What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-19 compared with 2025-11-19 · 108 added, 375 removed, 367 unchanged (57% of the section changed)

215 unchanged sentences

but now expect to generate all of our revenues through Wellgistics Pharmacy, and Wellgistics LLC.

Although Wellgistics Health

may add other sources of revenue through the acquisition of other operating companies in the future, Wellgistics Health currently does

not have any such plans.

Although Wellgistics Health may add

other sources of revenue through the acquisition of other operating companies in the future, Wellgistics Health currently does not have

any such plans.

Health will be subject to risk of specific inflationary pressures on product prices and its impact on consumer spending.

43 unchanged sentences

of Operations

the Three Months Ended September 30, 2025 and 2024

the Three Months Ended March 31, 2026 and 2025

Three Months Ended

September 30,

Cost of revenues

4 unchanged sentences

Loss from operations

(31,548,329 )

Total other income (expense)

$ (34,318,204 )

$ (1,867,027 )

and Cost of Revenues

revenues were $3,012,904 for the three months ended September 30, 2025, compared to $5,673,868 for the same period in 2024, representing

a decrease of approximately 47%.

The revenue during the current quarter was primarily derived from operations of Wellgistics Pharmacy,

which was acquired in August 2024.

The decline in revenues was primarily due to the Company’s cash constraints for the majority

of the third quarter, which inhibited the Company’s ability to purchase new inventory and delayed shipments in the distribution

of revenues for the three months ended September 30, 2025, totaled $2,781,892, compared to $5,152,624 for the same period in 2024.

decrease in cost of revenues is due to the lower sales volume during the period.

Gross Profit for the three months ended September 30, 2025, was $231,012, compared to $521,244 for the same period

in 2024, representing a decrease of approximately 56%.

The significant decline in gross profit was primarily attributable to lower revenues resulting from reduced

sales volumes and the Company’s constrained liquidity position, which limited its ability to procure inventory.

following is a summary of the disaggregation of revenue for the three months ended September 30, 2025 and 2024:

Net revenues for the three months ended March 31, 2026 were $1,559,563

compared to $10,863,443 for the three months ended March 31, 2025, a decrease of $9,303,880, or approximately 85.6%.

The decrease was

primarily driven by a significant decline in distribution revenues within the Wellgistics, LLC, reflecting the impact of liquidity constraints

that limited the Company’s ability to procure and fulfill product orders during the period.

These decreases were partially offset

by growth in pharmacy retail revenues, which increased to $1,134,416 for the three months ended March 31, 2026 from $114,676 for the three

months ended March 31, 2025, reflecting continued expansion of the Company’s pharmacy operations.

of revenues for the three months ended March 31, 2026 was $1,389,342, compared to $10,170,802 for the three months ended March 31, 2025,

a decrease of $8,781,460, or approximately 86.3%.

The decrease was primarily attributable to the lower volume of distribution activity

during the period, consistent with the decline in net revenues.

Gross profit for the three months ended March 31, 2026 was $170,221, compared

to gross profit of $692,641 for the three months ended March 31, 2025, a decrease of $522,420, or approximately 75.4%.

Gross margin was

10.9% for the three months ended March 31, 2026 compared to 6.4% for the three months ended March 31, 2025.

The improvement in gross margin

percentage reflects the increased contribution of pharmacy retail revenues, which carry higher margins than the distribution segment,

partially offset by the lower overall revenue base.

following is a summary of the disaggregation of revenue for the three months ended March 31, 2026 and 2025:

Three Months Ended

September 30,

Product revenue - distribution services

2 unchanged sentences

and Administrative Expense

and administrative expenses were $30,172,800 for the three months ended September 30, 2025, compared to $1,798,641 for the three

months ended September, 2024.

The increase was primarily due to the acquisition of Wellgistics LLC in August 2024 and full-scale

operations of the consolidated company in 2025.

General and administrative expenses include personnel costs, and professional fees

including audit, tax and legal.

For the three months ended September 30, 2025, general and administrative expenses also included

$25,370,523 of non-cash stock-based compensation consist of $24,300,000 related to the accelerated vesting of 9,000,000 restricted

shares granted to the Chief Executive Officer under the Company’s Amended and Restated 2023 Equity Incentive Plan and

$1,070,523 related to the issuance of common stock and restricted stock units to directors, employees, and consultants in exchange

for services rendered.

The Company also recorded a loss of $640,647 related to the satisfaction of its guaranty of a

revolving credit note issued by Tollo Health.

and Marketing Expense

and marketing expenses were $803,747 for the three months ended September 30, 2025, compared to $0 for the same period in 2024.

increase reflects the Company’s expanded promotional activities and marketing initiatives following the acquisitions of Wood

Sage and Wellgistics.

For the three months ended September 30, 2025, Sales and marketing expenses also included $346,000 of non-cash stock-based

compensation related to the issuance of common stock to sales and marketing advisors in exchange for services rendered.

and Amortization

and amortization was $802,794 for the three months ended September 30, 2025, compared to $467,423 for the three months ended September

This included amortization of $763,065 pertaining to intangible assets identified from acquisitions of Wood Sage and Wellgistics,

Depreciation expense of $39,729 relates to fixed assets acquired from the Wellgistics acquisition.

expense, net for the three months ended September 30, 2025 included total expense of $2,769,875, compared to $122,207 for the same period

The significant increase was primarily due to interest expense associated with financing activities, a loss on debt extinguishment

related to the Wellgistics acquisition, and a one-time loss on guarantee.

expense was $1,425,307 and $137,614 for the three months ended September 30, 2025 and 2024, respectively.

Interest expense in 2025 was

incurred on Wellgistics Health’s outstanding loans, promissory notes, revolving line of credit, and merchant cash advance agreements.

Company recognized a loss of $1,353,663 for the three months ended September 30, 2025, in connection with the Eighth Amendment to the

Membership Interest Purchase Agreement (“MIPA”) with Wellgistics LLC, executed on July 24, 2025.

Under the amendment, the

Company increased the principal balance of the related promissory note from $15 million to $17.5 million.

The original $15 million promissory

note, including $1,146,337 of accrued interest through July 24, 2025, was derecognized and replaced with a new note recorded at the present

value of its future cash flows.

The resulting difference between the carrying amount of the old debt and the fair value of the new note

was recognized as a loss on debt extinguishment for the period.

the Nine Months Ended September 30, 2025 and 2024

Nine Months Ended

September 30,

Cost of revenues

General and administrative

Sales and marketing

Depreciation and amortization

Total operating expenses

Loss from operations

(68,397,073 )

Total other income (expense)

$ (73,421,571 )

$ (2,524,474 )

and Cost of Revenues

revenues were $21,667,212 for the nine months ended September 30, 2025, compared to $5,718,408 for the same period in 2024.

in revenues was primarily attributable to the inclusion of Wellgistics Pharmacy and Wellgistics Tech & Hub operations following the

Company’s acquisitions of Wood Sage LLC on June 16, 2024 and Wellgistics LLC on August 30, 2024.

The 2025 period reflects a full

nine months of post-acquisition activity, while the 2024 period included only limited revenues generated during the post-acquisition

period following the August 30, 2024 closing of the Wellgistics acquisition.

of revenues for the nine months ended September 30, 2025 totaled $20,237,807, compared to $5,199,772 for the same period in 2024.

increase primarily reflects the inclusion of cost of sales from the newly acquired subsidiaries and higher purchase volumes associated

with expanded distribution activities.

Gross profit for the nine months ended September 30, 2025, was $1,429,405, compared to $518,636 for the same period

in 2024, representing an increase of approximately 176%.

The increase in gross profit was primarily attributable to the significant rise

in revenues following the inclusion of operations from Wellgistics Pharmacy and Wellgistics Tech & Hub, which were acquired as part

of the Company’s acquisitions of Wood Sage LLC on June 16, 2024, and Wellgistics LLC on August 30, 2024.

The 2025 period reflects

a full nine months of post-acquisition activity, whereas the 2024 period included only limited revenues following the August 2024 acquisition.

Gross margin decreased to 6.6% for the nine months ended September 30, 2025, from 9.1% in the prior-year period.

The significant decline

in gross margin was primarily attributable to lower revenues resulting from reduced sales volumes and the Company’s constrained

liquidity position, which limited its ability to procure inventory.

liquidity constraints and the resulting sales impact were concentrated in the third quarter of 2025, when temporary cash flow shortages

reduced the Company’s purchasing capacity and led to delayed product shipments.

Management expects gross margin to improve as liquidity

stabilizes and inventory purchasing normalizes in subsequent quarter.

following is a summary of the disaggregation of revenue for the nine months ended September 30, 2025 and 2024:

Nine Months Ended

September 30,

Product revenue - distribution services

Pharmacy retail sales

Third party logistics services

and Administrative Expense

and administrative expenses were $66,205,669 for the nine months ended September 30, 2025, compared to $2,448,813 for the nine

months ended September, 2024.

The increase was primarily due to the acquisition of Wellgistics LLC in August 2024 and full-scale

operations of the consolidated company in 2025.

General and administrative expenses include personnel costs, and professional fees

including audit, tax and legal.

For the nine months ended September 30, 2025, general and administrative expenses also included

$53,692,827 of non-cash stock-based compensation consist of $24,300,000 related to the accelerated vesting of 9,000,000 restricted

shares granted to the Chief Executive Officer under the Company’s Amended and Restated 2023 Equity Incentive Plan and

$29,392,827 related to the issuance of common stock and restricted stock units to directors, employees, and consultants in exchange

for services rendered The Company also recorded a loss of $640,647 related to the satisfaction of its guaranty of a revolving credit

note issued by Tollo Health, LLC within general and administrative expense.

General and administrative expenses for the three months ended March 31,

2026 were $4,868,935 compared to $31,172,920 for the three months ended March 31, 2025, a decrease of $26,303,985, or approximately 84.4%.

The decrease was primarily attributable to a significant reduction in non-cash stock-based compensation expense.

For the three months

ended March 31, 2025, the Company recognized approximately $27.2 million in stock-based compensation expense, including $27 million related

to the immediate vesting of 9,363,617 restricted shares granted on March 14, 2025.

No comparable non-recurring stock-based compensation

charges were incurred during the three months ended March 31, 2026.

Excluding non-cash stock-based compensation, general and administrative

expenses increased period over period, reflecting higher professional fees, legal costs, and administrative costs associated with the

Company’s ongoing operations as a public company.

and Marketing Expense

and marketing expenses were $1,212,347 for the nine months ended September 30, 2025, compared to $0 for the same period in 2024.

reflects the Company’s expanded promotional activities and marketing initiatives following the acquisitions of Wood Sage and Wellgistics.

For the nine months ended September 30, 2025, sales and marketing expenses also included $746,000 of non-cash stock-based compensation.

and marketing expenses for the three months ended March 31, 2026 were $960,000 compared to $65,217 for the three months ended March 31,

2025, an increase of $894,783.

The increase was primarily attributable to increased investment in brand awareness, customer acquisition

initiatives, and market development activities as the Company continues to expand its commercial presence across its pharmacy and distribution

and Amortization

and amortization was $2,408,462 for the nine months ended September 30, 2025, compared to $467,423 for the nine months ended September

This included amortization of $2,289,194 pertaining to intangible assets identified from acquisitions of Wood Sage and Wellgistics,

Depreciation expense of $119,269 relates to fixed assets acquired from the Wellgistics acquisition.

expenses, net for the nine months ended September 30, 2025 included total expense of $5,024,498, compared to $126,874 for the same period

The significant increase was primarily due to interest expense associated with financing activities, a loss on debt extinguishment

related to the Wellgistics acquisition, and a one-time loss on guarantee.

expense was $3,703,837 and $142,281 for the nine months ended September 30, 2025 and 2024, respectively.

Interest expense in 2025 was

incurred on Wellgistics Health’s outstanding loans, promissory notes, revolving line of credit, and merchant cash advance agreements.

Company recognized a loss of $1,353,663 for the nine months ended September 30, 2025, in connection with the Eighth Amendment to the

Membership Interest Purchase Agreement (“MIPA”) with Wellgistics LLC, executed on July 24, 2025.

Under the amendment, the

Company increased the principal balance of the related promissory note from $15 million to $17.5 million.

The original $15 million promissory

note, including $1,146,337 of accrued interest through July 24, 2025, was derecognized and replaced with a new note recorded at the present

value of its future cash flows.

The resulting difference between the carrying amount of the old debt and the fair value of the new note

was recognized as a loss on debt extinguishment for the period.

and amortization expense for the three months ended March 31, 2026 was $356,824 compared to $802,872 for the three months ended March

31, 2025, a decrease of $446,048, or approximately 55.6%.

The decrease was primarily attributable to the impairment of goodwill and intangible

assets recognized during the year ended December 31, 2025.

expense for the three months ended March 31, 2026 was $2,072,679 compared to $1,094,490 for the three months ended March 31, 2025, an

increase of $978,189, or approximately 89.4%.

The increase was primarily attributable to amortization of debt discount on the convertible

notes issued in January 2026, amortization of debt discount on the merchant cash advance, and the write-off of the remaining unamortized

debt discount upon full repayment of the Agile Capital Funding LLC arrangement during the period.

the three months ended March 31, 2026, the Company recognized a gain on extinguishment of vendor obligations of $259,880, resulting from

the settlement of certain accounts payable and notes payable balances through the issuance of shares of common stock to Silverback Capital

Corporation at a fair value below the carrying amount of the settled obligations.

fees of $13,000 were recognized during the three months ended March 31, 2026 in connection with the Silverback Capital Corporation settlement

There were no comparable amounts for the three months ended March 31, 2025.

income for the three months ended March 31, 2026 was $98,740 compared to $11,955 for the three months ended March 31, 2025, an increase

The increase was primarily attributable to settlements reached with certain counterparties in the ordinary course of business

during the three months ended March 31, 2026.

loss for the three months ended March 31, 2026 was $7,742,597 compared to $32,430,903 for the three months ended March 31, 2025, an improvement

of $24,688,306, or approximately 76.1%.

The improvement was primarily driven by the reduction in non-cash stock-based compensation expense

of approximately $27.0 million, partially offset by lower gross profit and higher interest expense during the period.

and Capital Resources

future cash needs are expected to include cash for operating activities, working capital, purchases of property and equipment, strategic

investments, development, and expansion of facilities.

We will fund our operations primarily through the issuance

of debt and the sale of equity securities.

We expect to generate positive cash flow from the operations in 2025 due to the annual revenue

generated from Wood Sage and Wellgistics LLC.

In order to proceed with our business plan, we may need to raise additional funds through

the issuance of debt, equity or other commercial arrangements that may not be available to us when needed or on terms that we deem favorable.

To the extent we raise additional capital through the sale of equity or convertible securities, our stockholders’ ownership interests

will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our

common stockholders.

Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting

or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or

declaring dividends.

If we are unable to obtain sufficient financial resources, our business, financial condition and results of operations

may be materially and adversely affected.

We may be required to delay, limit, reduce or terminate parts of its strategic business plan

or future commercialization efforts.

There can be no assurance that we will be able to obtain financing on acceptable terms.

short-term liquidity requirements include initiatives related to the (i) expansion of existing facilities and upgrade of equipment in

order to increase operational capacity, (ii) recruitment of additional employees to increase operational and business needs, upgrade

of information technology, and (iii) continued buildout of corporate functions and public company compliance requirements, inclusive

of accounting and legal fees.

Our long-term liquidity requirements include initiatives related to (a) strategic acquisitions mean to

further the development of our health ecosystem such as electronic health record systems, (b) expansion of micro-distribution centers

for wholesale and other wholly owned pharmacies in strategic demographic regions, (c) investments into artificial intelligence, machine

learning, and data warehousing capabilities, and (d) additional integrations with third-party partners such as PMS systems, ride-sharing

logistics providers, enterprise health systems, and others to bolster the value proposition of our health ecosystem with a focus on improving

operational efficiency while simultaneously removing interdependencies.

Purchase Agreement

of September 30, 2025, the Company had issued a total of 3,426,254 shares of common stock pursuant to put notices under the Agreement,

resulting in net proceeds of $2,838,787.

On August 13, 2025, the Company delivered written notice to the Investor of its election to

terminate the Hudson EPA.

2025 Offering

September 29, 2025, the Company filed a prospectus supplement with the U.S.

Securities and Exchange Commission pursuant to Rule 424(b)(5)

in connection with a public offering of 7,142,862 shares of common stock and warrants to purchase up to 7,142,862 shares of common stock.

The warrants are exercisable immediately at $0.70 per share and expire five years from the date of issuance.

As of September 30, 2024,

the Company had issued total of 7,142,862 shares pursuant to this offering generated net proceeds of approximately $4.53 million, after

deducting placement-agent fees and other offering expenses.

Management intends to use the proceeds from the offering to strengthen the

Company’s working capital position, support ongoing operations, fund marketing initiatives, and pursue potential strategic acquisitions.

All warrants remained outstanding as of September 30, 2025.

debt consists of the following:

September 30,

Merchant cash advance

Note payable - owners of Wellgistics

Note payable - Integral Health

Note payable - third party, net of debt discount

Revolving line of credit

Seller promissory note

Current portion of debt obligations

Merchant cash advance

Third party investor

Note payable - Integral Health

Note payable - owners of Wellgistics

Long-term debt

(“Integral Health”)

August 22, 2023, Wood Sage entered into a non-interest bearing promissory note (“Note”) with Integral Health, a then related

party with common ownership and board members, pursuant to which Integral made a certain loan to Wood Sage in the amount of $1,300,000

to satisfy the purchase price under the agreements by which Wood Sage acquired Wellgistics Pharmacy and DelivMeds.

No later than 30 days

after a change in control to Wood Sage, the aggregate unpaid principal balance of the Note became due and payable by Wood Sage, which

occurred upon the consummation of the Company’s acquisition of Wood Sage.

October 30, 2025, the Company entered into a Debt Conversion Agreement (the “Integra Health DCA”), by and among the Company,

Integra Health Inc., a Florida corporation (“Integra Health”), and WoodSage.

The Integra Health DCA addressed the conversion

of indebtedness in the amount of $1,300,000 due pursuant to a promissory note issued by WoodSage in favor of Integra Health, dated as

of August 22, 2023 (the “ Note ”).

Under the Integra Health DCA, the indebtedness in the among of $1,300,000 was converted

into shares of the Company’s common stock at a price per share of $0.70 for an aggregate number of shares of 1,857,143 in full

satisfaction of the obligations of WoodSage outstanding under the Note.

March 18, 2025, the Company entered into a merchant cash advance agreement with a third-party lender.

Pursuant to the agreement, the

Company received gross funding of $1,900,000 in exchange for the sale of future receivables totaling $2,840,000.

Of the $1,900,000 in

funding, $1,118,250 was directly applied by the lender to settle existing obligations under a prior agreement with the same lender, effectively

refinancing the earlier balance.

The remaining $781,750 was disbursed to the Company for working capital and operational needs.

MCA Agreement resets the Purchased Amount, repayment terms, and structure under a new contract.

The Company is obligated to remit weekly

payments of $56,800 until the full Purchased Amount of $2,840,000 is repaid.

Company accounts for the merchant cash advance as a debt obligation.

On restructuring, the Company recorded a liability equal to the

full Purchased Amount of $2,840,000, with a corresponding debt discount of $940,000 representing the difference between the repayment

obligation and the net proceeds received.

During the nine months ended September 30, 2025, the Company made repayments totaling $1,147,363.

After considering the net proceeds received

of $781,750, the Company recorded a net repayment of $365,613 for the period.

In connection with the refinancing of the prior MCA arrangement,

the Company recognized a non-cash charge of $205,261 related to the write-off of the remaining unamortized debt discount.

is included in interest expense and presented as a non-cash adjustment within the operating section of the Company’s Statement of

The debt discount is being amortized to interest expense over the term of the arrangement.

the three and nine months ended September 30, 2025, interest expense recorded was $281,091 and $668,148, respectively.

As of September

30, 2025, the carrying amount of the loan, net of the remaining unamortized discount of $271,852, was $ 1,154,148.

August 26, 2025, the Company entered into a Business Loan and Security Agreement with Agile Capital Funding, LLC (as Collateral Agent)

and Agile Lending, LLC (as Lead Lender) for a secured term loan of $1,300,000 (the “Agile Term Loan”).

The loan bears an

imputed interest charge of $572,000, resulting in a total repayment obligation of $1,872,000, payable in weekly installments of $58,500

commencing September 3, 2025 through April 8, 2026.

The loan carries an effective borrowing cost and does not bear a separately stated

interest rate.

inception, the Company received net proceeds of $500,074 after deduction of (i) repayment of the prior Agile loans originated

in May 2025, $459,300 and June 2025, $275,626, and (ii) an administrative agent fee of $65,000.

Accordingly, the Company recorded a debt

discount of $637,000, representing the difference between the total repayment obligation and the proceeds received.

The debt discount

is being amortized to interest expense using the effective interest method over the 32-week term of the loan.

During the nine months ended September 30, 2025, the Company received total cash proceeds of $1,250,074 from Agile loan arrangements,

consisting of proceeds from loans originated in May 2025, July 2025, and August 2025.

Total repayments made during the period were $318,260,

resulting in net cash received of $931,814, which is presented within financing activities in the Company’s Statement of Cash Flows.

In connection with the repayment of the May and July 2025 Agile loans, the Company recognized a non-cash charge of $201,110 related to

the write-off of the remaining unamortized debt discount.

This amount is included in interest expense and presented as a non-cash adjustment

within the operating section of the Statement of Cash Flows.

For the three and nine

months ended September 30, 2025, the Company recorded interest expense $131,924 and $508,686, respectively.

As of September 30, 2025,

the carrying amount of the loan, net of the remaining unamortized discount of $505,076, was $ 1,132,924.

payable – sellers of Wellgistics, LLC

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

Pursuant to the amended

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

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

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

becomes effective.

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, modified the repayment schedule $5,000000 principle shall be payable on the first and second anniversaries

and $7,500,000 principal shall be payable on the third anniversary, of the effective date of Promissory Note, and resulted in an accounting

extinguishment of the original note.

As part of the modification, accrued interest of $1,146,337 on the original note was derecognized,

and the Company recorded a non-cash loss on debt extinguishment of $1,353,663.

the three and nine months ended September 30, 2025, the Company recorded total interest expenses of $277,123 related to the amended note.

As of September 30, 2025, accrued interest on the note totaled $277,123, which is included in accrued expenses and other

current liabilities on the accompanying condensed consolidated balance sheet.

As of September 30, 2025, $5,000,000 of the the amended note was included as a current liability on the consolidated balance

sheet and the remaining $12,359,882 was classified as non-current.

Payable – Third party

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

The promissory note

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 three and nine months ended September 30, 2025, the Company recorded interest

expense of $11,210 and $33,232, respectively.

For the same periods, the Company recognized amortization of debt discount of $0 and $33,41,1

related to this promissory note.

As of September 30, 2025, accrued interest payable on this note was $33,232 and the outstanding principal

of $448,411 is classified under current liabilities.

As of the issuance date of these financial statements, the parties are currently

working on an extension.

February 2, 2025, the Company entered into an unsecured promissory note agreement for a principal amount of $100,000.

The promissory

note bears interest at a rate of 10% per annum, with both principal and accrued interest due in full on August 15, 2025.

of default, interest accrues at a default rate of 12% per annum.

For the three and nine months ended September 30, 2025, the Company

recorded interest expense of $2,500 and $6,562 related to this note.

As of September 30, 2025, accrued interest payable on this note

was $6,562, and the outstanding principal of $100,000 is classified under current liabilities.

February 2, 2025, the Company entered into another unsecured promissory note agreement a principal amount of $100,000.

The promissory

note bears interest at a rate of 10% per annum, with both principal and accrued interest due in full on August 15, 2025.

of default, interest accrues at a default rate of 12% per annum.

For the three and nine months ended September 30, 2025, the Company

recorded interest expense of $2,500 and $6,562 related to this note.

As of September 30, 2025, accrued interest payable on this note

was $6,562, and the outstanding principal of $100,000 is classified under current liabilities.

As of September 30, 2024, 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 three and

nine months ended September 30, 2024, the Company recorded interest expense of $2,000 and $6,000, respectively related to this note.

of September 30, 2025, accrued interest payable on this note was $17,666, and the outstanding principal of $100,000 is classified under

non-current liabilities.

line of credit – Wellgistics

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

The new line of credit

has interest annual rate equal to the Term Secured Overnight Financing Rate (“SOFR”) plus 11.5%, calculated and prorated

daily on the daily balance (an aggregate rate of 16.84% per annum).

The line of credit is collateralized by accounts receivable and inventory

Interest expense related to the line of credit amounted to $262,558 and $876,757 for the three and nine months ended September

30, 2025, respectively.

The outstanding balance on the line of credit as of September 30, 2025 and December 31, 2024 was $2,973,751 and

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

Promissory Note - Wellgistics

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

The promissory note was part of the

consideration to the seller in connection with its acquisition of American Pharmaceutical Ingredients, LLC (a subsidiary of Wellgistics

The promissory note bore interest at a rate of 2% per annum and was scheduled to mature on April 1, 2025.

Company assumed this debt as part of the acquisition of Wellgistics.

As of September 30, 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 nine months ended September 30, 2025.

following table is a summary of annual principal payments of the Company’s outstanding debt:

2025 (remaining three months)

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

pay any cash dividends for the foreseeable future.

In addition, our ability to pay dividends is likely to be limited by covenants of

any future indebtedness.

There are no, and we do not intend in the future for there to be any, restrictions in the covenants of any existing

and outstanding indebtedness on our wholly-owned subsidiaries from distributing earnings in the form of dividends, loans or advances

and through repayment of loans or advances to us.

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

Nine Months Ended

September 30,

Net cash (used in) provided by operating activities

$ (4,561,776 )

As of March 31, 2026, the Company had cash and cash

equivalents of $51,730 and a working capital deficit of $29,437,191.

The Company has incurred net losses of $7,742,597 and $32,430,903

for the three months ended March 31, 2026 and 2025, respectively, and has an accumulated deficit of $118,774,287 as of March 31, 2026.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The accompanying condensed consolidated

financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that

might result from the outcome of this uncertainty.

The Company has funded its operations primarily through

the issuance of debt and equity securities.

Management is actively pursuing additional sources of capital, including equity financing,

debt arrangements, and strategic partnerships, to fund ongoing operations and working capital requirements.

However, there can be no assurance

that such financing will be available on acceptable terms or at all.

following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2026

Three Months Ended

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Net change in cash and cash equivalents

from operating activities

cash used in operating activities for the nine months ended September 30, 2025 was $4,561,776, primarily due to our net loss of

$72,981,336, partially offset by non-cash expenses of $58,906,317 and $9,953,478 in cash provided in operating assets and

Non-cash expenses was primary driven by stock-based compensation of $54,438,827, loss on debt extinguishment of

$1,353,663, and amortization of intangible assets of $2,289,194.

Cash provided by operating assets and liabilities was primarily

driven by an increase in accounts payable of $4,101,943 and decrease in accounts receivable of $1,359,834, partially offset by

decreases in inventories and increase in accrued expenses.

cash provided by operating activities for the nine months ended September 30, 2024 was primarily a result changes in operating assets

and liabilities of $3,429,169, partially offset by our net loss of $2,524,474 and non-cash expenses of $494,089.

from investing activities

cash used in investing activities for the nine months ended September 30, 2025, was $626,144 due to expenditures made for capitalized

used in operating activities

Net cash used in operating activities for the three months ended March

31, 2026 was $3,413,129, primarily reflecting the Company’s net loss of $7,742,597, partially offset by non-cash charges totaling

$3,034,024 and net cash provided by changes in operating assets and liabilities of $1,295,444.

Non-cash charges consisted principally

of $1,485,618 in amortization of debt discount, $1,357,764 in stock-based compensation, $328,962 in amortization of intangible assets,

$93,698 in allowance for credit losses, and $27,862 in depreciation, partially offset by a gain on extinguishment of vendor obligations

Changes in operating assets and liabilities provided net cash of $1,295,444, driven primarily by an increase in accounts

payable of $1,472,242 and an increase in accrued expenses and other liabilities of $90,060, partially offset by a net decrease in amounts

due from and to related parties of $229,200.

cash used in operating activities for the three months ended March 31, 2025 was $1,347,449, primarily due to the net loss of $32,430,903,

partially offset by non-cash expenses of $28,674,553, principally consisting of stock-based compensation of $27,773,421, and net cash

provided by changes in operating assets and liabilities of $2,408,901, driven primarily by an increase in accounts payable of $1,876,683.

used in investing activities

cash used in investing activities for the three months ended March 31, 2026 was $205,098, consisting entirely of capitalized software

development costs related to the Company’s DelivMeds platform.

cash used in investing activities for the three months ended March 31, 2025 was $273,133, consisting of payments made for capitalized

software development costs.

from financing activities

cash provided by financing activities for the nine months ended September 30, 2025, was $8,388,250.

This was primarily driven by gross

proceeds of $4,000,000 from the issuance of common stock in our IPO, $4,534,053 from the September 2025 public offerings, $2,838,787

from common stock issuances under our equity purchase agreement, $615,000 from promissory notes, and $931,814 from the AGILE debt

modification and $20,070,000 from revolving line of credit.

These inflows were partially offset by $1,471,141 in offering costs, as well

as repayments totaling $22,993,122, which included repayments of the revolving line of credit and merchant cash advance.

cash used in financing activities for the nine months ended September 30, 2024 consists of $10,000 Founder’s initial contribution,

and $283,518 in offering costs incurred.

Net cash provided by financing activities for the three months ended March

31, 2026 was $3,627,386.

Cash inflows during the period consisted primarily of $6,002,500 in net proceeds from the issuance of secured

convertible promissory notes in January 2026.

These inflows were partially offset by $2,104,557 in repayments of the Agile Capital Funding

LLC term loan, $143,525 in repayments under the revolving line of credit, $90,281 in repayments under the merchant cash advance agreement,

and $36,751 in repayments of promissory notes.

cash provided by financing activities for the three months ended March 31, 2025 was $3,108,831, driven primarily by gross proceeds of

$4,000,000 from the issuance of common stock in connection with the Company’s initial public offering, $615,000 from the issuance

of promissory notes, and $471,158 in net proceeds from a merchant cash advance agreement.

These inflows were partially offset by $1,598,196

in offering costs and repayments of notes payable and the revolving line of credit.

Sheet Arrangements

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What changed 10-Q

Item 2. Management’s Discussion and Analysis