DataMeds AI, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA 66 TABLE OF CONTENTS TO FINANCIAL STATEMENTS Consolidated Financial Statements Table of Contents Report of Independent Registered Public Accounting Firm (Firm ID: 6727 ) F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations and Comprehensive Loss F-4 Consolidated Statements of Changes in Stockholders’ Equity (Deficit) F-5 Consolidated Statements of Cash Flows F-6 Notes to the Consolidated Financial Statements F-7 F- 1 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors of Wellgistics Health, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Wellgistics Health, Inc. and the subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, consolidated statements of stockholders’ equity (deficit) and consolidated statements of cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with Generally Accepted Accounting Principles of United States of America. Matters related to Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, if the Company is unable to raise additional funds to alleviate liquidity needs, it may be required to reduce the scope of its planned development. The company has suffered losses from operations and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Emphasis of Matters a. We draw attention to Note 4 - Inventories, net, which describes matters related to certain inventory acquired from First Defense Nasal Screen Corp (“FDNS”). As discussed in the note, the inventory has experienced minimal sales activity, and management has determined that there is no active market and that the inventory is non-moving. Based on this assessment, the Company concluded that the carrying value of the inventory was not recoverable and recorded a reserve for obsolete inventory of $5,988,257, which is included in cost of net revenues in the consolidated statements of operations. Our opinion is not modified with respect to this matter. b. We draw attention to Note 9 to the consolidated financial statements, which describes the grant of 9,000,000 shares of restricted common stock to the Company’s Chief Executive Officer on February 28, 2025, under the Company’s Amended and Restated 2023 Equity Incentive Plan. As discussed in the note, although the award was originally subject to performance-based vesting conditions over a three-year period, the Compensation Committee approved an acceleration of vesting on July 24, 2025, which was subsequently ratified by the Board of Directors, resulting in full vesting during the third quarter of 2025. Accordingly, the Company recognized stock-based compensation expense of approximately $24.3 million for the year ended December 31, 2025, with no remaining unrecognized compensation cost as of year end. Our opinion is not modified with respect to this matter. c. We draw attention to Note 13 to the consolidated financial statements, which describes litigation initiated by the Company against certain former officers and directors relating to alleged breaches of fiduciary duty, contractual matters, and related claims. As disclosed, obligations associated with certain arrangements subject to dispute are recorded as liabilities of approximately $17.5 million as of December 31, 2025. The outcome of the litigation, including a pending motion to compel arbitration and additional claims asserted subsequent to year end, is inherently uncertain and may result in the reversal of all or a portion of the recorded liabilities in future periods. Because this matter may give rise to a gain contingency, no amounts have been recognized for any potential recovery. Our opinion is not modified with respect to this matter. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The company is not required to have nor we have engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Suri & Co., Chartered Accountants We have served as the Company’s auditors since 2022. Place: Bengaluru, India Date: March 20, 2026 F- 2 WELLGISTICS HEALTH, INC CONSOLIDATED BALANCE SHEETS December 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 42,571 $ 1,028,336 Accounts receivable, related party - 271,298 Accounts receivable, net 1,137,219 2,453,517 Inventories, net 1,639,426 9,518,608 Prepaid expenses - 524 Due from related parties - 1,021,000 Deferred offering costs - 875,385 Total current assets 2,819,216 15,168,668 Property, plant and equipment, net 229,376 388,180 Capitalized software 1,850,358 1,618,017 Operating lease, right-of-use-assets 966,893 1,528,128 Goodwill 14,193,923 16,219,929 Other intangible assets, net 10,314,675 20,746,009 Note receivable - 139,771 Other assets - 1,438,940 Deposits 85,008 85,008 Total assets $ 30,459,449 $ 57,332,650 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $ 11,665,135 $ 6,308,754 Accounts payable, related party 25,500 25,500 Accounts payable 25,500 25,500 Accrued expenses and other liabilities 6,407,722 4,320,417 Due to related parties 225,000 4,944,770 Due to seller - 10,000,000 Due to related parties 225,000 4,944,770 Current portion of debt obligations, net of debt discount 10,887,520 11,927,816 Operating lease liabilities- current portion 569,251 519,490 Total current liabilities 29,780,128 38,046,747 Notes payable 12,600,000 10,100,000 Note payable, related party - 1,300,000 Note payable - 1,300,000 Loan payable - 55,085 Operating lease liabilities 527,122 1,096,372 Total liabilities $ 42,907,250 $ 50,598,204 Commitments and contingencies (Note 13) - - Stockholders’ equity (deficit): Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 102,289,619 and 51,055,508 shares issued and 101,307,498 and 51,055,508 shares outstanding as of December 31, 2025 and December 31, 2024, respectively 10,131 5,105 Additional paid-in capital 98,573,758 16,486,501 Accumulated deficit ( 111,031,690 ) ( 9,757,160 ) Total stockholders’ equity (deficit) ( 12,447,801 ) 6,734,446 Total liabilities and stockholders’ equity (deficit) $ 30,459,449 $ 57,332,650 The accompanying notes are an integral part of these financial statements. F- 3 WELLGISTICS HEALTH, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Year Ended December 31, 2025 2024 Net revenues $ 23,337,860 $ 18,128,831 Cost of net revenues 29,764,279 16,361,517 Gross profit (loss) ( 6,426,419 ) 1,767,314 Operating expenses: 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 ) Other income/(expense): Interest expense, net ( 4,579,556 ) ( 831,467 ) Loss on debt extinguishment ( 2,987,922 ) - Other income 42,045 120,373 Total other expense, net ( 7,525,433 ) ( 711,094 ) Net loss before income taxes ( 101,274,530 ) ( 6,856,226 ) Provision for income taxes - - Net loss $ ( 101,274,530 ) $ ( 6,856,226 ) Weighted average common shares outstanding - basic and diluted 70,986,200 47,252,081 Net loss per common share - basic and diluted $ ( 1.43 ) $ ( 0.15 ) The accompanying notes are an integral part of these financial statements. F- 4 WELLGISTICS HEALTH, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) Additional Total Common Stock Paid-In Accumulated Stockholders’ Shares Amount Capital Deficit Equity (Deficit) Balance at December 31, 2023 44,720,000 $ 4,472 $ ( 3,972 ) $ ( 2,900,934 ) $ ( 2,900,434 ) Common stock issued for services 1,341,600 134 680,666 - 680,800 Common stock issued to employees 820,612 82 410,224 - 410,306 Common stock issued pursuant to business combinations 4,173,296 417 15,399,583 - 15,400,000 Net loss - - - ( 6,856,226 ) ( 6,856,226 ) Balance at December 31, 2024 51,055,508 $ 5,105 $ 16,486,501 $ ( 9,757,160 ) $ 6,734,446 Balance 51,055,508 $ 5,105 $ 16,486,501 $ ( 9,757,160 ) $ 6,734,446 Common stock issued pursuant to IPO 888,889 89 3,999,911 - 4,000,000 Common stock issued pursuant to consulting agreements 152,000 15 543,505 - 543,520 Common stock issued pursuant to equity purchase agreement 3,426,254 343 2,838,444 - 2,838,787 Issuance of commitment shares under equity purchase agreement 152,000 15 594,305 - 594,320 Common stock issued in settlement of due to seller 7,940,118 794 9,999,206 - 10,000,000 Common stock issued pursuant to public offering 7,142,862 714 4,533,339 - 4,534,053 Exercise of warrants pursuant to public offering 3,282,858 328 2,297,672 - 2,298,000 Accelerated vesting of restricted stock to former officer 9,000,000 900 24,299,100 - 24,300,000 Vested restricted stock granted to consultants 1,061,120 106 3,072,010 - 3,072,116 Vested restricted stock granted to directors 8,362,494 836 24,250,397 - 24,251,233 Vested restricted stock granted to employees 1,022,373 102 1,487,236 - 1,487,338 Common stock issued for services 443,428 44 545,956 - 546,000 Common stock cancelled ( 222,205 ) ( 22 ) 22 - - Common stock issued pursuant to debt conversion agreement 7,599,799 760 5,972,682 - 5,973,442 Offering costs - - ( 2,346,526 ) - ( 2,346,526 ) Net loss - - - ( 101,274,530 ) ( 101,274,530 ) Balance at December 31, 2025 101,307,498 $ 10,131 $ 98,573,758 $ ( 111,031,690 ) $ ( 12,447,801 ) Balance 101,307,498 $ 10,131 $ 98,573,758 $ ( 111,031,690 ) $ ( 12,447,801 ) The accompanying notes are an integral part of these financial statements. F- 5 WELLGISTICS HEALTH, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS 2025 2024 Year Ended December 31, 2025 2024 Cash flows from operating activities: Net loss $ ( 101,274,530 ) $ ( 6,856,226 ) Adjustments to reconcile net loss to net cash used in operating activities: Allowances for credit losses and note receivable 927,596 93,378 Write off of other assets 1,421,269 Loss on debt extinguishment 2,987,922 - Amortization of debt discount 33,411 - Stock-based compensation 54,794,525 1,081,106 Goodwill and intangble assets impairment 12,571,937 - Reserve for obsolete inventory 5,988,257 - Depreciation 158,804 67,616 Amortization 3,052,260 1,047,048 Changes in operating assets and liabilities: Accounts receivable, net 799,771 ( 40,081 ) Inventories, net 1,890,925 ( 72,356 ) Prepaid expenses 524 11,435 Other assets - ( 587,539 ) Accounts payable 2,195,822 ( 882,315 ) Accrued expenses and other liabilities 3,233,642 1,564,576 Operating lease liabilities, net 41,746 22,091 Due from / to related parties, net 321,090 3,326,274 Net cash used in operating activities ( 10,855,029 ) ( 1,224,993 ) Cash flows from investing activities: Cash acquired in business combinations - 931,368 Deposits for operating leases - ( 85,008 ) Investments in capitalized software ( 881,526 ) ( 377,288 ) Net cash (used in) provided by investing activities ( 881,526 ) 469,072 Cash flows from financing activities: Proceeds from promissory note 865,000 - Repayment of seller promissory note ( 137,141 ) ( 135,777 ) Proceeds from revolving line of credit 20,070,000 756,480 Repayment of revolving line of credit ( 23,957,337 ) - Proceeds from Merchant cash advance 1,482,950 1,314,500 Repayment of merchant cash advance ( 1,513,969 ) - Proceeds from term loan 1,733,961 - Repayment f term loan ( 652,931 ) - Proceeds from common stock issued pursuant to equity purchase agreement 2,838,787 - Proceeds from common stock issued pursuant to IPO 4,000,000 - Proceeds from common stock issued pursuant to public offering 4,534,053 - Proceeds from exercise of warrants 2,298,000 - Proceeds from common stock issued - 10,000 Offering costs ( 810,583 ) ( 162,310 ) 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 and cash equivalents at beginning of period 1,028,336 1,364 Cash and cash equivalents at end of period $ 42,571 $ 1,028,336 Supplemental disclosure of cash flow information: Cash paid for income taxes $ - $ - Cash paid for interest $ 3,110,776 $ 332,847 Supplemental disclosure of non-cash investing and financing activities: Licence acquired through accounts payable $ 2,500,000 $ - Issuance of commitment shares under equity purchase agreement $ 594,320 $ - Derecognition of promissory note and accrued interest pursuant to debt extinguishment $ 16,146,337 $ - Common stock issued in partial settlement of seller’s note $ 10,000,000 $ - Common stock issued pursuant to debt settlement $ 5,319,859 $ - Assets acquired in business combinations $ - $ 38,906,585 Liabilities assumed in business combinations $ - $ 14,726,514 Common stock issued pursuant to business combinations $ - $ 15,400,000 Repayment of note payable by related party on behalf of Company $ - $ 250,000 Note payable issued pursuant to business combination $ - $ 15,000,000 Liabilities payable pursuant to business combination $ - $ 10,000,000 Shares issued pursuant to business combination $ - $ 15,400,000 Promissory note issued pursuant to business combination $ - $ 15,000,000 Debt assigned to related party $ - $ 250,000 The accompanying notes are an integral part of these financial statements. F- 6 WELLGISTICS HEALTH, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company was initially organized in the name of Ayan Sponsors LLC on September 6, 2022, and subsequently incorporated in the name Danam Health, Inc. (the “Company”/ “us”/ “we”/ “our”) as a Delaware Corporation that was registered on November 15, 2022, The Company’s headquarters are in Tampa, Florida. In January 2023 and May 2023, the Company entered into separate definitive agreements with the owners of Wood Sage LLC (“Wood Sage”) and Wellgistics LLC, respectively, whereby the Company would acquire all of the respective outstanding membership interests of Wood Sage and Wellgistics LLC. In June 2024, the Company and Wood Sage entered into an amended and revised definitive agreement and closed on the Wood Sage Acquisition, thereby making Wood Sage a wholly owned subsidiary. In connection with the Wood Sage Acquisition, the Company acquired two of its operating subsidiaries, Alliance Pharma Solutions LLC d/b/a DelivMeds (n/k/a Wellgistics Tech & Hub, LLC) (“DelivMeds”)—a pharmaceutical technology hub—and Community Specialty Pharmacy, LLC (n/k/a Wellgistics Pharmacy, LLC) (“Wellgistics Pharmacy”)—a retail community specialty pharmacy. On August 30, 2024, the Company closed on the Wellgistics Acquisition, thereby making Wellgistics LLC—a company focused on wholesale operations including the distribution and fulfillment of certain pharmaceutical medications to a network of independent pharmacies meant to improve market access to and patient outcomes regarding the medications—a wholly owned subsidiary. As such, the Company currently exists as a holding company with Wood Sage as a directly held intermediate holding company subsidiary, Wellgistics Tech & Hub, LLC and Wellgistics Pharmacy, LLC as indirect operating subsidiaries, and Wellgistics, LLC as a direct operating subsidiary On October 4, 2024, the Company changed its corporate name to “Wellgistics Health, Inc.” (referred as “Wellgistics Health/WGRX/” “the Company”/ “we”/ “us”/ “our”) by filing a duly authorized Certificate of Amendment to its Certificate of Incorporation. Initial Public Offering On February 20, 2025, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Craft Capital Management LLC as representatives of the several underwriters (the “Underwriters”), relating to the Company’s initial public offering (the “Offering” or “IPO”) of 888,889 shares of common stock, par value $ 0.0001 per share, at a public offering price of $ 4.50 per share, generating gross proceeds of approximately $ 4 million and net proceeds of approximately $ 3.1 million, after deducting underwriting discounts and commissions and other estimated offering expenses. The shares of common stock were offered and sold pursuant to the Company’s Registration Statement on Form S-1 (File No. 333-280945), originally filed with the U.S. Securities and Exchange Commission (the “Commission”) on July 22, 2024, and later amended (as amended, the “Registration Statement”). The Registration Statement was declared effective by the Commission on February 14, 2025. The closing of the Offering took place on February 24, 2025. A final prospectus describing the terms of the offering was filed with the Commission on February 21, 2025. F- 7 The Company’s common stock commenced trading on the Nasdaq Capital Market LLC on February 21, 2025, under the symbol “WGRX”. The IPO generated net proceeds to the Company of approximately $ 3.1 million, after deducting underwriting discounts and commissions and other estimated offering expenses. The Company intends to use the net proceeds from the offering to increase its capitalization, provide financial flexibility, and enhance visibility into the marketplace as well as to create a public market for the common stock and for general corporate purposes, including establishing working capital, funding marketing initiatives, and facilitating capital expenditures. Basis of Presentation and Principles of Consolidation The Company’s fiscal year ends on December 31. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.GAAP”) in all material respects and have been consistently applied in preparing the accompanying consolidated financial statements. The consolidated financial statements include the consolidated financial statements of Wood Sage since the acquisition on June 16, 2024 and financial statements of Wellgistics, LLC since the acquisition on August 30, 2024. All inter-company balances and transactions are eliminated on consolidation. Use of Estimates The preparation of the Company’s Consolidated Financial Statements and related disclosures in conformity with U.S.GAAP requires the Company to make estimates and assumptions that affect the reported amounts of certain assets and liabilities; the reported amounts of revenues and expenses for the periods covered and certain amounts disclosed in the notes to the Financial Statements. These estimates are based on information available through the date of the issuance of the financial statements and actual results could differ from those estimates. Areas requiring significant estimates and assumptions by the Company include, but are not limited to: ● provisions for income taxes and related valuation allowances and tax uncertainties; ● lease tenure ● recoverability of long-lived assets and their related estimated lives. ● fair value of long-term debt and notes receivable ● allowance for expected credit losses on financial assets ● grant-date fair value and valuation of stock-based compensation awards ● estimated useful lives of intangible assets and property, plant and equipment ● evaluation of goodwill for impairment ● accruals for estimated liabilities ● evaluation of equity method investments ● net-realizable value of inventory Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. There was no difference between net loss and comprehensive loss presented in the consolidated financial statements for the year ended December 31, 2025 and 2024. Segment Reporting In accordance with Accounting Standards Codification (“ASC”) 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. ASC 280 establishes standards for companies to report financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker (“CODM”), or group, in deciding how to allocate resources and assess performance. F- 8 The CODM has been identified as the Chief Executive Officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has one operating and reportable segment. The key measures of segment profit or loss reviewed by our CODM are revenue and operating costs. These metrics are reviewed and monitored by the CODM to manage and forecast cash. The CODM also reviews operating costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget. See Note 12 for further details. Concentration of Credit Risks and Major Customers Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and receivables. The Company places its cash and cash equivalents with financial institutions. Deposits are insured to Federal Deposit Insurance Corp limits. Customer Concentration Risk For the year ended December 31, 2025, one customer accounted for approximately 13 % of the Company’s total revenues. As of December 31, 2025, two customers accounted for approximately 25 % and 18 %, respectively, of gross accounts receivable. For the year ended December 31, 2024, two customers accounted for approximately 19 % and 12 %, respectively, of the Company’s total revenues. As of December 31, 2024, one customer accounted for approximately 23 % of gross accounts receivable. The Company’s revenues and accounts receivable are subject to concentration risk due to its reliance on a limited number of significant customers. The loss of any one of these customers, or a material reduction in purchase volumes from such customers, could have a material adverse effect on the Company’s business, financial condition, and results of operations. Management continues to actively pursue opportunities to broaden and diversify the Company’s customer base in order to reduce its exposure to this concentration risk. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The financial and nonfinancial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The hierarchy is presented down into three levels based on the reliability of the inputs. Level 1 Quoted prices are available in active markets for identical assets or liabilities. Level 2 Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash flow models or valuations. F- 9 The carrying amounts of cash, accounts receivable, note receivable, deposits, accounts payable, accrued liabilities and short-term debt approximate their fair value because of the short-term nature of these instruments. The carrying amount of long-term debt approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar maturities. Accounts Receivable and Allowances for Credit Losses Accounts receivable are recorded at the net invoiced amount, net of allowance for credit losses, and do not bear interest. Expected credit losses include losses expected based on known credit issues with specific customers as well as a general expected credit loss allowance based on relevant information, including historical loss rates, current conditions, and reasonable economic forecasts that affect collectability. The Company reserves for any accounts receivable balances that are determined to be uncollectible in the allowance for credit losses. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance. The Company uses a loss rate method to estimate its allowance for credit losses. The determination of the current expected credit loss rate begins with our review of historical loss experience as a percentage of accounts receivable. To determine the current allowance for credit losses, we combine the historical and expected credit loss rates and apply them to our period end accounts receivable. The Company provides for a 95 % - 100 % loss rate of the accounts receivable which are due over the period of 90 days. For the year ended December 31, 2025 and 2024, the Company recognized provision for credit losses of $ 723,401 and $ 93,378 , respectively, within general and administrative expenses. Inventories, Net Inventories are stated at the lower of cost and net realizable value. Cost is determined on a first in first out (“FIFO”) basis. Cost of inventory is determined as the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. On a quarterly basis, we evaluate inventory for net realizable value using estimates based on historical experience, current or projected pricing trends, specific categories of inventory, age and expiration dates of on-hand inventory and manufacturer return policies. If actual conditions are less favorable than our assumptions, additional inventory write-downs may be required, and no reserve is maintained as obsolete or expired inventories are written off and are presented in cost of net revenues in the accompanying consolidated statements of operations and comprehensive loss. We believe that the inventory valuation provides a reasonable approximation of the current value of inventory. Capitalized Software The Company complies with the guidance of ASC 350-40, “ Intangibles—Goodwill and Other—Internal Use Software ”, in accounting for our internally developed system projects that it utilizes to provide our services to customers. These system projects generally relate to software of the Company that is not intended for sale or otherwise marketed. Internal and external costs incurred during the preliminary project stage are expensed as they are incurred. Once a project has reached the development stage, the Company capitalizes direct internal and external costs until the software is substantially complete and ready for our intended use. Costs for upgrades and enhancements are capitalized, whereas costs incurred for maintenance are expensed as incurred. These capitalized software costs are amortized on a project-by-project basis over the expected economic life of the underlying software on a straight-line basis, which is generally three to five years. Amortization commences when the software is available for our intended use. As of December 31, 2025 and December 31, 2024, the Company capitalized $ 2,499,553 and $ 1,618,017 , respectively, in software development cost related to the Delivmeds platform via its DelivMeds subsidiary. These amounts represent the fair value measurement of the capitalized software. For the year ended December 31, 2025, the Company recorded an impairment loss of $ 649,185 on its capitalized software, reflecting a decrease in the carrying value of the DelivMeds platform software to $ 1,850,358 as of December 31, 2025. The impairment charge was recorded within goodwill and intangible assets impairment in the consolidated statements of operations. To date, the Delivmeds platform is not yet been placed in service and therefore amortization has not commenced. F- 10 Property, Plant and Equipment, Net Property, plant and equipment, net (“PP&E”) is stated at cost less accumulated depreciation and amortization and any accumulated impairment losses. Depreciation and amortization are computed using the straight-line method over the assets’ estimated useful lives. The estimated useful lives of PP&E are as follows: Equipment – 5 – 10 years Furniture and Fixtures – 7 years Software – 3 – 5 years Leasehold improvements – Shorter of the estimate useful life or remaining lease term Major renewals and improvements are capitalized. Replacements, maintenance, and repairs, which do not significantly improve or extend the useful life of the assets, are expensed when incurred. Upon the sale or retirement of assets, costs and the related accumulated depreciation and amortization are removed from the accounts and any gain or loss is included in the results of operations. The Company evaluates its long-lived assets or asset groups for indicators of possible impairment by determining whether there were any triggering events that could impact the Company’s assets. If events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable the Company performs a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by such asset or asset group. Should an impairment exist, the impairment loss is measured based on the excess carrying value of the asset over the asset’s fair value generally determined by estimates of future discounted cash flows. The Company has no t identified any such impairment losses for the year ended December 31, 2025 and 2024. Goodwill Goodwill represents the excess of the cost over the fair market value of net assets acquired in business combinations. In accordance with Intangibles – Goodwill and Other (Topic 350), goodwill is not amortized but is tested for impairment at least annually, or more frequently if indicators of potential impairment exist. Goodwill is tested for impairment at the reporting unit level. The Company’s reporting units have discrete financial information available, and management regularly reviews the operating results. For purposes of impairment testing, goodwill is allocated to the applicable reporting units based on the Company’s reporting structure. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors assessed for each of the applicable reporting units include, but are not limited to, changes in macroeconomic conditions, industry and market considerations, cost factors, discount rates, competitive environments, and financial performance of the reporting units. If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, a quantitative test is required. Alternatively, the Company may proceed directly to the quantitative test. Under the quantitative test, the estimated fair value of each reporting unit is compared to its carrying value, including goodwill. If the carrying value of the reporting unit, including goodwill, exceeds its fair value, an impairment charge equal to the excess is recognized, up to the maximum amount of goodwill allocated to that reporting unit. During the year ended December 31, 2025, the Company identified certain events and circumstances that indicated potential impairment of goodwill. As a result, the Company performed a quantitative impairment test. The results of the test indicated that the fair value of certain reporting units was lower than the carrying value, resulting in an impairment charge of $ 2,026,006 for goodwill which is recorded within goodwill and intangible assets impairment in the consolidated statements of operations. F- 11 Impairment of Long-Lived Assets The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. The Company evaluates its intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. In accordance with ASC 350, “Intangibles—Goodwill and Other,” intangible assets with finite lives, such as trademarks and customer relationships, are amortized over their estimated useful lives. The Company compares the carrying value of the intangible asset to its fair value, which is determined based on projected future cash flows. If the carrying value of the asset exceeds its fair value, an impairment loss is recognized, and the asset is written down to its fair value. For the year ended December 31, 2025, the Company recognized an impairment charge of $ 9,879,075 related to certain intangible assets with finite lives. The impairment primarily resulted from a decline in the fair value of customer relationships and trademarks identified during the acquisitions of Wellgistics LLC and Wood Sage LLC. Leases The Company accounts for its leases under ASC 842, Leases . Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred. In calculating the right of use asset and lease liability, the Company has elected not to combine lease and non-lease components. The non-lease components are accounted for separately and recognized as expenses when incurred. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term. Offering Costs The Company complies with the requirements of ASC 340-10-S99-1. Prior to the completion of an offering, offering costs are capitalized if they are directly related to an equity financing that is probable of successful completion until such financing is consummated. The deferred offering costs are charged to stockholders’ equity upon the completion of an offering or to expense if the offering is abandoned, terminated, or significantly delayed in the period of determination. Deferred offering costs includes professional fees incurred including legal, accounting, underwriting and advisory services in connection with the Company’s equity offering. As of December 31, 2025 and 2024, the Company had capitalized $ 0 and $ 875,385 , respectively, in deferred offering costs. For the year ended December 31, 2025, a total of $ 875,385 in previously capitalized offering costs was charged to stockholders’ equity upon the completion of the IPO. For the year ended December 31, 2025, the Company incurred total offering costs of $ 1,471,141 related to the IPO and public offering, all of which were charged to stockholders’ equity upon the completion of the respective offerings. F- 12 Revenue Recognition The Company recognizes revenue from contracts with customers under ASC 606, Revenue from Contracts with Customers (“ASC 606”). To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract was determined to be within the scope of ASC 606, the Company assessed the goods or services promised within each contract and determined those that were performance obligations, and assessed whether each promised good or service was distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. The Company recognizes revenue at the point of sale. The majority of orders are placed via the Company’s website. Customers generally pay by credit card at the time they place their order. The Company does have larger customers to whom they have extended terms for payment. Generally, payments from these customers are due within 30 days of their order being shipped. However, a few customers have been given terms extending out to 45 days. Distribution Wellgistics, LLC provides distribution and third party logistics services to both pharmaceutical manufacturers and independent retail pharmacies. The Company recognizes revenue when goods are delivered to the customer. The gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, rebates, sales allowances and sales returns. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are considered when estimating the impact of these revenue deductions on gross sales for a reporting period. All revenue for the Company is recognized at the point-in-time when delivered to customer based on contractual obligations. Any amount collected from customers for goods not yet delivered is recorded as a contract liability. Pharmacy Wellgistics Pharmacy 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. F- 13 Disaggregation of Revenue The following is a summary of the disaggregation of revenue for the years ended December 31, 2025 and 2024: SCHEDULE OF DISAGGREGATION OF REVENUE 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 All revenue for the years ended December 31, 2025 and 2024 were within the United States. Cost of net revenues includes provisions for inventory obsolescence and charges related to vendor shipping advances for which no supplies have been made and are no longer considered recoverable. Contract Assets and Liabilities Contract assets would include costs and services incurred on contracts with open performance obligations. These amounts would be included in contract assets on the consolidated balance sheets. Contract liabilities include payment received for incomplete performance obligations and are included in Unearned revenue on the consolidated balance sheets. At December 31, 2025 and 2024, the Company had unearned revenue of $ 488,229 and $ 245,765 , respectively, which is included in accrued expenses and other current liabilities on the consolidated balance sheets. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. The Company measures all stock-based awards granted to employees, directors and non-employee consultants based on the fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. For awards with service-based vesting conditions, the Company records the expense for using the straight-line method. For awards with performance-based vesting conditions, the Company records the expense if and when the Company concludes that it is probable that the performance condition will be achieved. The Company classifies stock-based compensation expenses in its statement of operations in the same manner in which the award recipient’s costs are classified. See Note 9 for further details. Net Loss per Share Net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents both basic and diluted net loss per share. Diluted net loss per share reflects the actual weighted average number of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the calculation of diluted net loss per share if their inclusion would be anti-dilutive. As all potentially dilutive securities are considered anti-dilutive as of December 31, 2025 and 2024, the diluted net loss per share is the same as basic net loss per share for both periods. F- 14 For the year ended December 31, 2025, the following items were excluded from the computation of diluted net loss per share because including these securities would have been anti-dilutive: SCHEDULE OF POTENTIALLY DILUTIVE ITEMS OUTSTANDING December 31, 2025 2024 Unvested restricted common stock issued not outstanding 982,121 - Warrants 3,860,004 - Total potentially dilutive shares 4,842,125 - Recent Accounting Pronouncements Recently Adopted Standards ASU 2023-09 — Income Taxes (Topic 740): Improvements to Income Tax Disclosures In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The ASU requires public business entities to disclose, on an annual basis, a rate reconciliation presented in both dollar amounts and percentages, with specific categories and further disaggregation of those categories based on a quantitative threshold equal to 5% or more of the amount determined by multiplying pre-tax income (loss) by the applicable statutory rate. The ASU also requires disclosure of income taxes paid disaggregated by federal, state, and foreign jurisdictions. The Company adopted ASU 2023-09 effective January 1, 2025 on a prospective basis. The adoption had a financial statement disclosure impact only and did not have a material impact on the Company’s consolidated financial statements. ASU 2023-07 — Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The ASU requires public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, as well as other segment items and a description of its composition. The ASU also requires entities with a single reportable segment to provide all disclosures required under the standard. The Company adopted ASU 2023-07 effective January 1, 2025. The adoption had a financial statement disclosure impact only and did not have a material impact on the Company’s consolidated financial statements. Recently Issued Standards Not Yet Adopted ASU 2023-08 — Accounting for and Disclosure of Crypto Assets In December 2023, the FASB issued ASU 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets . The ASU requires entities to subsequently measure qualifying crypto assets at fair value, with changes in fair value recognized in net income each reporting period. The ASU also establishes specific disclosure requirements, including information about significant crypto asset holdings, contractual sale restrictions, and changes in such holdings. The guidance applies to crypto assets that meet all of the following criteria: ● Meet the definition of intangible assets as defined in the ASC Master Glossary; ● Do not provide enforceable rights to or claims on underlying goods, services, or other assets; ● Are created or reside on a distributed ledger based on blockchain or similar technology; ● Are secured through cryptography; ● Are fungible; and ● Are not created or issued by the reporting entity or its related parties. F- 15 ASU 2023-08 is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted. The Company does not currently hold any material crypto assets. Accordingly, the adoption of ASU 2023-08 is not expected to have a material impact on the Company’s consolidated financial statements; however, the Company will continue to monitor its investment activities and evaluate the impact of the standard should it acquire crypto assets in the future. ASU 2024-03 — Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . The ASU requires public business entities to disclose, in the notes to financial statements, specified information about certain costs and expenses included in expense line items presented on the face of the income statement. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements and related disclosures. ASU 2025-05 — Measurement of Credit Losses for Accounts Receivable and Contract Assets In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets : The ASU provides a practical expedient permitting entities to assume that conditions at the balance sheet date remain unchanged over the life of current accounts receivable and current contract assets when estimating expected credit losses. The guidance is effective for annual and interim reporting periods beginning after December 15, 2025, with early adoption permitted. The Company does not expect ASU 2025-05 to have a material impact on its consolidated financial statements. ASU 2025-06 — Targeted Improvements to the Accounting for Internal-Use Software In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software: The ASU requires entities to begin capitalizing software development costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform its intended function (the “probable-to-complete recognition threshold”). The amendments are effective for annual reporting periods beginning after December 15, 2027, with early adoption permitted. Entities may apply the amendments using a prospective, modified retrospective, or retrospective transition approach. The Company is currently evaluating the impact of ASU 2025-06 and will assess the impact upon adoption. ASU 2025-11 — Interim Reporting: Narrow-Scope Improvements In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements : The ASU requires entities to disclose events occurring since the end of the last annual reporting period that have a material impact on the entity. The amendments apply to all entities that present interim financial statements in accordance with GAAP. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The amendments may be applied either prospectively or retrospectively. The Company expects ASU 2025-11 to impact its disclosures only and does not expect it to affect its results of operations, financial condition or cash flows. NOTE 2. LIQUIDITY AND GOING CONCERN For the years ended December 31, 2025 and 2024, the Company has a net loss of $ 101,274,530 and $ 6,856,226 , respectively, and had an accumulated deficit of $ 111,031,690 as of December 31, 2025. For the year ended December 31, 2025, the Company has net cash used in operating activities of $ 10,855,029 . These factors raise substantial doubt about the Company’s ability to continue as a going concern within twelve months from the date these consolidated financial statements are issued. F- 16 Management Plan Subsequent to December 31, 2025, the Company completed two private placements of convertible promissory notes raising aggregate gross proceeds of $ 9,000,000 . On January 5, 2026, the Company entered into a note purchase agreement with certain investors pursuant to which the Company issued and sold convertible promissory notes in an aggregate principal amount of $ 3,125,000 for aggregate gross proceeds of $ 2,500,000 , reflecting a 20 % original issue discount. On January 16, 2026, the Company entered into a note purchase agreement with certain investors pursuant to which the Company issued and sold secured convertible promissory notes in an aggregate principal amount of $ 8,125,000 for aggregate gross proceeds of $ 6,500,000 , reflecting a 20 % original issue discount, secured by the assets of the Company and its wholly-owned subsidiaries. The proceeds from these offerings are being used to fund working capital requirements and general corporate purposes. See Note 15. In connection with our assessment of going concern considerations in accordance with FASB ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the aforementioned plans do not sufficiently alleviate the substantial doubt about the Company’s ability to continue as a going concern through twelve months from the date these audited consolidated financial statements are issued. There can be no assurance that the Company will generate sufficient cash flows from operations, successfully refinance or repay its near-term debt obligations, or secure additional financing on acceptable terms, or at all. These audited consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern. NOTE 3. ACCOUNTS RECEIVABLE, NET Accounts receivable, net consist of the following: SCHEDULE OF ACCOUNTS RECEIVABLE, NET December 31, 2025 2024 Billed – Third Party $ 1,984,424 $ 3,394,112 Billed – Affiliates - 271,298 Total Accounts Receivable 1,984,424 3,665,410 Less: Allowance for credit losses ( 847,205 ) ( 940,595 ) Total accounts receivable, net $ 1,137,219 $ 2,724,815 NOTE 4. INVENTORIES, NET Inventory consists of the following: SCHEDULE OF INVENTORY December 31, 2025 2024 First Defense Nasal Screen Corp (“FDNS”) $ 5,988,257 $ 6,717,373 Finished goods 2,072,985 3,034,836 Total inventory, at cost 8,061,242 9,752,209 Less: reserve for obsolescence ( 6,421,816 ) ( 233,601 ) Inventories, net $ 1,639,426 $ 9,518,608 Inventory consists of products that were purchased by Wellgistics, LLC in 2020 from First Defense Nasal Screen Corp (“FDNS”). An ongoing legal dispute between the Company and the supplier has been settled where the Company was awarded $ 4.6 million. The award was not accounted for due to the uncertainty of receipt. Following the bankruptcy filing of FDNS the court awarded the complete possession of the inventory to the Company and Vide the United States Bankruptcy Court order dated March 15, 2023, the entity is in receipt of a monthly plan payment of $ 3,014 for the FDNS from March 2023 which has been included in other income in the consolidated statements of operations. The related inventory has experienced minimal sales activity, and management determined that there is no active market for the product and that the inventory is non-moving. Based on this assessment, the Company concluded that the carrying value was not recoverable. Accordingly, the Company recorded a reserve for obsolete inventory of $ 5,988,257 , which is included in cost of net revenues in the consolidated statements of operations. F- 17 NOTE 5. PROPERTY, PLANT AND EQUIPMENTS, NET Property, plant and equipment consist of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT, NET December 31, 2025 2024 Leasehold Improvements $ 766,467 $ 766,467 Equipment 589,208 589,208 Furniture & Fixtures 152,161 152,161 Property, plant and equipment, gross 1,507,836 1,507,836 Less: Accumulated Depreciation ( 1,278,460 ) ( 1,119,656 ) Property, plant and equipment, net $ 229,376 $ 388,180 Depreciation expense was $ 158,804 and $ 67,616 for the years ended December 31, 2025 and 2024, respectively. NOTE 6. INTANGIBLE ASSETS Intangible assets consist of the following: SCHEDULE OF INTANGIBLE ASSETS December 31, 2025 2024 Software development costs - Delivmeds $ 2,499,543 $ 1,618,017 Accumulated impairment ( 649,185 ) - Capitalized software $ 1,850,358 $ 1,618,017 Customer relationships - Woodsage acquisition 393,853 393,853 Customer relationships - Wellgistics acquisition 11,256,067 11,256,067 Trademark - Wellgistics acqusition 10,143,137 10,143,137 License rights 2,500,000 - Intangible assets, gross 24,293,057 21,793,057 Accumulated amortization ( 4,099,307 ) ( 1,047,048 ) Accumulated impairment ( 9,879,075 ) - Other intangible assets, net $ 10,314,675 $ 20,746,009 Intangible assets of $ 393,853 represent customer relationships identified and measured at fair value pursuant to the Wood Sage business combination completed in June 2024. Amortization expense related to these intangible assets was $ 49,232 and $ 26,841 for the years ended December 31, 2025 and 2024, respectively. Intangible assets of $ 11,256,067 and $ 10,143,137 represent customer relationships and trademarks, respectively, identified and measured at fair value pursuant to the Wellgistics, LLC business combination completed in August 2024. Amortization expense related to customer relationships was $ 1,876,011 and $ 637,308 for the years ended December 31, 2025 and 2024, respectively. Amortization expense related to the Wellgistics trademark was $ 1,127,015 and $ 382,876 for the years ended December 31, 2025 and 2024, respectively. On November 24, 2025, the Company entered into a License Agreement with Datavault AI Inc., pursuant to which the Company obtained a non-transferable license to certain proprietary technology for use within the United States pharmaceutical distribution market. In connection with this agreement, the Company recorded a license right intangible asset of $ 2,500,000 , representing the non-refundable license fee payable under the agreement. The license right has been determined to be a finite-lived intangible asset. As the licensed technology had not yet been placed into service as of December 31, 2025, no amortization was recorded during the year ended December 31, 2025. Amortization is expected to commence upon the technology being placed into service, which is currently anticipated to occur in 2026, and will be recognized on a straight-line basis over an estimated useful life of seven years . F- 18 During the year ended December 31, 2025, the Company identified indicators of impairment related to certain intangible assets acquired in connection with the Wellgistics LLC business combination. Accordingly, the Company performed a recoverability assessment of the affected assets and recognized impairment charges of $ 5,314,027 related to Wellgistics customer relationships and $ 4,565,048 related to the Wellgistics trademark, for a total intangible asset impairment charge of $ 9,879,075 . These charges were recorded within goodwill and intangible asset impairment in the consolidated statements of operations and reduced the carrying values of the respective assets to their estimated fair values as of December 31, 2025. No impairment charges were recognized during the year ended December 31, 2024. Other intangible assets, net as of December 31, 2025 and 2024 were $ 10,314,675 and $ 20,746,009 , respectively, as reflected in the accompanying consolidated balance sheets. The following table represents the future amortization of intangibles assets: SCHEDULE OF FUTURE AMORTIZATION OF INTANGIBLES ASSETS Year Ended December 31, 2026 $ 1,672,991 2027 1,672,991 2028 1,672,991 2029 1,672,991 2030 1,423,045 Thereafter 2,199,666 Intangible assets 10,314,675 NOTE 7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES December 31, 2025 2024 Accrued personnel costs $ 4,588,421 $ 3,112,470 Accrued professional fees 114,429 347,829 Accrued expenses 199,053 - Credit card obligation 183,943 110,201 Unearned revenue 488,229 245,765 Accrued interest 833,647 504,152 Accrued expenses and other liabilities $ 6,407,722 $ 4,320,417 F- 19 NOTE 8. DEBT Outstanding debt consists of the following: SCHEDULE OF OUTSTANDING DEBT December 31, 2025 2024 Merchant cash advance $ 1,744,134 $ 1,259,415 Loan payable 1,601,052 - Note payable - owners of Wellgistics 5,000,000 5,000,000 Note payable - third party, net of debt discount 898,411 - Revolving line of credit 1,643,923 5,531,260 Seller promissory note - 137,141 Current portion of debt obligations 10,887,520 11,927,816 Merchant cash advance $ - $ 55,085 Third party investor 100,000 100,000 Note payable - Integral Health - 1,300,000 Note payable - owners of Wellgistics 12,500,000 10,000,000 Long-term debt 12,600,000 11,455,085 Total debt $ 23,487,520 $ 23,382,901 As of December 31, 2025 and 2024, total unamortized debt discount was $ 1,568,776 and $ 519,430 , respectively. 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 (“March 2025 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 the amount 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. F- 20 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 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. F- 21 For the year ended December 31, 2025, the Company recognized total losses on debt extinguishment of $ 578,524 related to Agile refinancing. 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 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. F- 22 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 years 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. 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 condensed 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. The following table is a summary of annual principal payments of the Company’s outstanding debt: SCHEDULE OF ANNUAL PRINCIPAL PAYMENTS Year Ended December 31, 2026 $ 10,887,520 2027 5,100,000 2028 7,500,000 Principal Payment $ 23,487,520 F- 23 NOTE 9. STOCKHOLDERS’ EQUITY 2025 transactions Initial Public Offering On February 24, 2025, the Company closed its IPO of 888,889 shares of common stock at a public offering price of $ 4.50 per share. The IPO generated gross proceeds of $ 4.0 million and net proceeds of approximately $ 3.1 million after deducting underwriting discounts, commissions, and other offering expenses. September 2025 Offering On September 29, 2025, the Company filed a prospectus supplement with the U.S. Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended, in connection with a registered public offering of its securities. Pursuant to the offering, the Company issued an aggregate of 7,142,862 shares of its common stock, together with warrants to purchase up to 7,142,862 shares of common stock (the “Warrants”). The combined public offering price was $ 0.70 per share of common stock and accompanying Warrant. The Warrants are exercisable immediately upon issuance at an exercise price of $ 0.70 per share and expire five years from the date of issuance. The offering closed in September 2025 and resulted in gross proceeds of $ 4,534,053 . During October 2025, holders exercised 3,282,858 Warrants for aggregate proceeds of $ 2,298,000 . As of December 31, 2025, the remaining 3,860,004 Warrants were outstanding. Advisor and Consulting Agreements On February 25, 2025, the Company entered into a consulting agreement with Hudson to provide business advisory services, growth strategy guidance, and networking support for a 30-day period. As consideration for these services, the Company agreed to pay Hudson a cash fee of $ 250,000 and to issue 52,000 shares of restricted common stock. The Company recognized stock-based compensation expense of $ 143,520 for the year ended December 31, 2025. This expense was recorded within general and administrative expenses in the consolidated statements of operations. The fair value of the restricted stock was determined based on the market price of the Company’s common stock on the grant date. On March 17, 2025, the Company entered into consulting agreement with Draper, Inc. (“ Draper ”), pursuant to which Draper agreed to provide investor relations and business development services. As consideration for services under the initial three-month term of the agreement, the Company issued 100,000 shares of restricted common stock to Draper. The consulting agreement automatically renews on a month-to-month basis unless terminated by either party with at least seven days’ notice prior to the end of the current term. The Company will be obligated to issue an additional 100,000 restricted shares of common stock for each renewal period. The Company subsequently terminated this consulting agreement on June 16, 2025. Based on the market price of the Company’s common stock on the grant date, the total fair value of the shares issued to Draper was determined to be $ 400,000 . For the year ended December 31, 2025, the Company recognized stock-based compensation expense of $ 400,000 , in connection with this agreement. This expense was recorded within sales and marketing expenses in the consolidated statements of operations. On August 4, 2025, the Company issued 243,428 shares of its common stock to Outside the Box Capital Inc. as consideration for advisory services rendered to the Company. The fair value of the shares, determined based on the market closing price of the Company’s common stock on the grant date, was $ 200,000 . The total fair value of $ 200,000 was recognized as stock-based compensation expense for the year ended December 31, 2025, and recorded within general and administrative expenses in the accompanying consolidated statements of operations. On August 26, 2025, the Company issued an aggregate of 200,000 shares of its common stock to Octagon Media Corp as consideration for marketing services rendered to the Company. The fair value of the shares was determined based on the closing market price of $ 1.73 per share on the grant date, resulting in a total fair value of $ 346,000 . The entire amount was recognized as stock-based compensation expense for the year ended December 31, 2025, and included within sales and marketing expenses in the accompanying consolidated statements of operations. F- 24 Directors and Former Employees On April 10, 2025, the Company’s Board of Directors appointed Michael L. Peterson to fill the vacancy created by the resignation of Sajid Sayed. On July 2, 2025, in connection with his service as a director, the Company granted Mr. Peterson 200,000 restricted shares of common stock. The grant-date fair value of the award was $ 182,600 , determined based on the closing price of the Company’s common stock on the date of grant. Of the total shares granted, 66,000 shares vested immediately on the grant date. The remaining 134,000 shares were subject to vesting in equal annual installments on July 2, 2026 and July 2, 2027. Mr. Peterson resigned from the Board effective October 1, 2025. For the year ended December 31, 2025, the Company recognized stock-based compensation expense of $ 60,258 related to the vested shares. The expense is included in general and administrative expenses in the consolidated statements of operations. In June 2025, the Company granted 750,000 restricted shares of its common stock to former Chief Executive Officer Timothy Canning in satisfaction of a sign-on bonus obligation under the terms of his employment agreement. The shares vest on the six-month anniversary of the grant date. Mr. Canning resigned from the Company effective February 28, 2025. The grant-date fair value of the award was $ 832,500 , determined based on the closing price of the Company’s common stock on the date of grant. For the year ended December 31, 2025, the Company recognized stock-based compensation expense of $ 832,500 related to this award, which is included in general and administrative expenses in the consolidated statements of operations. Equity Purchase Agreement On April 9, 2025, the Company entered into an Equity Purchase Agreement (the “Hudson EPA”) with Hudson pursuant to which Hudson committed to purchase, at the Company’s discretion and subject to certain conditions, up to $ 50 million of the Company’s common stock over a 24-month period. Under the terms of the Hudson EPA, the Company could, from time to time, issue put notices directing Hudson to purchase shares of common stock at a price determined in accordance with a formula based on the market price of the Company’s common stock, as defined in the agreement. In connection with entering into the Hudson EPA, the Company issued 152,000 commitment shares to Hudson. The commitment shares were valued at $ 594,320 based on the closing price of the Company’s common stock on the date of issuance. For the year ended December 31, 2025, the Company recognized $ 594,320 of stock-based compensation expense related to the commitment shares, which is included in general and administrative expenses in the consolidated statements of operations. During the year ended December 31, 2025, the Company issued an aggregate of 3,426,254 shares of common stock pursuant to put notices under the Hudson EPA, resulting in gross proceeds of $ 2,838,787 . The Company terminated the Hudson EPA effective August 13, 2025. Wellgistics MIPA On April 14, 2025, the Company and the sellers of Wellgistics LLC amended the Membership Interest Purchase Agreement (the “Wellgistics MIPA”). Pursuant to the amendment, the portion of the closing cash consideration payable to Strategix Global LLC was reduced by $ 1,500,000 . In lieu of such cash payment, the Company issued 333,333 shares of its common stock to Strategix Global LLC. The shares are subject to a 12-month lock-up period consistent with the lock-up restrictions applicable to management and certain large stockholders in connection with the Company’s initial public offering. On July 24, 2025, the Company entered into the Eighth Amendment to the Wellgistics MIPA with the sellers of Wellgistics LLC, including Strategix Global LLC, Nomad Capital LLC, and Jouska Holdings LLC. Pursuant to the Eighth Amendment, the Company agreed to satisfy a portion of the remaining closing cash consideration through the issuance of 7,606,785 shares of its common stock (the “Conversion Shares”). The Conversion Shares were issued at a conversion price of $ 1.07 per share, representing the agreed-upon fair value of the Company’s common stock on the date of issuance. The aggregate fair value of the shares issued, approximately $ 8.5 million, was recorded as a reduction of the purchase consideration payable related to the Wellgistics LLC acquisition. F- 25 Debt Conversions – Integra Health and Integra Pharma On October 30, 2025, the Company entered into a Debt Conversion Agreement with Integra Health Inc., pursuant to which outstanding indebtedness of $ 1,300,000 owed by WoodSage LLC, a wholly owned subsidiary of the Company, 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 Company’s common stock on the conversion date was $ 0.786 per share, resulting in an aggregate fair value of approximately $ 1,459,714 for the shares issued. Because the fair value of the equity issued exceeded the carrying amount of the debt extinguished, the Company recognized a loss on debt extinguishment of approximately $ 159,714 for the year ended December 31, 2025. Upon issuance of the shares, the indebtedness was fully satisfied. On October 30, 2025, the Company entered into a separate Debt Conversion Agreement with Integra Pharma Solutions, LLC, pursuant to which outstanding indebtedness of $ 4,019,859 owed by WoodSage LLC was converted into 5,742,656 shares of the Company’s common stock at a stated conversion price of $ 0.70 per share. The fair value of the Company’s common stock on the conversion date was $ 0.786 per share, resulting in an aggregate fair value of approximately $ 4,513,727 for the shares issued. As the fair value of the equity issued exceeded the carrying amount of the debt extinguished, the Company recognized a loss on debt extinguishment of approximately $ 493,868 for the year ended December 31, 2025. Upon issuance of the shares, the indebtedness was fully satisfied. 2023 Equity Incentive Plan The Company adopted the 2023 Equity Incentive Plan (the “Plan”), which provides the issuance of up to 43,506,064 shares of the Company’s common stock (the “Initial Limit”). Beginning on January 1, 2025, and on each January 1 thereafter, the number of shares reserved for issuance under the Plan will automatically increase by an amount equal to three percent (3%) of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31, or such lesser amount as may be determined by the Plan’s administrator (the “Annual Increase”). Shares issued under the Plan may be newly issued shares or reacquired shares. The Plan permits the grant of various types of stock-based awards, including incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares available for issuance as incentive stock options may not exceed the Initial Limit, as adjusted for any Annual Increases, subject to adjustment as provided under the terms of the Plan. Shares subject to awards that expire, are canceled, or otherwise terminate without having been exercised or settled in full will again become available for future grant under the Plan. However, shares repurchased by the Company on the open market will not be added back to the share reserve. Awards that may be settled solely in cash do not count against the share reserve. The Plan also includes a limitation on annual compensation to non-employee directors. The aggregate value of all equity awards granted to any non-employee director under the Plan, together with any cash compensation paid for service as a non-employee director, may not exceed (i) $ 1,000,000 in the first calendar year of service and (ii) $ 750,000 in any subsequent calendar year. The fair value of such awards is determined based on grant date fair value in accordance with ASC Topic 718, excluding the impact of estimated forfeitures related to service-based vesting conditions. Restricted Common Stock On February 28, 2025, in connection with the appointment of Brian Norton as Chief Executive Officer of the Company, Mr. Norton was granted and issued 9,000,000 shares of restricted common stock under the Company’s Amended and Restated 2023 Equity Incentive Plan (the “Plan”). The shares were originally scheduled to vest in three equal annual installments over a three-year period, contingent upon the achievement of specified gross-revenue and gross-profit performance targets. On July 24, 2025, the Compensation Committee approved the acceleration of vesting of the restricted shares, and the Board of Directors ratified such approval on September 4, 2025. As a result, all 9,000,000 shares became fully vested during the third quarter of 2025. As of the issuance date of these consolidated financial statements, the Company and its transfer agent are examining if the shares should be considered vesting and unrestricted. F- 26 In accordance with ASC 718, Compensation—Stock Compensation , the Company recognized total stock-based compensation expense of approximately $ 24.3 million related to this award for the year ended December 31, 2025, which is included in general and administrative expenses in the consolidated statements of operations. The fair value of the award was determined based on the closing market price of the Company’s common stock on the grant date of February 28, 2025. The acceleration of vesting did not result in any incremental fair value. As of December 31, 2025, there is no remaining unrecognized compensation cost related to this award. On March 14, 2025, the Company granted an aggregate of 10,612,108 shares of restricted common stock under the Plan to certain directors, employees, and consultants. On June 26, 2025, the Company granted an additional 750,000 shares of restricted stock to former Chief Executive Officer Timothy Canning, and on July 2, 2025, the Company granted 200,000 shares of restricted stock to director Michael L. Peterson. The shares granted had varying vesting terms, ranging from immediate vesting to vesting over a five-year period. As of December 31, 2025, 10,445,987 of these shares had vested and are included in the total outstanding common stock reported in the consolidated statement of stockholders’ equity. As of December 31, 2025, a total of 134,000 shares were forfeited and cancelled and the remaining 982,121 shares were unvested as of December 31, 2025. A summary of information related to restricted common stocks for the year ended December 31, 2025 is as follows: SCHEDULE OF RESTRICTED COMMON STOCKS Restricted Common Stock Weighted Average Fair Value Unvested shares as of December 31, 2024 - - Granted 20,562,108 $ 2.73 Vested ( 19,445,987 ) $ 2.73 Forfeited and cancelled ( 134,000 ) $ 2.90 Unvested shares as of December 31, 2025 982,121 $ 2.63 The following table summarizes stock-based compensation expense recognized for the year ended December 31, 2025 and 2024: SCHEDULE OF STOCK-BASED COMPENSATION EXPENSE 2025 2024 Year Ended December 31, 2025 2024 Sales and marketing expenses $ 746,000 $ - General and administrative expenses 54,048,525 - Total stock-based compensation expense $ 54,794,525 $ - As of December 31, 2025, total unrecognized compensation expense related to the 982,121 unvested restricted stock awards was $ 1,691,385 , which is expected to be recognized over a weighted-average period of 2 years. 2024 transactions On October 30, 2024, the Company effected a forward stock split of all issued and outstanding shares of common stock at a ratio of 1-to-1,677,000. The Company also amended its Certificate of Incorporation to authorize 500,000,000 shares of common stock, par value $ 0.0001 per share from 10,000 shares of Common Stock, $ 0.001 par value per share prior to the amendment. Accordingly, all share and per share amounts for all periods presented in the accompanying financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the stock split. F- 27 On December 5, 2024, the Company effected a reverse stock split of all issued and outstanding shares of common stock at a ratio of 1-for-3.75. Accordingly, all share and per share amounts for all periods presented in the accompanying financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the reverse stock split. On June 16, 2024, the Company issued 173,961 shares of common stock pursuant to the acquisition of Wood Sage for a fair value of $ 400,000 . During the year ended December 31, 2024, the Company issued 1,341,600 shares of common stock to Strategic EP, LLC for services, and 820,612 shares to employees, at a fair value of $ 0.50 per share. Effective August 30, 2024, the closing of the Wellgistics acquisition, the Company issued 3,999,335 shares of common stock pursuant to the acquisition of Wellgistics, LLC for a fair value of $ 15,000,000 . As of December 31, 2024, the Company had 51,055,508 shares of common stock issued and outstanding. NOTE 10. LEASE OBLIGATIONS Rent is classified by function on the consolidated statements of operations as general and administrative. The Company determines whether an arrangement is or contains a lease at inception by evaluating potential lease agreements including services and operating agreements to determine whether an identified asset exists that the Company controls over the term of the arrangement. Lease commencement is determined to be when the lessor provides access to, and the right to control, the identified asset. The rental payments for the Company’s leases are typically structured as either fixed or variable payments. Fixed rent payments include stated minimum rent and stated minimum rent with stated increases. The Company considers lease payments that cannot be predicted with reasonable certainty upon lease commencement to be variable lease payments, which are recorded as incurred each period and are excluded from the calculation of lease liabilities. In May 2024, the Company entered into a lease agreement for office space in Tampa, Florida. As a result, the Company recognized a right-of-use asset and corresponding lease liability, calculated using a discount rate of 8.36 %. The lease includes a monthly base rent of $ 18,792 and expired in June 2027. The lease required a security deposit by Wellgistics Health of $ 35,855 and Wellgistics, LLC of $ 31,871 . On June 9, 2023, Intergra Pharma Solutions entered into First amendment to the Vector Collective lease, which is sublease to Wellgistics Pharmacy. The lease includes a monthly base rent of $ 4,714.41 from and after November 16, 2023 and expires on November 15, 2026 . A right-of-use asset and corresponding lease liability recognized calculated using a discount rate of 8.36 %. In January 2022, Wellgistics LLC entered into lease agreement for warehousing facility located in Lefrois, Florida, which has a lease term of 75 months, set to expire in March 2028, with a monthly base rent of $ 26,303 . Wellgistics LLC recognized a right-of-use asset and corresponding lease liability, calculated using a discount rate of 6.21 %. F- 28 The following is the summary of operating lease assets and liabilities: SCHEDULE OF OPERATING LEASE ASSETS AND LIABILITIES 2025 2024 December 31, 2025 2024 Operating Leases Right-of-use assets $ 966,893 $ 1,528,128 Lease liabilities, current portion 569,251 519,490 Long-term lease liabilities 527,122 1,096,372 Total lease liabilities $ 1,096,373 $ 1,615,862 Weighted Average Remaining Lease Term 1.95 2.92 Weighted Average Discount Rate 8.36 % 8.36 % The following is the summary of future minimum payments: SCHEDULE OF SUMMARY OF FUTURE MINIMUM PAYMENTS December 31, 2026 $ 621,530 2027 458,657 2028 84,976 Total lease payments 1,165,163 Less: Imputed interest ( 68,790 ) Total $ 1,096,373 Note 11. RELATED PARTY TRANSACTIONS The Company had transactions with Scienture Holdings, Inc. and group (f/k/a/ TrXade Health, Inc / TRG / TrXade Health / Scienture) and group which included Integra Pharma Solutions, LLC (“IPS”), in which the board members of the Company were also members of Scienture’s management and board at the time the transactions occurred. Tollo Health, LLC acquired IPS from Scienture in April 2025. At that time Tollo Health, LLC was owned in part by Integral Health, Inc., in which certain board members of the Company also had a beneficial ownership interest. Integral Health acquired IPS from Tollo Health, LLC in June 2025. The common management between the entities at the time the transactions occurred classifies Scienture, IPS, and Integral as related parties. During the first quarter of 2025, the Company purchased $ 500,000 of inventories from Tollo Health, LLC, which was a related party until June. See Note 13 for the Guarantee Obligation. In August 2025, Integral Health, including its subsidiary IPS, were acquired by third parties. As of September 30, 2025, amounts owed to Integra Pharma totaled $ 4,019,859 and were reclassified from due to related parties to other short-term advances following the change in related party status. On October 30, 2025, the Company entered into a Debt Conversion Agreement with Integra Pharma Solutions, LLC and WoodSage LLC, pursuant to which the outstanding indebtedness of $ 4,019,859 was converted into 5,742,656 shares of the Company’s common stock at a stated conversion price of $ 0.70 per share. The debt was fully satisfied upon issuance of the shares. Wellgistics, LLC was previously partly owned by a private equity company, Nomad Capital LLC, which has ownership interest in a few portfolio companies and Wellgistics, LLC had transactions with some of the affiliated companies of Nomad Capital. Operating expenses with affiliated companies, which include software expenses and marketing expenses, are recorded within general and administrative expenses. Cingo Solutions provides IT, cyber security and compliance services; and RxERP provides serialized ERP for pharma as a software-as-a-service (“ SaaS ”) to the Company. Wellgistics, LLC is charged a managerial service and software fee by Cingo and RxERP, respectively, which is recorded within general and administrative expenses. F- 29 The Company had transactions with Scietech, LLC where a significant investor is the spouse of one of the directors of the Company, which qualifies as a related party. The following is a summary of due from and to related parties, as well as accounts receivable and accounts payable, as of December 31, 2025 and 2024: SCHEDULE OF SUMMARY OF DUE FROM AND TO RELATED PARTIES 2025 2024 December 31, 2025 2024 Due from TRG $ - $ 146,000 Due from IPS - 305,000 Due from Scienture Holdings - 570,000 Due from related parties $ - $ 1,021,000 Due to Chief Executive Officer $ 225,000 - Due to TRG - 9,351 Due to IPS - 3,764,000 Due to Scienture Holdings - 1,171,419 Due to related parties $ 225,000 $ 4,944,770 2025 2024 December 31, 2025 2024 Accounts receivable - IPS * $ - $ 271,298 Accounts receivable $ - $ 271,298 Accounts payable - Scietech $ 25,500 $ 25,500 Accounts payable $ 25,500 $ 25,500 * IPS is no longer a related party as of December 31, 2025 and its receivable balance of $ 492,117 is included in accounts receivable, net in the consolidated balance sheet. The Company had the following transactions with related parties for the years ended December 31, 2025 and 2024: SCHEDULE OF RELATED PARTY TRANSACTION 2025 2024 Year Ended December 31, 2025 2024 Sales to Integra Pharma Solutions, LLC * $ - $ 746,728 Sales $ - $ 746,728 IT Support fees paid to Scietech LLC $ - $ 9,750 IT expenses paid to Cingo Solutions $ 378,011 $ 80,355 IT expenses paid to Birch OS & RxERP $ 350,290 $ 100,112 IT expenses $ 350,290 $ 100,112 Management services fees paid to Nomad Capital $ 160,000 $ 105,186 Business development and consultation fees paid to Green Apoteker LLC $ - $ 25,500 * IPS is no longer a related party as of December 31, 2025 and sales made to IPS in 2025 amounted to $ 220,820 which is included in the net revenues in the consolidated statements of operations and comprehensive loss. F- 30 NOTE 12. SEGMENT AND GEOGRAPHIC INFORMATION The Company operates as one operating segment. The Company’s CODM is its chief executive officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated gross margin, operating income and net income to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the rate at which the Company seeks to grow operating income and the allocation of budget between cost of revenues, sales and marketing, general and administrative expenses or technology and development. The following table presents selected financial information with respect to the Company’s single operating segment for the years ended December 31, 2025 and 2024: SCHEDULE OF SEGMENT AND GEOGRAPHIC INFORMATION 2025 2024 Year Ended December 31, 2025 2024 Net revenues $ 23,337,860 $ 18,128,831 Cost of net revenues 29,764,279 16,361,517 Gross profit (loss) ( 6,426,419 ) 1,767,314 Operating expenses: 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 ) Other income/(expense): Interest expense, net ( 4,579,556 ) ( 831,467 ) Loss on debt extinguishment ( 2,987,922 ) - Other income 42,045 120,373 Total other expense, net ( 7,525,433 ) ( 711,094 ) Net loss before income taxes ( 101,274,530 ) ( 6,856,226 ) Provision for income taxes - - Net loss $ ( 101,274,530 ) $ ( 6,856,226 ) All revenues were within the U.S. region. See Note 1, Organization and Summary of Significant Accounting Policies - Revenue Recognition for additional information about disaggregated revenue. The Company’s long-lived tangible assets, as well as the Company’s operating lease right-of-use assets recognized on the consolidated balance sheets were located as follows: SCHEDULE OF LONG LIVED TANGIBLE ASSETS AND OPERATING LEASE RIGHT OF USE ASSETS 2025 2024 December 31, 2025 2024 United States Property, plant and equipment, net $ 229,376 $ 388,180 Operating lease, right-of-use assets $ 966,893 $ 1,528,128 F- 31 NOTE 13. COMMIMENTS AND CONTINGENCIES From time to time, the Company is involved in legal proceedings arising from the normal course of business activities. The Company, in conjunction with its legal counsel, assesses the need to record a liability for litigation or loss contingencies. A liability is recorded when and if it is determined that such a liability for litigation or loss contingencies is both probable and estimable. Although the results of legal proceedings and claims cannot be predicted with certainty, the Company is not currently a party to any legal proceedings, which would, individually or in the aggregate, have a material adverse effect on its results of operations, cash flows, or financial position. Legal Matters On August 21, 2024, Blythe Global Advisors, LLC filed a demand for arbitration against the Company and the Chairman of the Board for breach of contract, breach of the implied covenant of good faith and fair dealing, and breach of personal guaranty. Blythe claims to have performed accounting services for the Company in the amount of $ 377,947 for which it has not been paid and that Ajjarapu personally guaranteed payment of Blythe’s invoices. The Company has answered the arbitration demand and is vigorously defending the matter. Relatedly, in early 2025, Wellgistics, LLC, Wood Sage, LLC, Alliance Pharma Solutions, LLC, and Community Specialty Pharmacy, LLC, all subsidiaries of the Company, sued Blythe Global Advisors, LLC in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida, asserting state statutory claims of improper UCC-1 filings, tortious interference with business relationships, slander of title, and state RICO violations. The Company claims that Blythe improperly filed a UCC-1 against the assets of these subsidiaries, when it only had a right file such a lien against the Company and that the filing impeded Wellgistics, LLC’s ability to secure a necessary credit line, causing substantial damages. Blythe filed a motion to dismiss that remains pending. The Company is vigorously prosecuting its claims. Wellgistics, LLC is a defendant in a legal proceeding initiated by Lifsa Drugs LLC in the United States District Court for the District of New Jersey. The complaint alleges that Wellgistics, LLC failed to make payment for certain pharmaceutical products supplied by the plaintiff and seeks damages of approximately $ 420,460 , together with interest, legal fees, and other related costs. The matter pertains to purchases of goods made by Wellgistics, LLC in the ordinary course of business. Accordingly, the underlying amount relating to such purchases has already been recorded as a liability in the Company’s books and is included within Accounts payable in the accompanying consolidated balance sheet as of December 31, 2025. At this stage of the proceedings, the outcome of the litigation cannot be reasonably predicted. Management, in consultation with legal counsel, is currently evaluating the claim and the potential exposure, if any, beyond the amount already recorded. The Company will continue to monitor developments related to this matter and will record any additional provision, if required, when the likelihood of loss becomes probable and reasonably estimable. Dispute with Former Management On October 10, 2025, the Company initiated litigation in the Circuit Court of the Thirteenth Judicial Circuit in and Hillsborough County, Florida against certain former officers and/or directors of the Company (collectively, the “Former Management Parties”). The complaint asserts claims including, among others, breach of the fiduciary duty of loyalty, breach of contract, tortious interference with a contract, tortious interference with business relationships, and other applicable claims, arising out of the Former Management Parties’ efforts to threaten harm the Company as leverage to force the retraction of a vote of the majority shareholders. On December 10, 2025, Defendants filed a motion to compel arbitration of all claims in the suit. The Company does not agree that all the claims in the suit are subject to mandatory arbitration, and filed an opposition to that motion on December 22, 2025. A hearing is currently scheduled on the motion to compel arbitration for April 27, 2026. While the Company believes it has meritorious claims, litigation is inherently uncertain, and there can be no assurance regarding the outcome or timing of resolution. In January 2026, the Company has also served a notice of claims against the Former Management Parties for misrepresentations and omissions of material fact in connection with an acquisition of certain limited liability company membership interests, which that resulted in, among other things, supposed promises of equity and related arrangements to such individuals. The Company intends to seek, among other relief, rescission and cancellation of any purported commitments related to or resulting from the misrepresentations and omissions, as well as related equitable and monetary remedies. As of December 31, 2025, obligations associated with these arrangements are reflected as liabilities on the Company’s consolidated balance sheet in the aggregate amount of approximately $ 17,500,000 . Because the potential resolution of this matter may result in a gain contingency, no amounts have been recognized in the accompanying consolidated financial statements for any potential recovery or reduction of the recorded liability. If the Company prevails in the litigation, all or a portion of the recorded liability may be reversed in a future period. The Company will continue to evaluate this matter and will adjust the related liability, if appropriate, based on developments in the litigation. Guarantee Obligation On March 12, 2025, Tollo Health, LLC, Tollo Health Inc., and Gerald Commissiong (collectively, the “Borrowers”) entered into a Revolving Credit Agreement and issued a Revolving Credit Note to Testing123, LLC (the “Lender”) in the original principal amount of up to $ 750,000 . The obligations of the Borrowers were secured pursuant to a Pledge and Security Agreement and guaranteed by the Company under a Corporate Guaranty. Pursuant to the Transaction Documents, the initial advance of $ 444,600 was funded on March 12, 2025. The term of the loan for this draw was two months, maturing on May 12, 2025, and bore interest at 5 % per month, compounding monthly. Upon default, the interest rate increased to 10% per month, also compounding monthly. Failure to pay any amount when due constituted an event of default under the Note. The Borrowers defaulted on their payment obligations, thereby triggering the Company’s liability as guarantor. On July 25, 2025, the Company satisfied its obligations under the Guaranty and paid $ 640,647 —representing principal and accrued interest—directly to Testing123, LLC. Of the total guarantee payment, $ 500,000 was subsequently recovered through an offset against an existing accounts payable balance, resulting in a net loss on guarantee of $ 140,647 , which is included in general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2025. Vendor Demand Letter The Company and certain of its subsidiaries have received demand letters from various vendors requesting payment for goods and services previously provided. The aggregate amount referenced in these demand letters is approximately $ 2.2 million. Of this amount, approximately $ 1.5 million relates to obligations that are already recorded within accounts payable in the accompanying consolidated balance sheet as of the reporting date. The remaining $ 0.7 million relates to claims asserted by certain vendors that are not recorded as liabilities in the accompanying consolidated financial statements. Based on management’s evaluation of the underlying matters in accordance with ASC 450, Contingencies, the Company has determined that a loss related to these claims is not probable as of the reporting date. Accordingly, no liability has been recognized for these amounts. The Company is currently in the process of initiating appropriate legal responses with respect to these claims. NOTE 14. INCOME TAXES The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes , and the enhanced disclosure requirements of ASU 2023-09, Income Taxes (Topic 740) — Improvements to Income Tax Disclosures , adopted for the fiscal year ended December 31, 2025. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. F- 32 Components of Income Tax Expense The Company’s operations are entirely domestic. For the years ended December 31, 2025 and 2024, the provision for income taxes was $ 0 as the Company incurred net losses in both periods and maintains a full valuation allowance against its net deferred tax assets. SCHEDULE OF PROVISION FOR INCOME TAXES 2025 2024 December 31, 2025 2024 Current : Federal $ - $ - State and local - - Total current - - Deferred: Federal - - State and local - - Total deferred - - Total provision for income taxes $ - $ - Effective Tax Rate Reconciliation The following table presents a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate in accordance with ASU 2023-09: SCHEDULE OF RECONCILIATION OF INCOME TAX EXPENSE December 31, December 31, 2025 2025(%) 2024 2024(%) Pre-tax loss $ ( 101,274,530 ) 100 % $ ( 6,856,226 ) 100 % Tax benefit at statutory federal rate ( 21,263,006 ) - 21 % ( 1,439,807 ) - 21 % State and local income taxes - federal ( 5,568,882 ) - 5.5 % ( 377,092 ) - 5.5 % Non-deductible impairment charges 3,326,880 3.3 % - 0 % Non-deductible loss on debt extinguishment 791,799 0.8 % - 0 % Change in valuation allowance 22,719,071 22.4 % 1,816,900 26.5 % Effective income tax rate $ - 0 % $ - 0 % Deferred Tax Assets and Liabilities SCHEDULE OF DEFERRED TAX ASSETS 2025 2024 Deferred tax assets: Net operating loss carry forwards $ 25,304,718 $ 2,585,647 Accrued exp and other liabilities 1,331,849 946,190 Capitalized software 488,563 428,775 Total gross deferred tax assets 27,125,130 3,960,612 Deferred tax liabilities: None - - Total gross deferred tax liabilities - - Net deferred tax asset before valuation allowance 27,119,268 3,960,612 Less : Valuation allowance ( 27,125,130 ) ( 3,960,612 ) Net deferred tax asset $ - $ - F- 33 Net Operating Loss Carryforwards As of December 31, 2025, the Company had estimated federal and state net operating loss carryforwards of approximately $ 85 million. These losses were generated in tax years ending after December 31, 2017 and carry forward indefinitely pursuant to the Tax Cuts and Jobs Act of 2017, subject to an annual utilization limitation of 80 % of taxable income. SCHEDULE OF NET OPERATING LOSS CARRYFORWARDS Tax Year Book Loss Permanent difference Est. Tax NOL Expiration 2022 $ 5,250 $ - $ 5,250 Indefinite 2023 2,895,684 - 2,895,684 Indefinite 2024 6,856,226 - 6,856,226 Indefinite 2025 101,274,530 15,542,188 85,732,342 Indefinite Total $ 111,031,690 $ 15,542,188 $ 95,489,502 Valuation Allowance The Company has established a full valuation allowance against its net deferred tax assets as of December 31, 2025 and 2024, as management has determined that it is more likely than not that the net deferred tax assets will not be realized based on the Company’s history of operating losses and current financial position. The valuation allowance increased by $ 23,164,519 during the year ended December 31, 2025, primarily reflecting the increase in net operating loss carryforwards, impairment-related temporary differences, and accrued expenses arising during the period. SCHEDULE OF NET DEFERRED TAX ASSETS 2025 2024 Balance, beginning of year $ 3,960,612 $ - Increase: Current year NOL generated 22,719,071 2,585,647 Accrued expenses and other current liabilities 385,660 946,190 Capitalized software 59,788 428,775 Balance, end of year $ 27,125,130 $ 3,960,612 The Company has evaluated its tax positions in accordance with ASC 740-10 and has determined that there are no material unrecognized tax benefits as of December 31, 2025 and 2024. In accordance with ASU 2023-09, the Company discloses that no income taxes were paid at the federal or state level during the years ended December 31, 2025 and 2024. NOTE 15. SUBSEQUENT EVENTS Convertible Note Offerings On January 5, 2026, the Company entered into a Note Purchase Agreement with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell convertible promissory notes (the “January Notes”) in an aggregate principal amount of up to $ 3,125,000 in a private offering. The aggregate purchase price paid by the Investors was $ 2,500,000 , reflecting an original issue discount of 20 %. The January Notes bear interest at 0 % per annum, except upon the occurrence of an event of default, in which case a default interest rate of 18 % per annum applies. All outstanding principal is due and payable on the earlier of (i) the six-month anniversary of the date of issuance, or (ii) the closing of a qualified financing resulting in gross proceeds to the Company of at least $ 2,000,000 . If not sooner repaid, the outstanding balance of each January Note is convertible, at the election of the holder, into shares of equity securities issued in the qualified financing at the price per share applicable to such financing, provided that the conversion price per share of common stock shall not be lower than $ 0.08 per share (the “Floor Price”), subject to adjustment for stock splits and similar events. The obligations under the January Notes are fully guaranteed by a subsidiary of the Company pursuant to a Global Guaranty Agreement. F- 34 In connection with the offering, the Company entered into a Placement Agency Agreement with Dawson James Securities, Inc. (the “Placement Agent”). As compensation for its services, the Company paid selling commissions of 6.5 % of gross offering proceeds, totaling $ 162,500 , and issued common stock purchase warrants to the Placement Agent and its designees to purchase a number of shares of common stock equal to 5 % of aggregate gross proceeds received, at an exercise price equal to the closing price of the common stock on the last trading day prior to the closing of the offering. On January 16, 2026, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell secured convertible promissory notes (the “Notes”) in an aggregate principal amount of up to $ 8,125,000 in a private offering. The aggregate purchase price paid by the Investors for the Notes was $ 6,500,000 , reflecting an original issue discount of 20 %. The Notes bear interest at 0 % per annum, except upon the occurrence of an event of default, in which case a default interest rate of 18 % per annum applies. All outstanding principal and accrued interest under the Notes is due and payable on the earlier of (i) the six-month anniversary of the date of issuance, or (ii) the closing date of the Company’s next qualified financing. If not sooner repaid, the outstanding balance of each Note is convertible, at the election of the holder, into shares of the Company’s common stock at a conversion price of $ 0.4057 per share. The Notes are secured by substantially all of the assets of the Company and its wholly-owned subsidiaries pursuant to a Security Agreement and an Intellectual Property Security Agreement entered into in connection with the offering. The obligations under the Notes are fully guaranteed by a subsidiary of the Company pursuant to a Global Guaranty Agreement. While the aggregate principal amount remains outstanding, the Company has agreed not to incur additional indebtedness or grant new liens on its assets, subject to certain limited exceptions. The Note Purchase Agreement also provides that, for the longer of one year from the date of issuance or so long as any Notes remain outstanding, the Investors have the right to participate in any future equity or debt offerings by the Company in an amount of up to 100% of their respective purchased Note principal. In connection with the offering, the Company entered into a Placement Agency Agreement with Dawson James Securities, Inc. (the “Placement Agent”). As compensation for its services, the Company paid the Placement Agent selling commissions equal to 6.5 % of gross offering proceeds and issued common stock purchase warrants to the Placement Agent and its designees to purchase a number of shares of common stock equal to 5 % of aggregate gross proceeds received, at an exercise price equal to the closing price of the common stock on the last trading day prior to the closing of the offering. The Notes and any shares of common stock issuable upon conversion thereof, and the placement agent warrants, were issued in reliance upon the exemptions from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D thereunder. Settlement Agreement with Silverback Capital Corporation (SCC) On January 28, 2026, the Company entered into a Settlement Agreement and Stipulation (the “Settlement Agreement”) with Silverback Capital Corporation, a Delaware corporation (“SCC”), pursuant to which SCC agreed to acquire and settle certain bona fide liabilities and obligations of the Company in an aggregate principal amount of $ 10,712,734 (the “Claim Amount”). Pursuant to the Settlement Agreement, the Company agreed to issue shares of its common stock to SCC in full satisfaction of the Claim Amount. The Settlement Shares may be issued in one or more tranches, with the number of shares in each tranche determined by dividing the applicable portion of the Claim Amount by a fixed price per share ranging from $ 0.25 to $ 2.25 per share, as set forth in the Settlement Agreement. In addition to the shares issuable in satisfaction of the Claim Amount, the Company agreed to issue 100,000 shares of common stock as a settlement fee and 300,000 shares of common stock to cover legal fees and expenses incurred in connection with the Settlement. On February 4, 2026, the Circuit Court within the Twelfth Judicial Circuit of Florida granted approval of the Settlement Agreement following a fairness hearing conducted in accordance with Section 3(a)(10) of the Securities Act of 1933, as amended. The shares of common stock to be issued pursuant to the Settlement will be issued in reliance upon the exemption from registration afforded by Section 3(a)(10) of the Securities Act. F- 35 On February 9, 2026, the Company and SCC entered into an Amendment to the Settlement Agreement, pursuant to which the fixed price per share applicable to the first $ 2,250,000 tranche was amended and fixed at $ 0.25 per share. All other terms of the Settlement Agreement remain in full force and effect. Resignation of Directors On February 1, 2026, each of Steven Lee and Howard Doss advised the Company of their resignation from the Board of Directors, effective immediately. Mr. Lee had served as a member of the Ethics Committee, and Mr. Doss had served as Chairman of the Audit Committee. Each of Mr. Lee and Mr. Doss indicated that their respective decisions to resign were not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices. Election of Director Effective February 4, 2026, the Board of Directors of the Company elected Gary Herman as a member of the Board of Directors. Mr. Herman has since been appointed as Chairman of the Audit Committee of the Board of Directors and qualifies as an “independent” director as defined under applicable rules of The Nasdaq Stock Market and the SEC. Pursuant to the Company’s non-employee director compensation policy, Mr. Herman is entitled to receive an annual cash retainer of $ 120,000 , payable at his election in cash or shares of common stock on a quarterly basis in arrears. Mr. Herman is also entitled to receive an annual equity award of 60,000 shares of common stock under the Company’s Amended and Restated 2023 Equity Incentive Plan, issuable annually in arrears. In connection with his appointment, Mr. Herman received an initial grant of 200,000 restricted shares of common stock, vesting in equal annual installments over a three-year period. Effective March 19, 2026, the Board of Directors of the Company appointed Marlene Velez to serve as a member of the Board of Directors. Ms. Velez has been appointed to serve on the Audit Committee and Nominating and Compensation Committee. Consulting Agreement with Fortitude Advisors, LLC On February 6, 2026, the Company entered into a consulting agreement with Fortitude Advisors, LLC, an entity owned and controlled by Gerald Commissiong, pursuant to which Mr. Commissiong was appointed to serve as Consulting Chief Business Officer of the Company. Sponsorship Agreement with Cutting Edge Sports Management, LLC On November 26, 2025, the Company entered into a Sponsorship Agreement with Cutting Edge Sports Management, LLC (“CESM”), pursuant to which the Company agreed to pay a sponsorship fee of $ 250,000 in exchange for certain sponsorship benefits at Dream Bowl XIV, held in Arlington, Texas from January 8–11, 2026. The sponsorship benefits included broadcasting and branding opportunities and access to certain intellectual property of CESM. The Sponsorship Agreement had a term from the date of execution through February 15, 2026. Interim Commercialization and Revenue Share Agreement On March 6, 2026, the Company, entered into an Interim Commercialization and Revenue Share Agreement (the “Revenue Share Agreement”) with Kare PharmTech LLC, a Florida limited liability company (“PharmTech”), whereby the Company and PharmTech agreed to collaborate on an interim basis to commercialize certain PharmTech products through the distribution and pharmacy network of the Company. Pursuant to the Revenue Share Agreement, PharmTech has authorized the Company to market, promote and distribute “KARE Verify,” a product that provides benefits verification and eligibility verification services (the “Product”), through the Company’s pharmacy, manufacturers and distribution channels; affiliated pharmacies and providers; and telemedicine and digital pharmacy platforms. All net revenue generated from sales of the Product under the Revenue Share Agreement shall be shared as follows: fifty percent ( 50 %) to the Company and fifty percent ( 50 %) to PharmTech. The term of the Agreement shall be thirty-six months unless earlier terminated. F- 36 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Resignation of Independent Registered Public Accounting Firm On November 11, 2025, the members of the Audit Committee of the Board of Directors received formal notice that the Company’s independent registered public accounting firm, UHY LLP (“UHY”), had resigned as the Company’s independent accountants, effective November 11, 2025. UHY indicated that it elected to resign in light of certain information identified in connection with the resignation of the Company’s former Chief Executive Officer, which had not yet been investigated at the time of UHY’s resignation. UHY had been engaged by the Company effective July 7, 2025, and did not audit any financial statements of the Company prior to its resignation. Accordingly, UHY did not issue any report on the Company’s financial statements, and no report was qualified or modified as to uncertainty, audit scope, or accounting principles. During the period from UHY’s engagement through the date of its resignation, there were no disagreements with UHY on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. During that period, there were no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K, except that UHY communicated to the Company’s management and Audit Committee that it had identified material weaknesses in the Company’s internal control over financial reporting, as described in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025. The Company provided UHY with a copy of the disclosures made in response to this Item 9 and requested that UHY furnish a letter addressed to the SEC confirming its agreement with the statements herein. A copy of UHY’s letter is filed as Exhibit 16.1 to this Annual Report on Form 10-K. Engagement of New Independent Registered Public Accounting Firm On November 17, 2025, the Audit Committee of the Board of Directors approved the re-engagement of Suri & Co., Chartered Accountants (“Suri”), as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025. Suri previously served as the Company’s independent registered public accounting firm, including auditing the Company’s financial statements for the fiscal year ended December 31, 2024. During the two most recent fiscal years and any subsequent interim period prior to Suri’s re-engagement, the Company did not consult with Suri regarding either (i) the application of accounting principles to a specified transaction or the type of audit opinion that might be rendered on the Company’s financial statements, or (ii) any matter that was either the subject of a disagreement or a reportable event.