We expect that new partnerships with group purchasing organizations will be effective, as we increase the business divisions' visibility with all or many of the member pharmacies. Our technology division will be connected to our pharmacy network enabling us to operate as a digital pharmacy and hub. Our pharmacy network leverages independent, locally-owned pharmacies that are rooted in their communities to create a powerful network of over 19,000 pharmacies across the United States capable of delivering prescriptions in hours. This channel services approximately 1.3 billion prescriptions annually and represents a $47 billion market at wholesale cost.

We seek to provide an end-to-end solution for digitizing the prescription journey through our Wellgistics Tech & Hub mobile application, which should help to preserve patient autonomy, improve prescription price transparency, and provide additional concierge services in an effort to boost medication adherence and improve patient outcomes. We intend to aggregate the data collected from our solution to provide comprehensive reports that are tied to medication adherence and outcomes to make a meaningful impact for all stakeholders involved. We expect to monetize this valuable data with manufacturers, payors and providers.

Recent Developments

Corporate Name and Trading Symbol Change

On July 20, 2026, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation to change its name from Wellgistics Health, Inc. to DataMeds AI, Inc., effective July 22, 2026. In connection with the name change, the Company's common stock began trading on The Nasdaq Capital Market under the new ticker symbol "MEDS," replacing its prior symbol "WGRX."

Reverse Stock Split

On May 20, 2026, the Company filed a Certificate of Amendment to effect a 1-for-50 reverse stock split of its common stock, which became effective May 26, 2026. The reverse stock split was intended to assist the Company in regaining compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2).

Nasdaq Listing Compliance

The Company received deficiency notices from The Nasdaq Stock Market LLC on December 10, 2025 and April 13, 2026, relating to non-compliance with the minimum bid price and minimum stockholders' equity requirements, respectively, under Nasdaq Listing Rules 5550(a)(2) and 5550(b)(1). See "Liquidity and Capital Resources" below and Note 2 to the condensed consolidated financial statements for further information.

May 2026 Financing

On May 27, 2026, the Company entered into a Note Purchase Agreement with a group of investors, pursuant to which the previously outstanding convertible promissory notes issued in January and April 2026 were extinguished and replaced with new convertible promissory notes in an aggregate principal amount of $20,323,732, comprised of rollover and new money proceeds. See Note 8 to the condensed consolidated financial statements for further information.

Collaboration Agreement - Healthstar Technologies, LLC

On April 13, 2026, the Company entered into a Collaboration Agreement with Kare Rx Hub, LLC and Kare Pharmtech, LLC, providing for the formation of Healthstar Technologies, LLC, in which the Company would hold a 51% membership interest, in exchange for consideration of $2,000,000 payable in shares of the Company's common stock. As of the date of this Quarterly Report, closing under the Collaboration Agreement had not yet occurred. See Note 14 to the condensed consolidated financial statements for further information

Proposed Transaction with EOS, Scilex, Datavault and HealthBridge Advisors

On May 20, 2026, the Company entered into a Fully Binding Term Sheet with EOS Technology Holdings, Inc., Scilex Holding Company, Datavault AI, Inc., HealthBridge Advisors, LLC, and Fortitude Advisors, LLC, contemplating a proposed transaction involving certain intellectual property assets, an expansion of the Company's existing license arrangement with Datavault, and the acquisition of a controlling interest in Tollo Health, LLC. On July 29, 2026, the Company entered into an Amended and Restated Letter of Intent with EOS, Scilex, Datavault, and HealthBridge Advisors, which superseded and replaced the original Term Sheet in its entirety. The proposed transaction remains subject to negotiation and execution of definitive agreements, stockholder and other approvals, and other customary closing conditions. See Note 10 to the condensed consolidated financial statements for further information.

Leadership Changes

On May 20, 2026, the Company's Board of Directors appointed Gerald Commissiong as Interim Co-Chief Executive Officer of the Company, in connection with the Term Sheet described above.

Settlement Agreement - Silverback Capital Corporation

During the six months ended June 30, 2026, the Company issued shares of common stock to Silverback Capital Corporation pursuant to a Settlement Agreement and Stipulation, approved under Section 3(a)(10) of the Securities Act of 1933, to satisfy certain outstanding creditor obligations. The Company delivered a termination letter with respect to the Settlement Agreement on April 3, 2026, which the parties subsequently rescinded on May 18, 2026, reinstating the Settlement Agreement in its entirety. See Note 9 to the condensed consolidated financial statements for further information.

Key Components of Results of Operations

We are an early-stage company, and our historical results may not be indicative of our future results for reasons that may be difficult to anticipate. Accordingly, the drivers of our future financial results, as well as the components of such results, may not be comparable to our historical or future results of operations.

Revenues

The Company is a holding company specifically formed to hold operating companies. We did not generate any revenue prior to the Wood Sage Acquisition, but now expect to generate all of our revenues through Wellgistics Pharmacy, and Wellgistics LLC. Although the Company may add other sources of revenue through the acquisition of other operating companies in the future, the Company currently does not have any such plans.

The Company will be subject to risk of specific inflationary pressures on product prices and its impact on consumer spending. For example, increases in prescription drug costs could impact consumers' ability to afford initial or on-going therapy. The Company's focus on the relatively expensive specialty lite business segment (i.e., $500 - $3,000 therapies) could be particularly impacted by increasing costs. Additionally, consumer discretionary funds could be reduced, impacting the ability to pay for digital services and subscription models that the Company offers. If inflation continues to increase, sourcing and procuring specialty lite products may prove to be capital intensive. The Company may not be able to adjust prices sufficiently to offset the effect without negatively impacting consumer demand or the Company's gross margin. All of these inflationary risk factors could materially and adversely impact the Company's business operations, financial condition and results of operations.

Wellgistics Pharmacy recognizes product revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, when we transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Wellgistics Pharmacy fills prescriptions for prescription and over-the-counter drugs written by a provider and recognizes revenue at the time the patient confirms the prescription order for payment of co-pays.

Expenses

Sales and Marketing Expense

Sales and marketing expenses consist of personnel and personnel-related expenses, including stock-based compensation for our business development team as well as trade events participation, public relations, white paper development, social media, pharmacy trade and patient materials, advertising, sales collateral, syndicated data fees, and other marketing expenses. We expect to increase our sales and marketing activities to grow our customer base and increase market share. We also expect that our sales and marketing expenses will increase over time as we continue to hire additional personnel to scale the business.

General and Administrative Expense

General and administrative expenses currently consist of business development, consulting, and information technology development and support and third-party software expenses.

General and administrative expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation expense) for personnel in executive, finance, accounting, corporate development and other administrative functions. General and administrative expenses will also include legal fees, professional fees paid for accounting, auditing, consulting, tax, and investor relations services, insurance costs, facility costs not otherwise included in research and development expenses. Following the Company's registration as a public company, general and administrative expenses also include public company expenses such as costs associated with compliance with the rules and regulations of the SEC and the stock exchange.

Income Tax (Benefit) Expense

Our income tax provision will consist of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We will maintain a valuation allowance against the full value of our U.S. and state net deferred tax assets because we believe the recoverability of the tax assets is more likely than not.

Results of Operations

For the Three and Six Months Ended June 30, 2026 and 2025

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2026				2025				2026				2025
Net revenues		$	1,779,860			$	7,790,865			$	3,339,423			$	18,654,308
Cost of revenues			1,597,656				7,285,113				2,986,998				17,455,915
Gross profit			182,204				505,752				352,425				1,198,393
General and administrative			7,056,671				4,859,949				11,925,606				36,032,869
Sales and marketing			113,990				343,383				1,073,990				408,600
Depreciation and amortization			356,597				802,796				713,421				1,605,668
Total operating expenses			7,527,258				6,006,128				13,713,017				38,047,137
Loss from operations			(7,345,054	)			(5,500,376	)			(13,360,592	)			(36,848,744	)
Total other income (expense)			(11,018,171	)			(1,172,088	)			(12,745,230	)			(2,254,623	)
Net loss		$	(18,363,225	)		$	(6,672,464	)		$	(26,105,822	)		$	(39,103,367	)

Revenues and Cost of Revenues

Net revenues for the three months ended June 30, 2026 were $1,779,860, compared to $7,790,865 for the three months ended June 30, 2025, a decrease of $6,011,005, or approximately 77.2%. For the six months ended June 30, 2026, net revenues were $3,339,423, compared to $18,654,308 for the six months ended June 30, 2025, a decrease of $15,314,885, or approximately 82.1%. The decrease in both periods was primarily driven by a significant decline in distribution revenues within Wellgistics, LLC, reflecting the impact of liquidity constraints that limited the Company's ability to procure and fulfill product orders. These decreases were partially offset by growth in pharmacy retail revenues, which increased to $1,590,367 for the three months ended June 30, 2026 from $77,756 for the three months ended June 30, 2025, and to $2,724,783 for the six months ended June 30, 2026 from $192,432 for the six months ended June 30, 2025, reflecting continued expansion of the Company's pharmacy operations.

Cost of net revenues for the three months ended June 30, 2026 was $1,597,656, compared to $7,285,113 for the three months ended June 30, 2025, a decrease of $5,687,457, or approximately 78.1%. For the six months ended June 30, 2026, cost of net revenues was $2,986,998, compared to $17,455,915 for the six months ended June 30, 2025, a decrease of $14,468,917, or approximately 82.9%. The decrease in both periods was primarily attributable to the lower volume of distribution activity, consistent with the decline in net revenues.

Gross profit for the three months ended June 30, 2026 was $182,204, compared to $505,752 for the three months ended June 30, 2025, a decrease of $323,548, or approximately 64.0%. Gross margin was 10.2% for the three months ended June 30, 2026, compared to 6.5% for the three months ended June 30, 2025. For the six months ended June 30, 2026, gross profit was $352,425, compared to $1,198,393 for the six months ended June 30, 2025, a decrease of $845,968, or approximately 70.6%, with gross margin of 10.6% compared to 6.4% for the prior year period. The improvement in gross margin percentage in both periods reflects the increased contribution of pharmacy retail revenues, which carry higher margins than the distribution segment, partially offset by the lower overall revenue base.

The following is a summary of the disaggregation of revenue for the three and six months ended June 30, 2026 and 2025:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2026				2025				2026				2025
Product revenue - distribution services		$	66,765			$	7,548,600			$	292,430			$	18,216,887
Pharmacy retail sales			1,590,367				77,756				2,724,783				192,432
Third party logistics services			122,728				164,509				322,210				244,989
Net revenues		$	1,779,860			$	7,790,865			$	3,339,423			$	18,654,308

General and Administrative Expense

General and administrative expenses for the three months ended June 30, 2026 were $7,056,671, compared to $4,859,949 for the three months ended June 30, 2025, an increase of $2,196,722, or approximately 45.2%. The increase was primarily attributable to a $2,008,000 non-recurring compensation charge recorded in connection with the Compensation Committee's approval, on May 12, 2026, of retroactive salary increases, a discretionary bonus, and a special bonus tied to the Company's 2026 capital-raising activity for its Chief Executive Officer and President, together with higher stock-based compensation expense related to restricted stock vesting.

For the six months ended June 30, 2026, general and administrative expenses were $11,925,606, compared to $36,032,869 for the six months ended June 30, 2025, a decrease of $24,107,263, or approximately 66.9%. The decrease was primarily attributable to the non-recurring stock-based compensation expense of approximately $27.2 million recognized during the three months ended March 31, 2025 in connection with the immediate vesting of restricted shares granted in March 2025, partially offset by the $2,008,000 compensation charge and the other items described above recognized during the three months ended June 30, 2026.

Sales and Marketing Expense

Sales and marketing expenses for the three months ended June 30, 2026 were $113,990, compared to $343,383 for the three months ended June 30, 2025, a decrease of $229,393. The decrease was primarily attributable to lower marketing and advertising spend during the current period, partially offset by $93,990 of expense recognized in connection with the Company's marketing services agreement with Outside The Box Capital Inc.

For the six months ended June 30, 2026, sales and marketing expenses were $1,073,990, compared to $408,600 for the six months ended June 30, 2025, an increase of $665,390. The increase was primarily attributable to increased investment in brand awareness, customer acquisition initiatives, and market development activities during the three months ended March 31, 2026, together with the expense recognized in connection with the Outside The Box Capital Inc. agreement described above.

Depreciation and Amortization

Depreciation and amortization expense for the three months ended June 30, 2026 was $356,597, compared to $802,796 for the three months ended June 30, 2025, a decrease of $446,199, or approximately 55.6%. For the six months ended June 30, 2026, depreciation and amortization expense was $713,421, compared to $1,605,668 for the six months ended June 30, 2025, a decrease of $892,247, or approximately 55.6%. The decrease in both periods was primarily attributable to the impairment of goodwill and intangible assets recognized during the year ended December 31, 2025, which reduced the carrying value of assets subject to amortization in the current year periods.

Other Expense, net

Interest expense, net, for the three months ended June 30, 2026 was $1,561,240, compared to $1,184,040 for the three months ended June 30, 2025, an increase of $377,200, or approximately 31.9%. For the six months ended June 30, 2026, interest expense, net was $3,633,919, compared to $2,278,530 for the six months ended June 30, 2025, an increase of $1,355,389, or approximately 59.5%. The increase in both periods was primarily attributable to interest and amortization of debt discount on the convertible promissory notes issued during 2026, interest on the seller promissory note, and interest on the revolving line of credit prior to its repayment, partially offset by lower interest expense following the repayment in full of the revolving line of credit in May 2026 and the extinguishment of the Agile Capital Funding LLC arrangement during the three months ended March 31, 2026.

During the three and six months ended June 30, 2026, the Company recognized a loss on extinguishment of debt of $8,881,694, comprised of a loss of $503,505, in connection with the extinguishment of the Agile Capital Funding LLC arrangement, and a loss of $8,378,189 recognized during the three months ended June 30, 2026 in connection with the refinancing of the Company's outstanding convertible promissory notes on May 27, 2026. There was no comparable amount for the three or six months ended June 30, 2025.

During the three months ended June 30, 2026, the Company recognized a loss on extinguishment of vendor obligations of $320,000, in connection with the settlement of obligations owed to Silverback Capital Corporation through the issuance of shares of common stock at a fair value in excess of the carrying amount of the obligations settled. For the six months ended June 30, 2026, the Company recognized a net loss on extinguishment of vendor obligations of $60,120, reflecting the $320,000 loss recognized during the three months ended June 30, 2026, partially offset by a gain on extinguishment of $259,880 recognized during the three months ended March 31, 2026 in connection with the settlement of vendor payables and notes payable through the issuance of shares of common stock at a fair value below the carrying amount of the obligations settled. There was no comparable amount for the three or six months ended June 30, 2025.

During the three and six months ended June 30, 2026, the Company recognized a loss on contract termination fee of $766,394, in connection with shares of common stock issued to Silverback Capital Corporation following the Company's purported termination, in April 2026, of its previously disclosed Settlement Agreement with Silverback, which the parties subsequently rescinded in May 2026. There was no comparable amount for the three or six months ended June 30, 2025.

Settlement fees of $13,000 were recognized during the six months ended June 30, 2026 in connection with the Silverback Capital Corporation settlement arrangement, all of which was recognized during the three months ended March 31, 2026. There was no comparable amount for the three or six months ended June 30, 2025.

Other income for the three months ended June 30, 2026 was $511,157, compared to $11,952 for the three months ended June 30, 2025, an increase of $499,205. For the six months ended June 30, 2026, other income was $609,897, compared to $23,907 for the six months ended June 30, 2025, an increase of $585,990. The increase in both periods was primarily attributable to settlements reached with certain counterparties in the ordinary course of business.

Net Loss

Net loss for the three months ended June 30, 2026 was $18,363,225, compared to $6,672,464 for the three months ended June 30, 2025, an increase of $11,690,761. The increase was primarily driven by the loss on extinguishment of debt of $8,378,189 recognized in connection with the May 2026 refinancing, the loss on contract termination fee of $766,394, the loss on extinguishment of vendor obligations, and higher general and administrative expenses, partially offset by the vendor credit recognized within sales and marketing expenses and higher other income during the period.

For the six months ended June 30, 2026, net loss was $26,105,822, compared to $39,103,367 for the six months ended June 30, 2025, a decrease of $12,997,545, or approximately 33.2%. The decrease was primarily driven by the non-recurring stock-based compensation expense of approximately $27.2 million recognized during the three months ended March 31, 2025 in connection with the immediate vesting of restricted shares granted in March 2025, partially offset by the loss on extinguishment of debt and loss on contract termination fee recognized during the three months ended June 30, 2026, and higher interest expense during the six months ended June 30, 2026.

Liquidity and Capital Resources

As of June 30, 2026, the Company had cash and cash equivalents of $2,456,373 and a working capital deficit of $33,781,185. The Company has incurred net losses of $18,363,225 and $26,105,822 for the three and six months ended June 30, 2026, respectively, and has an accumulated deficit of $137,137,512 as of June 30, 2026. These factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. See Note 2 to the condensed consolidated financial statements for further information.

The Company has funded its operations primarily through the issuance of debt and equity securities. Management is actively pursuing additional sources of capital, including equity financing, debt arrangements, and strategic partnerships, to fund ongoing operations and working capital requirements. However, there can be no assurance that such financing will be available on acceptable terms or at all.

The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, 2026 and 2025:

		Six Months Ended
		June 30,
		2026				2025
Net cash used in operating activities		$	(6,307,328	)		$	(3,426,447	)
Net cash used in investing activities		$	(447,230	)		$	(405,059	)
Net cash provided by financing activities		$	9,168,360			$	3,223,112
Net change in cash and cash equivalents		$	2,413,802			$	(608,394	)

Cash used in operating activities

Net cash used in operating activities for the six months ended June 30, 2026 was $6,307,328, primarily due to our net loss of $26,105,822, partially offset by non-cash expenses of $15,614,148 and $4,184,678 in cash provided by changes in operating assets and liabilities. Non-cash expenses were primarily driven by a loss on extinguishment of debt of $8,881,693, amortization of debt discount of $2,343,252, and stock-based compensation of $2,562,514. Cash provided by changes in operating assets and liabilities was primarily driven by an increase in accrued expenses and other liabilities of $2,640,868, which included a $2,008,000 compensation accrual approved by our Compensation Committee on May 12, 2026, and an increase in accounts payable of $2,432,030.

Net cash used in operating activities for the six months ended June 30, 2025 was $3,426,447, primarily due to our net loss of $39,103,367, partially offset by non-cash expenses of $30,548,175 and $5,128,743 in cash provided by changes in operating assets and liabilities. Non-cash expenses were primarily driven by stock-based compensation of $28,708,643. Cash provided by changes in operating assets and liabilities was primarily driven by an increase in accounts payable of $3,141,895.

Cash used in investing activities

Net cash used in investing activities for the six months ended June 30, 2026 and 2025 was $447,230 and $405,059, respectively, consisting entirely of capitalized software development costs related to the Company's DelivMeds platform.

Cash from financing activities

Net cash provided by financing activities for the six months ended June 30, 2026 was $9,168,360. This was primarily driven by gross proceeds of $14,200,000 from the issuance of convertible promissory notes, partially offset by $1,157,500 in payment of debt issuance costs, $2,104,557 in repayments under our term loan with Agile Capital Funding LLC, $1,643,923 in repayments of our revolving line of credit, and $89,909 in repayments under our merchant cash advance agreement.

Net cash provided by financing activities for the six months ended June 30, 2025 was $3,223,112. This was primarily driven by gross proceeds of $4,000,000 from the issuance of common stock in our IPO, $567,722 from common stock issuances under our equity purchase agreement, $615,000 from promissory notes, and $234,157 in net proceeds from a merchant cash advance. These inflows were partially offset by $1,208,498 in offering costs, as well as repayments of a note payable and revolving line of credit.

Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules.

Critical Accounting Policies and Estimates

Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. Preparation of the financial statements requires our management to make a number of judgments, estimates and assumptions relating to the reported amount of expenses, assets and liabilities and the disclosure of contingent assets and liabilities. We consider an accounting judgment, estimate or assumption to be critical when (i) the estimate or assumption is complex in nature or requires a high degree of judgment and (ii) the use of different judgments, estimates and assumptions could have a material impact on our consolidated financial statements. Our significant accounting policies are described in Note 1 to our financial statements included elsewhere in this proxy statement/prospectus.

Our critical accounting policies include:

Revenue Recognition

The Company adopted Accounting Standards Codification ("ASC") 606 upon inception.

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract was determined to be within the scope of ASC 606, the Company assessed the goods or services promised within each contract and determined those that were performance obligations, and assessed whether each promised good or service was distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. The Company recognizes revenue at the point of sale. The majority of orders are placed via the Company's website. Customers generally pay by credit card at the time they place their order. The Company does have larger customers to whom they have extended terms for payment. Generally, payments from these customers are due within 30 days of their order being shipped. However, a few customers have been given terms extending out to 45 days.

Distribution

Wellgistics, LLC provides distribution and third party logistics services to both pharmaceutical manufacturers and independent retail pharmacies. The Company recognizes revenue when goods are delivered to the customer. The gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, rebates, sales allowances and sales returns. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are considered when estimating the impact of these revenue deductions on gross sales for a reporting period. All revenue for the Company is recognized at the point-in-time when delivered to customer based on contractual obligations. Any amount collected from customers for goods not yet delivered is recorded as unearned revenue.

Wellgistics Pharmacy

The Company is in the retail pharmacy business. and fills prescriptions for drugs written by a doctor and recognizes revenue at the time the patient confirms delivery of the prescription. Customer returns are not material. The following are the steps taken to recognize revenue.

Step One: Identify the contract with the customer - The prescription is written by a doctor for a customer and delivered to the Company. The prescription identifies the performance obligations in the contract. The Company fills the prescription and delivers the prescription to the customer, fulfilling the contract. The collection is probable because there is confirmation that the customer has insurance for the reimbursement to the Company prior to filling of the prescription.

Step Two: Identify the performance obligations in the contract - Each prescription is distinct to the customer.

Step Three: Determine the transaction price - The consideration is not variable. The transaction price is determined to be the price of the prescription at the time of delivery which considers the expected reimbursements from third party payors (e.g., pharmacy benefit managers, insurance companies and government agencies).

Step Four: Allocate the transaction price - The price of the prescription invoiced represents the expected amount of reimbursement from third party payors. There is no difference between contract price and "stand-alone selling price".

Step Five: Recognize revenue when or as the entity satisfies a performance obligation - Revenue is recognized upon the delivery of the prescription.

Business Combinations

The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase.