Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

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 audited consolidated financial statements and related notes appearing elsewhere in this Annual Report of Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See "Cautionary Note Regarding Forward-Looking Statements." 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 Form 10-K. 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 Form 10-K. Unless the context otherwise requires, references in this section to "the company", "we," "us," "our," "Wellgistics Health" refer to Wellgistics Health, Inc. after giving effect to the Wood Sage and Wellgistics, LLC Acquisition.

Overview

Incorporated in 2022, Wellgistics Health is a holding company for operating companies centered around pharmaceuticals and healthcare services. Currently, we own two indirect operating companies, DelivMeds and Wellgistics Pharmacy, through an intermediary-Wood Sage-and one direct operating company, Wellgistics LLC.

Wellgistics LLC

Wellgistics LLC was founded in 2013. In 2017, Strategix Global, LLC acquired a majority interest in Wellgistics LLC. Wellgistics LLC is 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, we provide significant value by offering competitive pricing, unique products, and exceptional service, while also promoting manufacturers' products to a diverse range of pharmacies. Our 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. As Wellgistics Health acquired Wellgistics LLC upon the closing of the Wellgistics Acquisition, Wellgistics LLC now serves as the wholesale arm of Wellgistics Health's healthcare ecosystem.

Wellgistics LLC provides distribution and 3PL services to both pharmaceutical manufacturers and independent retail pharmacies. With over 60 manufacturing relationships, we identify niche therapeutic products and work with our manufacturing clients to increase market access and visibility of our client relationships with product awareness and support campaigns. Specifically, we help promote product distribution through our 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. Our 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. The services provided to our manufacturing clients, pharmacy buyers, and other constituents described below are paramount to the revenue generated from this division.

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

DelivMeds was founded in 2017 as a holding company for technology solutions wholly owned by Integral. In 2020, DelivMeds recommissioned its technology project so that it would serve as a pharmaceutical hub, facilitating prescription transfer and clinical concierge services to a network of independent pharmacies. After conducting an extensive market research survey focusing on competition, DelivMeds established several key differentiators for the its hub. These differentiators included various integrations of the hub with pharmacy management software systems and pharmacy point of sale systems, among others such that DelivMeds would serve as an end-to-end patient-centric solution automating the prescription journey. Powered by Wellgistics Pharmacy as the backend pharmacy, DelivMeds 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 PBMs, and Pharmaceutical Manufacturing Companies.

DelivMeds aims to preserve patient autonomy, improve price transparency, and aide 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. DelivMeds' 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. As previously mentioned, Wood Sage acquired DelivMeds in August 2023. As discussed below and elsewhere in this Annual Report, Wellgistics Health acquired Wood Sage in June 2024. DelivMeds now serves as the middleware technology arm to Wellgistics Health's integrated healthcare ecosystem.

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

Wellgistics Pharmacy was founded in 2011 as a retail community specialty pharmacy. Specializing in HIV/AIDS, the pharmacy obtained URAC and ACHC accreditations for Specialty Pharmacy and also performed general pharmacy services in its community. In 2018, Integral acquired Wellgistics Pharmacy and relocated Wellgistics Pharmacy to Tampa, Florida. Subsequently, Wellgistics Pharmacy expanded its business operations to perform 340B services by partnering with local clinics and provider groups. During this time period, the pharmacy initiated its pursuit of additional pharmacy state licenses to convert Wellgistics Pharmacy's business to 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. As a result of this strategic business shift Wellgistics Pharmacy's leadership team chose to voluntarily forfeit Wellgistics Pharmacy's specialty accreditations. However, Wellgistics Pharmacy maintains specialty internal standard operating procedures and performs all of the functions of a 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. 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. Wellgistics Pharmacy 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. These relationships help drive revenue and prescription volume. Our relationship with Wellgistics LLC along with our deep-rooted ties to other wholesalers enables Wellgistics Pharmacy to offer a competitive cash-based formulary for the uninsured and underinsured patient populations. Wellgistics Pharmacy continues to see an uptick in utilization, as more patients elect to pay out of pocket due to our low-cost model, which Wellgistics Pharmacy believes is an opportunity to gain market share with small- to medium-size employer groups in a partnership model with other consumer driven healthcare companies. The services that Wellgistics Pharmacy provides to its patients and other constituents are vital to the revenue and prescription volume generated from this division. Wellgistics Pharmacy now serves as the backbone of Wellgistics Health's healthcare ecosystem.

Wellgistics Health, 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 closing the Wood Sage Acquisition, Wellgistics Health did not generate revenues. Upon closing of the Wood Sage Acquisition and the Wellgistics Acquisition, our revenues are derived from (i) pharmaceutical dispensing of products, (ii) care management services we deliver to patients and offer to pharmaceutical manufacturing clients, and (iii) SaaS fees for use of our platform technology services, and (iv) product procurement and distribution to independent pharmacies. We closed the Wood Sage Acquisition in June 2024 and closed the Wellgistics Acquisition in August 2024. However, while Wellgistics Health, Wood Sage, and Wellgistics LLC previously were separate entities, each of the three companies have shared common office space, comarketed solutions to the marketplace, and leveraged financial and back-office support prior to June 2024

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 digital pharmacy, including its hub and clinical services technology platform, will be poised to add significant value in this 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.

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. Our pharmacy business will expand its service coverage area while strengthening its clinical expertise in several key therapeutic categories, including services such as care coordination and patient financial assistance. Furthermore, our partner relationships will enable us to offer a competitive cash formulary as an alternative option when high insurance deductibles make it economically feasible. Our wholesale operations will expand as we continue to partner and establish new manufacturer relationships. With many of these new relationships, we will provide sales and clinical education support to the pharmacies purchasing these products. We have also strategically identified opportunities to wholesale products that are normally not carried by the three largest wholesalers in the United States. We will carve out exclusivity or semi- exclusive relationships based on a time period to ensure we are maximizing our revenues. New partnerships with group purchasing organizations are expected to be effective, as we increase the business divisions' visibility with all or many of the member pharmacies. Our technology division, which comprises a novel platform performing pharmacy hub and clinical services, will be connected to our pharmacy network enabling us to operate as a digital pharmacy and hub. Wellgistics Health's pharmacy network leverages the bricks and mortar of independent, locally-owned pharmacies, that are rooted in their communities, to create a powerful network capable of delivering Rx's in hours. This channel represents over 19,000 pharmacies across the United States, servicing 1.3 billion prescriptions annually representing a $47 billion market at wholesale cost.

Our mobile application for patients will provide an end-to-end solution for digitizing the prescription journey. The solution helps 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 will 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 will monetize this valuable data with manufacturers, payors and providers.

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

Wellgistics Health 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 DelivMeds, Wellgistics Pharmacy, and Wellgistics LLC. Although Wellgistics Health may add other sources of revenue through the acquisition of other operating companies in the future, Wellgistics Health currently does not have any such plans.

Wellgistics Health 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. Wellgistics Health'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 Wellgistics Health offers. If inflation continues to increase, sourcing and procuring specialty lite products may prove to be capital intensive. Wellgistics Health may not be able to adjust prices sufficiently to offset the effect without negatively impacting consumer demand or Wellgistics Health's gross margin. All of these inflationary risk factors could materially and adversely impact Wellgistics Health'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 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 Wellgistics Health's registration as a public company, 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.

Nasdaq Minimum Bid Price Deficiency

On December 10, 2025, the Company received a deficiency letter from the Nasdaq Listing Qualifications Staff notifying the Company that the closing bid price of its common stock had fallen below the minimum $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) for the 30 consecutive business day period between October 27, 2025 and December 9, 2025. The Company was granted an initial compliance period of 180 calendar days, or until June 8, 2026, to regain compliance.

To regain compliance, the closing bid price of the Company's common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days prior to June 8, 2026. If the Company does not regain compliance within the initial compliance period, it may be eligible for an additional 180-day compliance period, provided it meets all applicable continued listing requirements and notifies Nasdaq of its intention to cure the deficiency, including through a reverse stock split if necessary.

If the Company is unable to regain compliance with the Bid Price Rule during any applicable compliance period, its common stock will be subject to delisting from The Nasdaq Capital Market. A delisting of the Company's common stock could significantly reduce the liquidity of the Company's shares, limit its ability to raise capital through equity offerings, and have a material adverse effect on the Company's business, financial condition, and results of operations. The Company is currently evaluating its options to regain compliance; however, there can be no assurance that the Company will regain compliance with the Bid Price Rule or maintain compliance with any other Nasdaq continued listing requirements.

Results of Operations

For Year Ended December 31, 2025, Compared to Year Ended December 31, 2024

		Year Ended
		December 31,
		2025				2024
Net revenues		$	23,337,860			$	18,128,831
Cost of revenues			29,764,279				16,361,517
Gross profit			(6,426,419	)			1,767,314
General and administrative			70,332,827				6,797,782
Sales and marketing			1,224,521				-
Depreciation and amortization			3,211,064				1,114,664
Goodwill and intangible assets impairment			12,554,266				-
Total operating expenses			87,322,678				7,912,446
Loss from operations			(93,749,097	)			(6,145,132	)
Total other income (expense)			(7,525,433	)			(711,094	)
Net loss		$	(101,274,530	)		$	(6,856,226	)

Revenues and Cost of Revenues

Net revenues for the year ended December 31, 2025, were $23,337,860 compared to $18,128,831 for the year ended December 31, 2024. The increase in revenues was primarily driven by the inclusion of Wellgistics Pharmacy and Wellgistics Tech & Hub operations following the Company's acquisitions of Wood Sage LLC on June 16, 2024 and Wellgistics LLC on August 30, 2024. The year ended December 31, 2025 reflects a full twelve months of post-acquisition activity, whereas the prior-year period included only limited revenues generated following the August 30, 2024 closing of the Wellgistics acquisition..

Cost of revenues for the year ended December 31, 2025, totaled $29,764,279, compared to $16,361,517 for the year ended December 31, 2024. The increase was primarily attributable to the full-year inclusion of cost of sales from the acquired subsidiaries, compounded by liquidity constraints that restricted the Company's ability to procure inventory efficiently. Additionally, the Company's constrained liquidity position limited its ability to procure inventory at favorable terms, resulting in higher per-unit costs and contributing to cost of revenues exceeding net revenues for the period. Furthermore, the Company wrote off approximately $6.0 million in aged inventory.

Gross profit for the year ended December 31, 2025, was a gross loss of $(6,426,419), compared to gross profit of $1,767,314 for the year ended December 31, 2024. The shift to a gross loss was primarily the result of cost of revenues exceeding net revenues during the period. This was driven by liquidity constraints that restricted the Company's ability to procure inventory efficiently, caused delays in product shipments, and prevented the Company from achieving the purchasing scale necessary to improve margins. Furthermore, the Company created a reserve for approximately $6.0 million in aged inventory. As a result, gross margin declined to (27.5)% for the year ended December 31, 2025, from 9.7% in the prior-year period.

These liquidity constraints and the resulting sales impact were most pronounced in the second half of 2025, when temporary cash flow shortages reduced the Company's purchasing capacity and led to delayed product shipments. Management expects gross margin to improve as liquidity stabilizes and inventory purchasing normalizes in the upcoming years.

The following is a summary of the disaggregation of revenue for the year ended December 31, 2025 and 2024:

		Year Ended
		December 31,
		2025				2024
Product revenue - distribution services		$	21,868,748			$	17,669,468
Pharmacy retail sales			865,695				352,363
Third party logistics services			603,417				107,000
Net revenues		$	23,337,860			$	18,128,831

General and Administrative Expense

General and administrative expenses for the year ended December 31, 2025, were $70,332,827, compared to $6,797,782 for the year ended December 31, 2024. The significant increase was primarily driven by $54,048,525 of non-cash stock-based compensation recognized during the period. The remainder of the increase reflects the full-year consolidation of Wellgistics LLC and its subsidiaries following the August 2024 acquisition, including personnel costs and professional fees such as audit, tax, and legal services.

Of the $54,794,525 in non-cash stock-based compensation, $24,300,000 related to the accelerated vesting of 9,000,000 restricted shares granted to the Chief Executive Officer pursuant to the Company's Amended and Restated 2023 Equity Incentive Plan. The remaining $29,748,525 related to the issuance of common stock and restricted stock units to directors, employees, and consultants in exchange for services rendered during the year.

Additionally, general and administrative expenses for the year ended December 31, 2025 included a loss of $140,647 recognized in connection with the Company's satisfaction of its guaranty obligation under a revolving credit note issued by Tollo Health, LLC. This item is non-recurring in nature and is reflected within general and administrative expenses in the accompanying consolidated statements of operations.

Sales and Marketing Expense

Sales and marketing expenses were $1,224,521 for the year ended December 31, 2025, compared to $0 for the year ended December 31, 2024. The increase reflects the Company's expanded promotional activities and marketing initiatives following the acquisitions of Wood Sage and Wellgistics. For the year ended December 31, 2025, Sales and marketing expenses also included $746,000 of non-cash stock-based compensation related to the issuance of common stock to sales and marketing advisors in exchange for services rendered.

Depreciation and amortization

Depreciation and amortization for the year ended December 31, 2025, totaled $3,211,064, compared to $1,114,664 for the year ended December 31, 2024. The increase reflects the full twelve months of activity in the 2025 period, compared to only a partial post-acquisition period in 2024 following the closings of the Wood Sage LLC and Wellgistics LLC acquisitions. Of the total depreciation and amortization expense, $3,052,260 for the year ended December 31, 2025, and $1,047,048 for the year ended December 31, 2024, related to the amortization of intangible assets identified and recorded in connection with those acquisitions. The remaining $158,804 and $67,616 for the years ended December 31, 2025 and 2024, respectively, represented depreciation of fixed assets acquired as part of the Wellgistics LLC acquisition.

Goodwill and Intangible Assets Impairment

For the year ended December 31, 2025, the Company recognized a non-cash impairment charge of $12,554,266 related to goodwill and intangible assets arising from the acquisitions of Wood Sage LLC and Wellgistics LLC in 2024. As part of its annual impairment review, the Company tested the carrying value of goodwill and identifiable intangible assets, including customer relationships and trademarks, against their estimated fair values.

Of the total impairment charge, $2,026,006 related to the write-down of goodwill, attributable to the Wellgistics distribution acquisition. The remaining $10,528,260 related to the impairment of identifiable intangible assets, consisting of $5,314,027 attributable to customer relationships, $4,565,048 attributable to trademarks, both arising from the Wellgistics distribution acquisition, and $649,185 attributable to capitalized software associated with the Wellgistics Tech & Hub operations.

The impairment charge reflects a decline in the estimated fair value of these assets, driven primarily by lower-than-expected future cash flows from the acquired businesses. As a result of this testing, the carrying values of the affected goodwill and intangible assets were written down to their respective fair values, reflecting current economic conditions and the financial performance of the acquired operations since the date of acquisition.

As this is a non-cash charge, the impairment did not impact the Company's liquidity or cash position; however, it had a material effect on the Company's reported financial results for the year ended December 31, 2025.

Other Expense, net

Other expenses, net for the year ended December 31, 2025, totaled $7,525,433, compared to $711,094 for the year ended December 31, 2024. The significant increase was primarily attributable to higher interest expense incurred in connection with the Company's expanded debt obligations and a loss on debt extinguishment arising from the amendment of the Wellgistics acquisition note and the refinancing of certain other debt facilities during the year.

Interest expense for the year ended December 31, 2025, was $4,579,556, compared to $831,467 for the year ended December 31, 2024. The increase reflects the Company's higher outstanding debt balances during the period, including promissory notes, a revolving line of credit, Agile Capital debt, and merchant cash advance agreements entered into or assumed in connection with the Company's acquisition and financing activities.

The Company also recognized a total loss on debt extinguishment of $2,987,922 for the year ended December 31, 2025, consisting of two components. Of this amount, $1,353,663 arose from the Eighth Amendment to the Membership Interest Purchase Agreement ("MIPA") with Wellgistics LLC, executed on July 24, 2025. Under the amendment, the principal balance of the related promissory note was increased from $15,000,000 to $17,500,000. The original note, including $1,146,337 of accrued interest through July 24, 2025, was derecognized and replaced with a new promissory note recorded at the present value of its future cash flows. The difference between the carrying amount of the extinguished debt and the fair value of the new note was recognized as a loss on debt extinguishment in accordance with applicable accounting guidance. $653,582 related to losses recognized in connection with two debts conversion agreements entered into on October 30, 2025, pursuant to which outstanding indebtedness of Woodsage LLC was converted to shares of Company's common stock at $0.70 per share, with losses arising as the fair value of shares issued exceeded the carrying amount of debt extinguished. The remaining $980,677 of the total loss on debt extinguishment related to the refinancing of Agile Capital debt and merchant cash advance agreements that occurred periodically throughout the year.

Liquidity and Capital Resources

Liquidity

Our future cash needs are expected to include cash for operating activities, working capital, purchases of property and equipment, strategic investments, development, and expansion of facilities. We will fund our operations primarily through the issuance of debt and the sale of equity securities. We expect to generate positive cash flow from the operations in 2025 due to the annual revenue generated from Wood Sage and Wellgistics LLC. In order to proceed with our business plan, we may need to raise additional funds through the issuance of debt, equity or other commercial arrangements that may not be available to us when needed or on terms that we deem favorable. To the extent we raise additional capital through the sale of equity or convertible securities, our stockholders' ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we are unable to obtain sufficient financial resources, our business, financial condition and results of operations may be materially and adversely affected. We may be required to delay, limit, reduce or terminate parts of its strategic business plan or future commercialization efforts. There can be no assurance that we will be able to obtain financing on acceptable terms.

Our short-term liquidity requirements include initiatives related to the (i) expansion of existing facilities and upgrade of equipment in order to increase operational capacity, (ii) recruitment of additional employees to increase operational and business needs, upgrade of information technology, and (iii) continued buildout of corporate functions and public company compliance requirements, inclusive of accounting and legal fees. Our long-term liquidity requirements include initiatives related to (a) strategic acquisitions mean to further the development of our health ecosystem such as electronic health record systems, (b) expansion of micro-distribution centers for wholesale and other wholly owned pharmacies in strategic demographic regions, (c) investments into artificial intelligence, machine learning, and data warehousing capabilities, and (d) additional integrations with third-party partners such as PMS systems, ride-sharing logistics providers, enterprise health systems, and others to bolster the value proposition of our health ecosystem with a focus on improving operational efficiency while simultaneously removing interdependencies.

Debt

Integral Health Inc. ("Integral Health")

On August 22, 2023, Wood Sage entered into a non-interest bearing promissory note ("Note") with Integral Health, a then related party with common ownership and board members, pursuant to which Integral made a certain loan to Wood Sage in the amount of $1,300,000 to satisfy the purchase price under the agreements by which Wood Sage acquired Wellgistics Pharmacy and DelivMeds. No later than 30 days after a change in control to Wood Sage, the aggregate unpaid principal balance of the Note became due and payable by Wood Sage, which occurred upon the consummation of the Company's acquisition of Wood Sage.

On October 30, 2025, the Company entered into a Debt Conversion Agreement (the "Integra Health DCA") with Integra Health Inc., Blue Cap Acquisitions LLC, and WoodSage. Pursuant to the agreement, the outstanding indebtedness of $1,300,000 under the Note was converted into 1,857,143 shares of the Company's common stock at a stated conversion price of $0.70 per share. The fair value of the shares issued on the conversion date was $0.786 per share. As a result, the total fair value of the equity issued exceeded the carrying amount of the debt extinguished by approximately $159,714. Accordingly, the Company recognized a loss on debt extinguishment of $159,714 for the year ended December 31, 2025, which is included in other expense in the consolidated statements of operations. Upon conversion, the Note was fully satisfied and extinguished.

Merchant Cash Advances

On March 18, 2025, the Company entered into a merchant cash advance ("MCA") agreement with Cedar Advance LLC pursuant to which it received gross funding of $1,900,000 in exchange for the sale of future receivables totaling $2,840,000. Of the $1,900,000 gross funding, $1,118,250 was applied directly to satisfy amounts outstanding under a prior MCA arrangement, and the remaining $781,750 was remitted to the Company for working capital purposes. The Company accounts for the arrangement as a debt obligation. The difference between the repayment amount and the net proceeds received was recorded as a debt discount and is amortized to interest expense over the estimated term of the agreement using the effective interest method.

On October 20, 2025, the Company refinanced the March 2025 MCA pursuant to a new agreement with Cedar Advance LLC. Under the October agreement, the stated purchase price was $2,898,000. Of this amount, $1,198,800 was applied directly to satisfy outstanding amounts under the prior MCA, and $701,200 was remitted to the Company. The total repayment obligation under the new arrangement resulted in a principal balance of $1,900,000, with fixed weekly payments of $56,800 over an estimated 51-week term.

The Company evaluated the March 2025 and October 2025 refinancing in accordance with ASC 470 and concluded that the transaction represented a debt extinguishment. Accordingly, the remaining unamortized debt discount associated with the these refinancing written off, and the Company recognized a loss on debt extinguishment of $402,153 for the year ended December 31, 2025.

For the years ended December 31, 2025 and 2024, the Company recognized amortization of debt discount of $1,252,211 and $217,017 related to its merchant cash advance arrangements, which is recorded as interest expense in the consolidated statements of operations.

As of December 31, 2025, the gross contractual repayment obligation under the merchant cash advance was $2,547,200. The related unamortized debt discount was $803,066, resulting in a net carrying amount of $1,744,134, which is classified as a current liability in the consolidated balance sheets. As of December 31, 2024, the gross contractual repayment obligation under the merchant cash advance was $1,833,930. The related unamortized debt discount was $519,430, resulting in a net carrying amount of $1,314,500, of which $1,259,415 was classified as a current liability and $55,085 was classified as a long-term liability in the consolidated balance sheets.

Loan Payable

During the year ended December 31, 2025, the Company entered into multiple financing arrangements with Agile Capital Funding LLC ("Agile") and the Company accounts for these arrangements as debt obligations.

On May 14, 2025, the Company entered into an agreement with Agile pursuant to which it received net proceeds of $500,000 in exchange for total contractual repayments of $756,000. The agreement required fixed weekly payments over an estimated 24-week term. The Company recorded the obligation at the net proceeds received, with the excess of the total contractual repayment amount over the net proceeds recorded as a debt discount. The debt discount was amortized to interest expense over the estimated term of the agreement using the effective interest method.

On June 25, 2025, the Company entered into a separate agreement with Agile pursuant to which it received net proceeds of $250,000 in exchange for total contractual repayments of $367,200. The arrangement required fixed weekly payments over an estimated 28-week term. The Company recorded the obligation at the net proceeds received and recognized a corresponding debt discount, which was amortized to interest expense using the effective interest method.

On August 26, 2025, the Company entered into a refinancing arrangement with Agile pursuant to which it received net proceeds of approximately $500,074. Total contractual repayments under the August agreement were approximately $1,872,000, with fixed weekly payments over an estimated 33-week term. The August 2025 agreement was used to satisfy the outstanding balances of both the May 14, 2025 and June 25, 2025 arrangements. The Company evaluated the transaction under ASC 470-50 and concluded that the refinancing represented an extinguishment of the prior debt obligations. Accordingly, the Company derecognized the carrying amounts of the extinguished debt and recorded a loss on debt extinguishment related to the write-off of the remaining unamortized debt discount.

On October 29, 2025, the Company refinanced the August 2025 arrangement pursuant to a new agreement with Agile. Under the October agreement, the Company received net proceeds of $533,889, of which $50,000 represented issuance costs to be amortized over the term of the debt. Total contractual repayments under the October agreement are $2,880,000, with fixed weekly payments of $75,789 over an estimated 38-week term. A portion of the proceeds was applied directly to satisfy the outstanding balance of the August 2025 obligation. The Company accounted for the October transaction as a debt extinguishment in accordance with ASC 470-50 and recognized a loss related to the write-off of the remaining unamortized debt discount associated with the extinguished debt.

For the year ended December 31, 2025, the Company recognized total losses on debt extinguishment of $578,524 related to Agile refinancings.

For the year ended December 31, 2025, the Company recognized $765,681 of debt discount amortization, which is included in interest expense in the consolidated statements of operations.

As of December 31, 2025, the gross contractual repayment obligation under the Agile agreement was $2,366,766. The related unamortized debt discount was $765,710, resulting in a net carrying amount of $1,601,056, which is classified as a current liability in the consolidated balance sheets.

Note payable - owners of Wellgistics, LLC

On August 23, 2024, Wellgistics Health and the owners of Wellgistics LLC entered into the Fourth Amendment to the Membership Interest Purchase Agreement ("MIPA"). Pursuant to the amended agreement, the Company issued a promissory note in the aggregate principal amount of $15,000,000, which bears simple interest at a rate equal to the Prime Rate as published by The Wall Street Journal on January 1 of the applicable year. The principal and accrued interest were originally payable in three equal annual installments commencing on the first anniversary of the effective date of the related registration statement.

On July 24, 2025, the parties executed the Eighth Amendment to the MIPA, which increased the principal amount of the promissory note from $15.0 million to $17.5 million and modified the repayment schedule whereby $5,000,000 of principal shall be payable on the first and second anniversaries and $7,500,000 of principal shall be payable on the third anniversary, of the effective date of Promissory Note,

The Company evaluated the amendment in accordance with ASC 470-50, Debt-Modifications and Extinguishments, and concluded that the changes constituted a debt extinguishment. As a result, the original note and related accrued interest of $1,146,337 were derecognized. The Company recognized a non-cash loss on debt extinguishment of $1,353,663 during the year ended December 31, 2025.

For the years ended December 31, 2025 and 2024, the Company recognized interest expenses of $1,373,390 and $425,000, respectively, related to the seller promissory note. As of December 31, 2025 and 2024, accrued interest on the note totaled $652,055 and $425,000, respectively, and is included in accrued expenses and other current liabilities on the accompanying consolidated balance sheet.

As of December 31, 2025, $5,000,000 of the amended promissory note was classified as a current liability and the remaining $12,500,000 was classified as non-current in the consolidated balance sheets. As of December 31, 2024, $5,000,000 was classified as current and the remaining $10,000,000 was classified as long-term.

Note Payable - Third party

On January 2, 2025, the Company entered into an unsecured promissory note agreement for a principal amount of $448,411. The promissory note bears interest at a rate of 10% per annum, with both principal and accrued interest due in full on May 15, 2025. In the event of default, interest accrues at a default rate of 12% per annum. In connection with this note, the Company received net proceeds of $415,000, with the remaining $33,411 recognized as a debt discount. For the year ended December 31, 2025, the Company recorded interest expense of $44,442. For the same year, the Company recognized amortization of debt discount of $33,411 related to this promissory note. As of December 31, 2025, accrued interest payable on this note was $44,442 and the outstanding principal of $448,411 is classified under current liabilities. As of the issuance date of these financial statements, the parties are currently working on an extension.

On February 2, 2025, the Company entered into an unsecured promissory note agreement for a principal amount of $100,000. The promissory note bears interest at a rate of 10% per annum, with both principal and accrued interest due in full on August 15, 2025. In the event of default, interest accrues at a default rate of 12% per annum. Under the terms of the promissory note, an event of default occurs only if the maker fails to pay any amount due within five (5) days after receipt of written notice from the payee. As of December 31, 2025, the Company had not received any such written notice and, accordingly, no event of default had occurred. For the year ended December 31, 2025, the Company recorded interest expense of $9,062 related to this note. As of December 31, 2025, accrued interest payable on this note was $9,062, and the outstanding principal of $100,000 is classified under current liabilities.

On February 2, 2025, the Company entered into another unsecured promissory note agreement a principal amount of $100,000. The promissory note bears interest at a rate of 10% per annum, with both principal and accrued interest due in full on August 15, 2025. In the event of default, interest accrues at a default rate of 12% per annum. Under the terms of the promissory note, an event of default occurs only if the maker fails to pay any amount due within five (5) days after receipt of written notice from the payee. As of December 31, 2025, the Company had not received any such written notice and, accordingly, no event of default had occurred. For the year ended December 31, 2025, the Company recorded interest expense of $9,062 related to this note. As of December 31, 2025, accrued interest payable on this note was $9,062, and the outstanding principal of $100,000 is classified under current liabilities.

As of December 31, 2025, the $100,000 short-term note entered into in September 2023 with third party investor remains outstanding. The note bears interest at 8% per annum and provides that the lender will be issued 35,000 shares of common stock upon the consummation of a SPAC transaction or merger. For the years ended December 31, 2025 and 2024, the Company recorded interest expense of $8,000 for both the yeas related to this note. As of December 31, 2025 and 2024, accrued interest payable on this note was $19,666 and $11,666, respectively, and the outstanding principal of $100,000 is classified under non-current liabilities.

On April 8, 2025, the Company issued a Promissory Note to Strategic EP, LLC in the principal amount of $250,000. The note bears interest at a rate of 10% per annum. Under the terms of the agreement, the outstanding principal and accrued interest are payable on the earlier of (i) April 8, 2026, or (ii) within five business days following the Company's receipt of aggregate gross proceeds of at least $10 million from one or more equity or debt financings. On February 27, 2026, the Company received a demand letter from Strategic EP, LLC indicating that the Company was in default under the terms of the promissory note. As of December 31, 2025, the Company had accrued interest on the note in accordance with the contractual default interest rate of 18% amounting to $22,122 which is classified in the accrued expenses and other liabilities and the outstanding principal of $250,000 is classified under current liabilities. The Company is currently engaged in discussions with the lender to repay or otherwise settle the outstanding balance, including accrued interest. Management is working toward resolving the obligation and addressing the default under the terms of the agreement.

Revolving line of credit - Wellgistics

In November 2024, Wellgistics, LLC entered into a new credit agreement with for a line of credit of $10,000,000. The new line of credit has interest annual rate equal to the Term Secured Overnight Financing Rate ("SOFR") plus 11.5%, calculated and prorated daily on the daily balance (an aggregate rate of 16.84% per annum). The line of credit is collateralized by accounts receivable and inventory balances. Interest expense related to the line of credit amounted to $1,100,292 and $159,740 for the years ended December 31, 2025 and 2024, respectively. The outstanding balance on the line of credit as of December 31, 2025 and December 31, 2024 was $1,643,923 and $5,531,260 respectively, which is included as a current liability on the consolidated balance sheets.

Seller Promissory Note - Wellgistics

In May 2022, Wellgistics, LLC entered into a promissory note agreement in the amount of $1.2 million. The promissory note was part of the consideration to the seller in connection with its acquisition of American Pharmaceutical Ingredients, LLC. The promissory note bore interest at a rate of 2% per annum and was scheduled to mature on April 1, 2025.

The Company assumed this debt as part of the acquisition of Wellgistics. As of December 31, 2025, the promissory note had been fully repaid, and the outstanding balance was $0, compared to $137,141 as of December 31, 2024. Interest expense related to the promissory note was immaterial for the years ended December 31, 2025 and 2024.

Dividends

We intend to retain future earnings, if any, for future operations, expansion and debt repayment (if any) and we have no current plans to pay any cash dividends for the foreseeable future. In addition, our ability to pay dividends is likely to be limited by covenants of any future indebtedness. There are no, and we do not intend in the future for there to be any, restrictions in the covenants of any existing and outstanding indebtedness on our wholly-owned subsidiaries from distributing earnings in the form of dividends, loans or advances and through repayment of loans or advances to us.

Cash Flow

The following table summarizes our cash flows from operating, investing, and financing activities:

		Year Ended
		December 31,
		2025				2024
Net cash used in operating activities		$	(10,855,029	)		$	(1,224,993	)
Net cash (used in) provided by investing activities		$	(881,526	)		$	469,072
Net cash provided by financing activities		$	10,750,790			$	1,782,893
Net change in cash and cash equivalents		$	(985,765	)		$	1,026,972

Cash from operating activities

Net cash used in operating activities for the year ended December 31, 2025, was $10,855,029, primarily reflecting the Company's net loss of $101,274,530 , partially offset by non-cash charges totaling $80,514,712 and $10,132,667 of net cash provided by changes in operating assets and liabilities. Non-cash charges for the year ended December 31, 2025, consisted principally of $54,794,525 in stock-based compensation, $12,554,266 in impairment charges related to goodwill and intangible assets, $5,988,257 pertaining to reserve for obsolete inventory and $3,211,064 in depreciation and amortization of fixed assets and intangible assets. Changes in operating assets and liabilities provided net cash of $8,483,520 , driven primarily by an increase in accounts payable of $2,195,822 and an increase in accrued expenses and other liabilities of $3,233,642 , as well as a decrease in inventories of $1,890,925 and a decrease in accounts receivable of $799,771. These inflows were partially offset by an increase in amounts due from related parties of $321,090.

Net cash used in operating activities for the year ended December 31, 2024, was $1,224,993, reflecting a net loss of $6,856,226, partially offset by non-cash charges of $2,289,148 and $3,342,085 of net cash provided by changes in operating assets and liabilities. Changes in operating assets and liabilities were principally driven by an increase in accrued liabilities of $1,564,576 and an increase in amounts due from related parties of $3,326,274, partially offset by a decrease in accounts payable of $882,315 and an increase in other assets of $587,539.

Cash from investing activities

Net cash used in investing activities for the year ended December 31, 2025, was $881,526, consisting of capitalized software development costs related to DelivMeds platform.

Net cash provided by investing activities for the year ended December 31, 2024, was $469,072, primarily reflecting cash acquired in connection with the acquisitions of Wood Sage LLC and Wellgistics LLC, partially offset by $377,288 in capitalized software development costs and $85,008 paid for a lease security deposit.

Cash from financing activities

Net cash provided by financing activities for the year ended December 31, 2025, was $10,750,790. Cash inflows during the period consisted of proceeds of $20,070,000 from borrowings under the revolving line of credit, $4,000,000 from the issuance of common stock in connection with the Company's initial public offering, $4,534,053 from a subsequent public offering, $2,298,000 from the exercise of warrants, and $2,838,787 from common stock issuances under the Hudson Equity Purchase Agreement. Additionally, the Company received $1,733,961 from Agile Capital financing, $1,482,950 from merchant cash advance agreements, and $865,000 from the issuance of promissory notes.

These inflows were partially offset by $23,957,337 in repayments of the revolving line of credit, $1,513,969 in repayments of merchant cash advance obligations, $652,931 in repayments of the Agile Capital term loan, $137,141 in repayment of the seller promissory note, and $1,471,141 in offering costs incurred in connection with the Company's equity offerings during the year.

Net cash provided by financing activities for the year ended December 31, 2024, was $1,782,893, primarily reflecting proceeds of $756,480 from borrowings under a revolving line of credit and $1,314,500 from merchant cash advance agreements, as well as $10,000 from common stock issuances, partially offset by $135,777 in repayments of the seller promissory note and $162,310 in offering costs.

Off-Balance Sheet Arrangements

During the years 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.

Wellgistics LLC.

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. The company recognizes a refund liability if it receives consideration from a customer and expects to refund some or all of that consideration to the customer. A refund liability is measured at the amount of consideration received (or receivable) for which the company does not expect to be entitled (that is, amounts not included in the transaction price). The refund liability (and corresponding change in the transaction price and, therefore, the contract liability) is updated at the end of each reporting period for changes in circumstances.

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 to the Customer the prescription, 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.