What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-20 compared with 2025-03-25 · 424 added, 166 removed, 309 unchanged (66% of the section changed)

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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.

This discussion and analysis contains forward-looking

statements that involve risks, uncertainties and assumptions.

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.”

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in these forward-looking statements due to many factors, including, but not limited to, those set forth under the heading “Risk

Factors” in this Annual Report.

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 Annual Report.

Unless the context otherwise requires, references in this section to “the Company”,

“we,” “us,” “our,” “Wellgistics Health” refer to Wellgistics Health, Inc.

effect to the Wood Sage Acquisition and the Wellgistics, LLC Acquisition.

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.

in 2022, Wellgistics Health is a holding company for operating companies centered around pharmaceuticals and healthcare services.

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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

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.

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.

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

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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.

dive of this report reveals that total retail prescription drug spending from 2021 to 2022 increased by 8.4% to $405.9 billion.

2024 report on medicine spending trends found that overall spending in the U.S.

market for medicines reached $435 billion in 2023.

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

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.

business model primely positions us to address the prescription spend in the “specialty lite” therapy area while improving

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recognizes revenue at the time the patient confirms the prescription order for payment of co-pays.

and Development Expense

research and development expenses will consist primarily of internal and external expenses incurred in connection with our research activities

and development programs.

These expenses will include, but are not limited to, software development, integrations with pharmacy management

systems, development supplies, testing materials, personnel costs (including salaries and benefits), depreciation expense, overhead allocation,

(consisting of various support and facility costs), stock-based compensation and consulting fees.

Research and development costs will

be expensed as incurred.

and Marketing Expense

and marketing expenses will 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.

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.

and Administrative Expense

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and third-party software expenses.

On October 17, 2022, Wood Sage entered into the MSA, to cover the costs of ongoing software development

and all other operational-related costs to ensure that the development and operations would continue seamlessly without interruption

the future, general and administrative expenses will 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

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.

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.

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.

Tax (Benefit) Expense

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tax assets is more likely than not.

Minimum Bid Price Deficiency

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,

The Company was granted an initial compliance period of 180 calendar days, or until June 8, 2026, to regain compliance.

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.

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.

of Operations

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

operating expenses

from operations

$ (6,145,132 )

Cost of revenues

General and administrative

Sales and marketing

Depreciation and amortization

Goodwill and intangible assets impairment

Total operating expenses

Loss from operations

(93,749,097 )

other income (expense)

Total other income (expense)

$ (101,274,530

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and Cost of Revenues

sales were $18,128,831 for the year ended December 31, 2024, consisting of revenues derived from Wellgistics Pharmacy operations after

the closings of the Wood Sage Acquisition on June 16, 2024, and the Wellgistics Acquisition on August 30, 2024.

Cost of revenues for

the same period was $16,361,517.

The Company did not earn revenue for the year ended December 31, 2023.

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

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.

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.

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

Product revenue - distribution services

Pharmacy retail sales

Third party logistics services

and Administrative Expense

and administrative expenses were $6,797,782 for the year ended December 31, 2024, compared to $2,880,603 for the year ended December

The increase was primarily due to the acquisition of Wellgistics LLC in 2024.

General and administrative expenses include personnel

costs, and professional fees including audit, tax and legal.

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.

and Marketing Expense

and marketing expenses were $1,224,521 for the year ended December 31, 2025, compared to $0 for the year ended December 31, 2024.

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.

and amortization

and amortization was $1,114,664 for the year ended December 31, 2024, compared to $0 for the year ended December 31, 2023.

This included

amortization of $1,047,048, which relates to intangible assets identified from acquisitions of Wood Sage and Wellgistics, LLC.

expense of $67,616 relates to fixed assets acquired from the Wellgistics acquisition.

expense was $831,467 and $15,081 for the years ended December 31, 2024 and 2023, respectively.

Interest expense in 2024 was incurred

on Wellgistics Health’s outstanding notes and merchant cash advance agreement.

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

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.

the total impairment charge, $2,026,006 related to the write-down of goodwill, attributable to the Wellgistics distribution

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.

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.

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.

expenses, net for the year ended December 31, 2025, totaled $7,525,433, compared to $711,094 for the year ended December 31, 2024.

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.

expense for the year ended December 31, 2025, was $4,579,556, compared to $831,467 for the year ended December 31, 2024.

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.

and Capital Resources

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investments, development, and expansion of facilities.

We will fund our operations primarily through operating cash flows, 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.

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

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.

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operational efficiency while simultaneously removing interdependencies.

September 2023, the Company entered into two short-term note agreements for aggregate proceeds of $350,000.

One note for $100,000 bears

interest at 8% per annum and the Company will issue 35,000 shares of common stock upon a SPAC or merger.

The other note for $250,000

is non-interest bearing and the Company will issue 5,000 shares of common stock upon a SPAC or merger.

In May 2024, Scienture, a related

party, repaid the $250,000 note on behalf of the Company, and the note is no longer outstanding.

In January 2024, the Company entered

into a short-term note agreement for proceeds of $250,000.

The note bears interest at 2% per annum and matures on May 18, 2024.

the date of these consolidated financial statements, the note was fully repaid and is no longer outstanding.

January 20, 2023, Wood Sage, Wellgistics Pharmacy—operating under the name Community Specialty Pharmacy, LLC—and Scienture,

entered into a Membership Interest Purchase Agreement (the “CSP MIPA”), pursuant to which Scienture sold and Wood Sage acquired

Wellgistics Pharmacy.

That same date, Wood Sage, DelivMeds—operating under the name Alliance Pharma Solutions, LLC—and Scienture

entered into a Membership Interest Purchase Agreement (the “APS MIPA”), pursuant to which Scienture sold and Wood Sage acquired

one hundred percent (100%) of the membership interest it owned in DelivMeds.

On August 22, 2023, Wood Sage entered into a non-interest

bearing promissory note (“Note”) with Integral 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 CSP MIPA and APS MIPA.

No later than 30 days after a change in control to Wood

Sage, the aggregate unpaid principal balance of the Note will be due and payable by Wood Sage.

As of the date of these financial statements, the note is still outstanding

and the parties mutually agreed for an extension.

August 23, 2024, Wellgistics Health and Wellgistics LLC entered into the Fourth Amendment to the Wellgistics MIPA.

Pursuant to the amended

agreement, Wellgistics Health agreed to pay Wellgistics LLC a promissory note in the aggregate principal amount of $15,000,000 plus simple

interest accruing annually equal to the “Prime Rate” as published by the Wall Street Journal on January 1 of the applicable

year, together payable in three equal annual installments commencing on the first anniversary of the date that registration statement

becomes effective.

As of December 31, 2024, the calculated interest was $425,000.

As of December 31, 2024, $5,000,000 was included as

a current liability on the consolidated balance sheet and the remaining $10,000,000 was classified as long-term.

October 11, 2024, the Company entered a merchant cash advance agreement with a third-party lender.

This advance is secured by expected

future sales transactions of the Company with expected payments on weekly basis.

The Company received total proceeds of $1,500,000 against

future receivables of $2,236,500.

During the year ended December 31, 2024, the Company made total cash repayments of $402,570, including

principal repayments of $185,500 and interest expense of $217,070.

As of December 31, 2024, $1,314,500 remained outstanding, of which

$1,259,415 was included as a current liability on the consolidated balance sheet and the remaining $55,085 was classified as long-term.

November 2024, Wellgistics, LLC entered into a new credit agreement with for a line of credit of $10,000,000 replacing the former line

The new line of credit has interest annual rate equal to the Term SOFR plus 11.5%, calculated and prorated daily on the daily

The new line of credit is collateralized by accounts receivable and inventory balances.

Interest related to the line of credit

amounted to $159,740 for the year ended December 31, 2024.

The outstanding balance on the line of credit as of December 31, 2024 was

$5,531,260, which is included as a current liability on the consolidated balance sheet.

The Company assumed the initial revolving line

of credit as part of the Wellgistics acquisition.

May 2022, Wellgistics, LLC entered into a promissory note agreement in the amount of $1.2 million.

(“Integral Health”)

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.

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.

Cash Advances

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

August 26, 2025, the Company entered into a refinancing arrangement with Agile pursuant to which it received net proceeds of approximately

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.

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

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.

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

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.

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.

payable – owners of Wellgistics, LLC

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.

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,

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.

recognized a non-cash loss on debt extinguishment of $1,353,663 during the year ended December 31, 2025.

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.

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.

Payable – Third party

January 2, 2025, the Company entered into an unsecured promissory note agreement for a principal amount of $448,411.

The promissory note

was part of the consideration to the seller in connection with its acquisition of American Pharmaceutical Ingredients, LLC (an existing

subsidiary of Wellgistics LLC).

The promissory note bears interest at a rate of 2% per annum and will mature on April 1, 2025.

expense related to the promissory note was immaterial for the year ended December 31, 2024.

As of December 31, 2024 the amount outstanding

is $137,141, which is included as a current liability on the consolidated balance sheet.

The Company assumed this debt as part of the

Wellgistics acquisition.

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.

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.

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.

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.

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.

of December 31, 2025, the $100,000 short-term note entered into in September 2023 with third party investor remains outstanding.

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.

line of credit – Wellgistics

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

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.

Promissory Note - Wellgistics

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.

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.

intend to retain future earnings, if any, for future operations, expansion and debt repayment (if any) and we have no current plans to

7 unchanged sentences

Net cash used in operating activities

Net cash provided by investing activities

$ (10,855,029

$ (1,224,993 )

Net cash (used in) provided by investing activities

Net cash provided by financing activities

1 unchanged sentence

from operating activities

cash used in operating activities for the year ended December 31, 2024 was $511,918, primarily due to our net loss of $6,856,226, partially

offset by non-cash expense of $2,289,148, and $4,055,160 in cash used in operating assets and liabilities.

cash used in operating activities in 2023 was primarily a result of our net loss of $2,895,684 partially offset by changes in operating

assets and liabilities of $2,546,548.

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

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

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.

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

from investing activities

cash provided by investing activities for the year ended December 31, 2024, was $469,072, primarily due to cash acquired in the Wood

Sage Acquisition and Wellgistics Acquisition, partially offset by $377,288 in payments made for intangible assets under development and

$85,008 for a lease security deposit.

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.

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.

from financing activities

cash provided by financing activities for the year ended December 31, 2024, was $1,069,818, primarily due to proceeds received from merchant

cash advances and a new revolving line of credit totaling $2,070,980, partially offset by offering costs and repayment of note payable

totaled $1,011,162.

cash provided by financing activities in 2023 consists of $350,000 in proceeds from a note payable and $500 in proceeds from founder

common stock.

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.

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.

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.

Sheet Arrangements

91 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis