DataMeds AI, Inc. 10-Q

Item 1. Financial Statements. WELLGISTICS HEALTH, INC. CONSOLDIATED BALANCE SHEETS (Unaudited) March 31, December 31, 2026 2025 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 51,730 $ 42,571 Accounts receivable, net 992,147 1,137,219 Inventories, net 1,713,599 1,639,426 Due from related party 4,200 - Total current assets 2,761,676 2,819,216 Property, plant and equipment, net 201,514 229,376 Capitalized software 2,055,456 1,850,358 Operating lease, right-of-use-assets 844,400 966,893 Goodwill 14,193,923 14,193,923 Other intangible assets, net 9,985,713 10,314,675 Deposits 85,008 85,008 Total assets $ 30,127,690 $ 30,459,449 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $ 11,977,377 $ 11,665,135 Accounts payable, related party 25,500 25,500 Accounts payable 25,500 25,500 Accrued expenses and other liabilities 4,456,342 6,407,722 Due to related parties - 225,000 Convertible notes payable 6,567,649 - Current portion of debt obligations, net of debt discount 8,604,251 10,887,520 Operating lease liabilities- current portion 567,748 569,251 Total current liabilities 32,198,867 29,780,128 Notes payable 12,600,000 12,600,000 Operating lease liabilities 391,272 527,122 Total liabilities $ 45,190,139 $ 42,907,250 Commitments and contingencies (Note 13) - - Stockholders’ equity (deficit): Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 120,380,108 and 102,289,619 shares issued and 119,397,987 and 101,307,498 shares outstanding as of March 31, 2026 and December 31, 2025, respectively 11,940 10,131 Additional paid-in capital 103,699,898 98,573,758 Accumulated deficit ( 118,774,287 ) ( 111,031,690 ) Total stockholders’ equity (deficit) ( 15,062,449 ) ( 12,447,801 ) Total liabilities and stockholders’ equity (deficit) $ 30,127,690 $ 30,459,449 See the accompanying notes to the unaudited condensed consolidated financial statements 3 WELLGISTICS HEALTH, INC. CONSOLDIATED STATEMENTS OF OPERATIONS (Unaudited) 2026 2025 Three Months Ended March 31, 2026 2025 Net revenues $ 1,559,563 $ 10,863,443 Cost of net revenues 1,389,342 10,170,802 Gross profit (loss) 170,221 692,641 Operating expenses: General and administrative 4,868,935 31,172,920 Sales and marketing 960,000 65,217 Depreciation and amortization 356,824 802,872 Total operating expenses 6,185,759 32,041,009 Loss from operations ( 6,015,538 ) ( 31,348,368 ) Other income/(expense): Interest expense, net ( 2,072,679 ) ( 1,094,490 ) Gain on extinguishment of vendor obligation 259,880 - Settlement fees ( 13,000 ) - Other income 98,740 11,955 Total other expense, net ( 1,727,059 ) ( 1,082,535 ) Net loss before income taxes ( 7,742,597 ) ( 32,430,903 ) Provision for income taxes - - Net loss $ ( 7,742,597 ) $ ( 32,430,903 ) Weighted average common shares outstanding - basic and diluted 104,621,250 51,916,787 Net loss per common share - basic and diluted $ ( 0.07 ) $ ( 0.62 ) See the accompanying notes to the unaudited condensed consolidated financial statements 4 WELLGISTICS HEALTH, INC. CONSOLDIATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) Shares Amount Capital Deficit Equity (Deficit) Additional Total Common Stock Paid-In Accumulated Stockholders’ Shares Amount Capital Deficit Equity (Deficit) Balance at December 31, 2024 51,055,508 $ 5,105 $ 16,486,501 $ ( 9,757,160 ) $ 6,734,446 Common stock issued pursuant to public offering 888,889 89 3,999,911 - 4,000,000 Common stock issued pursuant to consulting agreements 152,000 15 543,505 - 543,520 Vested restricted stock granted to consultants 986,123 99 2,875,461 - 2,875,560 Vested restricted stock granted to directors 8,362,494 836 24,277,922 - 24,278,758 Vested restricted stock granted to employees 15,000 2 75,582 - 75,584 Offering costs - - ( 1,598,196 ) - ( 1,598,196 ) Net loss - - - ( 32,430,903 ) ( 32,430,903 ) Balance at March 31, 2025 61,460,014 $ 6,146 $ 46,660,685 $ ( 42,188,063 ) $ 4,478,768 Balance at December 31, 2025 101,307,498 $ 10,131 $ 98,573,758 $ ( 111,031,690 ) $ ( 12,447,801 ) Common stock and warrants issued in settlement of accrued compensation 10,000,000 1,000 2,588,580 - 2,589,580 Common stock issued in settlement of vendor obligation 6,466,000 647 1,355,973 - 1,356,620 Common stock issued as settlement and legal fees 400,000 40 51,960 - 52,000 Common stock issued pursuant to consulting agreement 1,224,489 122 514,163 - 514,285 Issuance of placement agent warrants in connection with convertible notes - - 416,965 - 416,965 Vested restricted stock granted to employees - - 169,853 - 169,853 Vested restricted stock granted to consultants - - 28,646 - 28,646 Net loss - - - ( 7,742,597 ) ( 7,742,597 ) Balance at March 31, 2026 119,397,987 $ 11,940 $ 103,699,898 $ ( 118,774,287 ) $ ( 15,062,449 ) See the accompanying notes to the unaudited condensed consolidated financial statements 5 WELLGISTICS HEALTH, INC. CONSOLDIATED STATEMENTS OF CASH FLOWS (Unaudited) 2026 2025 Three Months Ended March 31, 2026 2025 Cash flows from operating activities: Net loss $ ( 7,742,597 ) $ ( 32,430,903 ) Adjustments to reconcile net loss to net cash used in operating activities: Allowances for credit losses 93,698 76,154 Gain on extinguishment of vendor obligation ( 259,880 ) - Amortization of debt discount 1,485,618 22,107 Stock-based compensation 1,357,764 27,773,421 Depreciation 27,862 39,807 Amortization 328,962 763,064 Changes in operating assets and liabilities: Deferred offering costs 875,385 Accounts receivable, net 51,375 ( 180,098 ) Inventories, net ( 74,173 ) ( 214,471 ) Prepaid expenses - ( 334,785 ) Accounts payable 1,472,242 1,876,683 Accrued expenses and other liabilities 90,060 474,494 Operating lease liabilities, net ( 14,860 ) ( 1,307 ) Due from / to related parties, net ( 229,200 ) ( 87,000 ) Net cash used in operating activities ( 3,413,129 ) ( 1,347,449 ) Cash flows from investing activities: Investments in capitalized software ( 205,098 ) ( 273,133 ) Net cash used in investing activities ( 205,098 ) ( 273,133 ) Cash flows from financing activities: Proceeds from promissory note - 615,000 Repayment of promissory note ( 36,751 ) - Repayment of seller promissory note - ( 68,570 ) Proceeds from revolving line of credit - ( 310,561 ) Repayment of revolving line of credit ( 143,525 ) - Proceeds from convertible notes 6,002,500 Proceeds from Merchant cash advance - 471,158 Repayment of merchant cash advance ( 90,281 ) - Repayment of term loan ( 2,104,557 ) - Proceeds from common stock issued pursuant to public offering - 4,000,000 Offering costs - ( 1,598,196 ) Net cash provided by financing activities 3,627,386 3,108,831 Net change in cash and cash equivalents 9,159 1,488,249 Cash and cash equivalents at beginning of period 42,571 1,028,336 Cash and cash equivalents at end of period $ 51,730 $ 2,516,585 Supplemental disclosure of cash flow information: Cash paid for income taxes $ - $ - Cash paid for interest $ 132,751 $ 616,072 Supplemental disclosure of non-cash investing and financing activities: Issuance of common stock for prepaid consulting services $ - $ 334,783 Issuance of common stock and warrants in settlement of accrued compensation $ 2,589,580 $ - Issuance of common stock in settlement of vendor and debt obligation $ 1,356,620 $ - Fair value of warrants issued as debt issuance cost $ 416,965 $ - See the accompanying notes to the unaudited condensed consolidated financial statements 6 WELLGISTICS HEALTH, INC. NOTES TO THE CONDENDSED CONSOLDIATED FINANCIAL STATEMENTS (Unaudited) Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Wellgistics Health, Inc. (the “Company,” “we,” “us,” or “our”) is a Delaware corporation headquartered in Tampa, Florida. The Company was initially organized as Ayan Sponsors LLC on September 6, 2022, and subsequently incorporated as Danam Health, Inc. on November 15, 2022. On October 4, 2024, the Company changed its corporate name to Wellgistics Health, Inc. by filing a duly authorized Certificate of Amendment to its Certificate of Incorporation. The Company operates as a holding company with Wood Sage LLC (“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. In June 2024, the Company closed on the acquisition of Wood Sage (the “Wood Sage Acquisition”), acquiring two operating subsidiaries: Wellgistics Tech & Hub, LLC (f/k/a Alliance Pharma Solutions LLC d/b/a DelivMeds), a pharmaceutical technology hub, and Wellgistics Pharmacy, LLC (f/k/a Community Specialty Pharmacy, LLC), a retail community specialty pharmacy. On August 30, 2024, the Company closed on the acquisition of Wellgistics, LLC (the “Wellgistics Acquisition”), a wholesale pharmaceutical distributor serving a network of independent pharmacies. Summary of Significant Accounting Policies A description of the Company’s significant accounting policies and other financial information is included in the Company’s audited consolidated financial statements filed on March 20, 2026, with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “ Form 10-K ”). These policies have been applied consistently in these unaudited condensed consolidated interim financial statements. Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of March 31, 2025 and for the three months then ended. The accompanying unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2025 included in the Form 10-K filed with the SEC on March 20, 2026. 7 Basis of Presentation and Principles of Consolidation The Company’s fiscal year ends on December 31. The accompanying unaudited condensed 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 unaudited condensed consolidated financial statements. The condensed 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 unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Descriptions of significant accounting policies are included in the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. Actual results could differ from those estimates. 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. For the three months ended March 31, 2026 and 2025, there was no difference between net loss and comprehensive loss. 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. 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, Major Customers and Vendors 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. 8 For the three months ended March 31, 2026, no single customer accounted for more than 10 % of the Company’s total revenues. For the three months ended March 31, 2025, one customer accounted for approximately 24.6 % of total revenues. As of March 31, 2026, two customers accounted for approximately 25.4 % and 11.1 %, respectively, of gross accounts receivable. As of March 31, 2025, two customers accounted for approximately 20.2 % and 13.0 %, respectively, 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 their purchase volumes, 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. The carrying amounts of cash, accounts 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 Allowance 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. 9 The Company provides for a 95 % - 100 % loss rate of the accounts receivable which are due over the period of 90 days. For the three months ended March 31, 2026 and 2025, the Company recognized a provision for credit losses of $ 93,698 and $ 76,154 , 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 March 31, 2026 and December 31, 2025, the Company capitalized $ 2,704,641 and $ 2,499,553 , respectively, in software development pertaining to the Delivmeds platform via its DelivMeds subsidiary. The platform has not yet been placed in service and accordingly, amortization has not commenced. 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. 10 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 three months ended March 31, 2026 and 2025. 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. No goodwill impairment was identified during the three months ended March 31, 2026 and 2025. 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. No impairment of long-lived assets was identified during the three months ended March 31, 2026 and 2025. 11 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. 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. 12 Pharmacy The Company is in the retail pharmacy business. and fills prescriptions for drugs written by a doctor and recognizes revenue at the time the patient confirms delivery of the prescription. Customer returns are not material. The following are the steps taken to recognize revenue. Step One: Identify the contract with the customer — The prescription is written by a doctor for a customer and delivered to the Company. The prescription identifies the performance obligations in the contract. The Company fills the prescription and delivers to the Customer the prescription, fulfilling the contract. The collection is probable because there is confirmation that the customer has insurance for the reimbursement to the Company prior to filling of the prescription. Step Two: Identify the performance obligations in the contract — Each prescription is distinct to the Customer. Step Three: Determine the transaction price — The consideration is not variable. The transaction price is determined to be the price of the prescription at the time of delivery which considers the expected reimbursements from third party payors (e.g., pharmacy benefit managers, insurance companies and government agencies). Step Four: Allocate the transaction price — The price of the prescription invoiced represents the expected amount of reimbursement from third party payors. There is no difference between contract price and “stand-alone selling price”. Step Five: Recognize revenue when or as the entity satisfies a performance obligation — Revenue is recognized upon the delivery of the prescription. Disaggregation of Revenue The following is a summary of the disaggregation of revenue for the three months ended March 31, 2026 and 2025: SCHEDULE OF DISAGGREGATION OF REVENUE 2026 2025 Three Months Ended March 31, 2026 2025 Product revenue - distribution services $ 225,665 $ 10,668,287 Pharmacy retail sales 1,134,416 114,676 Third party logistics services 199,482 80,480 Net revenues $ 1,559,563 $ 10,863,443 All revenue for the three months ended March 31, 2026, and 2025, were within the United States. 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 unaudited condensed consolidated balance sheets At March 31, 2026, and December 31, 2025, the Company had unearned revenue of $ 26,000 and $ 488,229 , respectively, included in accrued expenses and other current liabilities. 13 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 Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share reflects the weighted-average number of common shares outstanding adjusted for the effect of potentially dilutive securities. For periods in which a net loss is reported, all potentially dilutive securities are excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive. Accordingly, basic and diluted net loss per share are the same for the three months ended March 31, 2026 and 2025. The following potentially dilutive securities were excluded from the computation of diluted net loss per share for the three months ended March 31, 2026 and 2025: SCHEDULE OF POTENTIALLY DILUTIVE ITEMS OUTSTANDING 2026 2025 March 31, 2026 2025 Unvested restricted common stock 1,182,121 10,248,491 Unissued director share awards 60,000 - Warrants 15,457,644 - Convertible notes 20,027,114 - Total potentially dilutive shares 36,726,879 10,248,491 Note 2. LIQUIDITY AND GOING CONCERN For the three months ended March 31, 2026, the Company had a net loss of $ 7,742,597 and had an accumulated deficit of $ 118,774,287 as of March 31, 2026. As of March 31, 2026, the Company had cash and cash equivalents of $ 51,730 and net cash used in operating activities of $ 3,413,129 for the three months then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern within twelve months from the date these unaudited condensed consolidated financial statements are issued. In addition, on December 10, 2025, the Company received a deficiency notice from The Nasdaq Stock Market LLC indicating that the closing bid price of the Company’s common stock had been below $1.00 per share for 30 consecutive trading days, and that the Company was therefore not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share. In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has until June 8, 2026 to regain compliance with the minimum bid price requirement. On April 13, 2026, the Company received an additional deficiency notice from The Nasdaq Stock Market LLC indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires listed companies on the Nasdaq Capital Market to maintain a minimum stockholders’ equity of $2.5 million. If the Company is unable to regain compliance with the applicable Nasdaq listing requirements within the required timeframes, the Company’s common stock may be subject to delisting from the Nasdaq Capital Market, which could materially adversely affect the liquidity of the Company’s common stock and its ability to raise additional capita Management Plans Management is actively pursuing multiple initiatives to address the Company’s liquidity position and going concern uncertainty: During the three months ended March 31, 2026, the Company raised gross proceeds of $6,500,000 through the issuance of secured convertible promissory notes to fund working capital requirements and satisfy existing debt obligations, including the full repayment of the Agile Capital Funding LLC arrangement. Subsequent to March 31, 2026, the Company raised additional gross proceeds of $1,000,000 through the issuance of promissory notes to fund working capital requirements. On April 2, 2026, the holders of a majority of the Company’s outstanding shares of common stock approved a reverse stock split at a ratio of not less than 1-for-25 and not more than 1-for-200, as determined by the Board of Directors in its sole discretion, which is intended in part to assist the Company in regaining compliance with Nasdaq’s minimum bid price requirement. On April 13, 2026, the Company entered into a collaboration agreement with Kare Rx Hub, LLC, Kare Pharmtech, LLC, and Healthstar Technologies, LLC related to the formation of a new limited liability company in which the Company is expected to hold a 51% ownership interest, which management believes will provide additional revenue opportunities and enhance the Company’s long-term growth prospects. 14 Management is also focused on growing revenues through the expansion of its pharmacy operations and distribution network, reducing operating expenses, and continuing to pursue additional equity and debt financing arrangements to fund the Company’s operations. The Company filed a definitive proxy statement on May 4, 2026 relating to a special meeting of stockholders to consider, among other matters, a proposed corporate name change to Vantix Health, Inc., the authorization of a class of preferred stock, and an increase in the number of shares reserved under the Company’s equity incentive plan, which management believes will enhance the Company’s ability to attract capital and incentivize key personnel. Management believes that these initiatives, together with existing cash resources and anticipated revenues, will provide the Company with additional liquidity to support its operations. However, there can be no assurance that the Company will be able to obtain sufficient additional capital when needed, regain compliance with Nasdaq listing requirements, execute its collaboration agreement on the terms currently contemplated, or achieve profitability. 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. 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 conditions described above raise substantial doubt about the Company’s ability to continue as a going concern through twelve months from the date these unaudited condensed consolidated financial statements are available to be issued. Note 3. ACCOUNTS RECEIVABLE, NET Accounts receivable, net consist of the following: SCHEDULE OF ACCOUNTS RECEIVABLE, NET March 31, December 31, 2026 2025 Billed – Third Party $ 1,933,199 $ 1,984,424 Total Accounts Receivable 1,933,199 1,984,424 Less: Allowance for credit losses ( 941,052 ) ( 847,205 ) Total accounts receivable, net $ 992,147 $ 1,137,219 Note 4. INVENTORIES, NET Inventory consists of the following: SCHEDULE OF INVENTORY March 31, December 31, 2026 2025 First Defense Nasal Screen Corp (“FDNS”) $ 5,988,257 $ 5,988,257 Finished goods 2,165,125 2,072,985 Total inventory, at cost 8,153,382 8,061,242 Less: reserve for obsolescence ( 6,439,783 ) ( 6,421,816 ) Inventories, net $ 1,713,599 $ 1,639,426 The FDNS inventory consists of products purchased by Wellgistics, LLC from First Defense Nasal Screen Corp (“FDNS”). Following a legal dispute with the supplier, the Company was awarded $ 4.6 million, which has not been recognized due to uncertainty of receipt. Pursuant to the United States Bankruptcy Court order dated March 15, 2023, the Company was awarded full possession of the FDNS inventory and receives a monthly plan payment of $ 3,014 , which is recognized in other income in the unaudited condensed consolidated statements of operations. 15 The FDNS inventory has experienced minimal sales activity and management has determined there is no active market for the product. Based on this assessment, the carrying value was deemed not recoverable, and a reserve for obsolescence of $ 5,988,257 was fully recorded during the year ended December 31, 2025 and remained unchanged as of March 31, 2026. During the three months ended March 31, 2026, the Company recorded an additional reserve for obsolescence of $ 17,967 related to finished goods inventory, included in cost of net revenues in the unaudited condensed consolidated statements of operations. Note 5. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment consist of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT, NET March 31, December 31, 2026 2025 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 ( 1,306,322 ) ( 1,278,460 ) Property, plant and equipment, net $ 201,514 $ 229,376 Depreciation expense was $ 27,862 and $ 39,807 for the three months ended March 31, 2026, and 2025, respectively, Note 6. INTANGIBLE ASSETS Intangible assets consist of the following: SCHEDULE OF INTANGIBLE ASSETS March 31, December 31, 2026 2025 Software development costs - Delivmeds $ 2,704,641 $ 2,499,543 Accumulated impairment ( 649,185 ) ( 649,185 ) Capitalized software $ 2,055,456 $ 1,850,358 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 2,500,000 Intangible assets, gross 24,293,057 24,293,057 Accumulated amortization ( 4,428,269 ) ( 4,099,307 ) Accumulated impairment ( 9,879,075 ) ( 9,879,075 ) Other intangible assets, net $ 9,985,713 $ 10,314,675 16 Capitalized Software Software development costs relate to the Wellgistics Tech & Hub, LLC platform. As of March 31, 2026 and December 31, 2025, the Company had gross capitalized software development costs of $ 2,704,641 and $ 2,499,543 , respectively. Accumulated impairment of $ 649,185 , recorded during the year ended December 31, 2025, remained unchanged as of March 31, 2026, resulting in a net carrying value of $ 2,055,456 and $ 1,850,358 as of March 31, 2026 and December 31, 2025, respectively. The platform has not yet been placed in service and accordingly, amortization has not commenced as of March 31, 2026. Customer Relationships and Trademark 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 $ 12,308 and $ 12,308 for the three months ended March 31, 2026, and 2025, respectively. Intangible assets of $ 11,256,067 and $ 10,143,137 represent customer relationships and trademarks, respectively, identified and measured at fair value in connection with the Wellgistics, LLC business combination completed in August 2024, amortized over their estimated useful lives. During the year ended December 31, 2025, the Company 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 , recorded within goodwill and intangible asset impairment in the consolidated statements of operations. No impairment charges were recognized during the three months ended March 31, 2026. Amortization expense related to Wellgistics customer relationships was $ 183,932 and $ 469,003 for the three months ended March 31, 2026 and 2025, respectively. Amortization expense related to the Wellgistics trademark was $ 132,722 and $ 281,754 for the three months ended March 31, 2026 and 2025, respectively. Total amortization expense related to other intangible assets was $ 328,962 and $ 763,064 for the three months ended March 31, 2026 and 2025, respectively. The following table represents the future amortization of intangible assets: SCHEDULE OF FUTURE AMORTIZATION OF INTANGIBLES ASSETS March 31, 2026 (remaining 9 months) $ 1,254,743 2027 1,672,991 2028 1,672,991 2029 1,672,991 2030 1,423,045 Thereafter 2,288,952 Intangible assets 9,985,713 17 Note 7. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consist of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES March 31, December 31, 2026 2025 Accrued personnel costs $ 2,714,655 $ 4,588,421 Accrued professional fees 207,829 114,429 Accrued expenses 160,317 199,053 Credit card obligation 182,319 183,943 Unearned revenue 26,000 488,229 Accrued interest 1,165,222 833,647 Accrued expenses and other liabilities $ 4,456,342 $ 6,407,722 Note 8. DEBT Outstanding debt consists of the following: SCHEDULE OF OUTSTANDING DEBT March 31, December 31, 2026 2025 Merchant cash advance $ 1,653,853 $ 1,744,134 Loan payable - 1,601,052 Note payable - owners of Wellgistics 5,000,000 5,000,000 Note payable - third party, net of debt discount 450,000 898,411 Revolving line of credit 1,500,398 1,643,923 Convertible notes 6,567,649 - Current portion of debt obligations 15,171,900 10,887,520 Third party investor $ 100,000 $ 100,000 Note payable - owners of Wellgistics 12,500,000 12,500,000 Long-term debt 12,600,000 12,600,000 Total debt $ 27,771,900 $ 23,487,520 As of March 31, 2026 and December 31, 2025, unamortized debt discount was $ 2,268,898 and $ 1,568,776 , respectively. Merchant Cash Advance On October 20, 2025, the Company entered into a merchant cash advance agreement with Cedar Advance LLC (the “October 2025 MCA”). Under the October 2025 MCA, the stated purchase price was $ 2,898,000 , of which $ 1,198,800 was applied directly to satisfy the outstanding balance under the Company’s prior merchant cash advance arrangement, and $ 701,200 was remitted to the Company for working capital purposes. The total repayment obligation under the October 2025 MCA resulted in a principal balance of $ 1,900,000 , repayable in fixed weekly installments of $ 56,800 over an estimated 51 -week term. The Company accounts for the merchant cash advance as a debt obligation. The difference between the total repayment obligation and the net proceeds received has been recorded as a debt discount and is amortized to interest expense over the term of the arrangement using the effective interest method. 18 For the three months ended March 31, 2026, the Company made total repayments of $ 181,800 under the merchant cash advance arrangement, of which $ 90,281 represented reduction of the principal balance and $ 91,519 represented amortization of the debt discount, recorded as interest expense in the condensed consolidated statements of operations. As of March 31, 2026, the gross contractual repayment obligation under the merchant cash advance was $ 2,365,400 . The related unamortized debt discount was $ 711,547 , resulting in a net carrying amount of $ 1,653,853 , which is classified as a current liability in the condensed consolidated balance sheet. As of December 31, 2025, the gross contractual repayment obligation was $ 2,547,200 . The related unamortized debt discount was $ 803,066 , resulting in a net carrying amount of $ 1,744,134 , classified as a current liability in the condensed consolidated balance sheet. Loan Payable On October 29, 2025, the Company entered into a financing arrangement with Agile Capital Funding LLC (“Agile”) pursuant to which it received net proceeds of $ 533,889 . Total contractual repayments under the arrangement were $ 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 prior Agile obligation. The Company accounts for the arrangement as a debt obligation. The difference between the total contractual repayment amount and the net proceeds received was recorded as a debt discount and is amortized to interest expense over the term of the arrangement using the effective interest method. During the three months ended March 31, 2026, the Company repaid in full all amounts outstanding under the Agile arrangement for total cash payments of $ 2,145,789 . The Company accounted for the settlement as a debt extinguishment in accordance with ASC 470-50. In connection with the extinguishment, the Company derecognized the gross contractual repayment obligation and the related unamortized debt discount. Regular amortization of debt discount recognized as interest expense during the three months ended March 31, 2026 prior to extinguishment was $ 41,232 . The remaining unamortized debt discount of $ 544,737 was charged to interest expense upon extinguishment. As of March 31, 2026, there were no amounts outstanding under the Agile arrangement. As of December 31, 2025, the net carrying amount of the Agile obligation was $ 1,601,056 , net of unamortized debt discount of $ 765,710 , and was classified as a current liability in the condensed consolidated balance sheets. Note payable – sellers of Wellgistics, LLC On July 24, 2025, the Company and the owners of Wellgistics LLC executed the Eighth Amendment to the Membership Interest Purchase Agreement (“MIPA”), pursuant to which the principal amount of the seller promissory note was increased from $ 15.0 million to $ 17.5 million. Under the amended note, $ 5,000,000 of principal is payable on each of the first and second anniversaries, and $ 7,500,000 of principal is payable on the third anniversary, of the effective date of the promissory note. The note 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. For the three months ended March 31, 2026 and 2025, the Company recognized interest expense of $ 366,781 and $ 318,750 , respectively, related to the seller promissory note. As of March 31, 2026 and December 31, 2025, accrued interest on the note totaled $ 1,018,836 and $ 652,055 , respectively, and is included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets. As of March 31, 2026 and December 31, 2025, $ 5,000,000 of the promissory note was classified as a current liability and the remaining $ 12,500,000 was classified as non-current in the condensed consolidated balance sheets. Note Payable – Third party On January 2, 2025, the Company entered into an unsecured promissory note agreement with Arvoda Consulting LLC for a principal amount of $ 448,411 , bearing 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, which was fully amortized as of December 31, 2025. During the three months ended March 31, 2026, the Company settled the outstanding principal and accrued interest under the Arvoda note through a combination of share issuances to Silverback Capital Corporation pursuant to a court-approved settlement agreement under Section 3(a)(10) of the Securities Act of 1933, and a direct cash payment by the Company. For the three months ended March 31, 2026 and 2025, the Company recognized interest expense of $ 399 and $ 11,304 , respectively. For the three months ended March 31, 2025, the Company also recognized amortization of debt discount of $ 22,107 . As of March 31, 2026, the note payable to Arvoda Consulting LLC had been fully satisfied and there were no amounts outstanding. As of December 31, 2025, accrued interest payable on this note was $ 44,442 and the outstanding principal of $ 448,411 was classified as a current liability in the condensed consolidated balance sheets. 19 On February 2, 2025, the Company entered into two separate unsecured promissory note agreement, each for a principal amount of $ 100,000 , bearing interest at a rate of 10 % per annum, with both principal and accrued interest originally 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 March 31, 2026, the Company had not received any such written notice and, accordingly, no event of default had occurred. For the three months ended March 31, 2026 and 2025, the Company recognized aggregate interest expense of $ 5,000 and $ 3,124 , respectively, related to this note. As of March 31, 2026 and December 31, 2025, aggregate accrued interest payable on this note was $ 23,124 and $ 18,124 , respectively, and the aggregate outstanding principal of $ 200,000 is classified as a current liability in the condensed consolidated balance sheets. On April 8, 2025, the Company issued a promissory note to Strategic EP, LLC in the principal amount of $ 250,000 , bearing 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. Upon the occurrence of a default, interest accrues at a default rate of 18 % per annum. For the three months ended March 31, 2026 and 2025, the Company recognized interest expense of $ 11,250 and $ 0 , respectively, related to this note, accrued at the default rate of 18 % per annum. As of March 31, 2026 and December 31, 2025, accrued interest payable on this note was $ 33,372 and $ 22,122 , respectively, and the outstanding principal of $ 250,000 is classified as a current liability in the condensed consolidated balance sheets. In September 2023, the Company entered into a promissory note agreement with a third party investor for a principal amount of $ 100,000 , bearing interest at a rate of 8 % per annum. Under the terms of the note, the lender is entitled to receive 35,000 shares of the Company’s common stock upon the consummation of a SPAC transaction or merger. As of March 31, 2026, this condition had not been met and accordingly no shares have been issued. For the three months ended March 31, 2026 and 2025, the Company recognized interest expense of $ 2,000 and $ 2,000 , respectively, related to this note. As of March 31, 2026 and December 31, 2025, accrued interest payable on this note was $ 21,666 and $ 19,666 , respectively, and the outstanding principal of $ 100,000 is classified as a non-current liability in the condensed consolidated balance sheets. Revolving line of credit – Wellgistics In November 2024, Wellgistics, LLC entered into a credit agreement for a revolving line of credit with a maximum borrowing capacity of $ 10,000,000 . The line of credit bears interest at a rate equal to the Term Secured Overnight Financing Rate (“SOFR”) plus 11.5%, calculated and prorated daily on the outstanding balance, representing an aggregate rate of approximately 16.84% per annum. The line of credit is collateralized by accounts receivable and inventory balances of Wellgistics, LLC. For the three months ended March 31, 2026 and 2025, the Company recognized interest expense of $ 68,227 , and $ 332,439 , respectively, related to the revolving line of credit. As of March 31, 2026 and December 31, 2025, the outstanding balance under the revolving line of credit was $ 1,500,398 and $ 1,643,923 , respectively, and is classified as a current liability in the condensed consolidated balance sheets. 20 Convertible notes payable 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 (the “Notes”) in an aggregate principal amount of $ 8,125,000 for aggregate gross proceeds of $ 6,500,000 , reflecting a 20 % original issue discount. The Notes mature on the earlier of (i) July 16, 2026, or (ii) the closing date of a qualified financing, as defined in the Note Purchase Agreement. The Notes bear interest at 0 % per annum, except upon an event of default, in which case interest accrues at 18 % per annum. As of March 31, 2026, no event of default had occurred. If not sooner repaid, all outstanding amounts under each Note are 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. In connection with the offering, the Company paid placement agent fees of $ 422,500 and legal fees of $ 75,000 directly from the gross proceeds. The Company also issued warrants to the placement agent and its designees to purchase an aggregate of 1,097,640 shares of common stock at an exercise price of $ 0.41 per share, with a five-year term. The fair value of the placement agent warrants of $ 416,965 , determined using the Black-Scholes option pricing model, was recorded as a debt issuance cost. Total debt discount and issuance costs are being amortized to interest expense over the term of the Notes using the straight-line method. For the three months ended March 31, 2026 and 2025, the Company recognized amortization of debt discount and issuance costs of $ 982,114 and $ 0 , respectively,as interest expense in the condensed consolidated statements of operations. As of March 31, 2026, the gross principal amount of the Notes was $ 8,125,000 and the unamortized debt discount and issuance costs were $ 1,557,351 , resulting in a net carrying amount of $ 6,567,649 , classified as a current liability in the condensed consolidated balance sheets. The following table presents, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of warrants granted during the three months ended March 31, 2026: SCHEDULE OF GRANT- DATE FAIR VALUE OF WARRANTS Three Months Ended March 31, 2026 Stock price $ 0.39 Exercise price 0.41 Risk-free interest rate 3.86 % Expected term (in years) 5.00 Expected volatility 196.9 % Expected dividend yield 0 % The following table is a summary of annual principal payments of the Company’s outstanding debt: SCHEDULE OF ANNUAL PRINCIPAL PAYMENTS March 31, 2026 (nine months ending December 31, 2026) $ 17,440,798 2027 5,100,000 2028 7,500,000 Principal gross 30,040,798 Less : Unamortized debt discount ( 2,268,898 ) Principal Payment $ 27,771,900 21 Note 9. STOCKHOLDERS’ EQUITY 2026 Transactions Consulting Agreement On January 13, 2026, the Company issued 1,224,489 shares of its common stock to Hudson Global Ventures, LLC as consideration for consulting services rendered to the Company. The fair value of the shares, determined based on the closing market price of $ 0.42 per share on the date of issuance, was $ 514,285 , which was recognized as consulting expense within general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2026. Settlement Agreement On January 28, 2026, the Company entered into a Settlement Agreement and Stipulation with Silverback Capital Corporation (“Silverback”), which was approved by the Circuit Court of the Twelfth Judicial Circuit in and for Desoto County, Florida on February 4, 2026, pursuant to Section 3(a)(10) of the Securities Act of 1933. Under the terms of the settlement, the Company agreed to issue shares of its common stock to Silverback, the proceeds from the resale of which were applied to satisfy certain outstanding obligations of the Company, including vendor payables and notes payable. Pursuant to the settlement, the Company issued shares to Silverback in three tranches. On February 12, 2026, the Company issued 2,340,000 shares at an agreed settlement price of $ 0.25 per share, for a total settlement value of $ 585,000 . The fair value of the shares on the date of issuance, based on the closing market price of $ 0.28 per share, was $ 655,200 . On March 9, 2026, the Company issued an additional 4,126,000 shares at an agreed settlement price of $ 0.25 per share, for a total settlement value of $ 1,031,500 . The fair value of the shares on the date of issuance, based on the closing market price of $ 0.17 per share, was $ 701,420 . The aggregate carrying amount of the obligations settled through these two tranches exceeded the aggregate fair value of the shares issued, resulting in a net gain on debt extinguishment of $ 259,880 , which is included in other income in the condensed consolidated statements of operations for the three months ended March 31, 2026. On March 23, 2026, the Company issued an aggregate of 400,000 shares of its common stock to Silverback in two components — 100,000 shares as consideration for settlement fees and 300,000 shares as consideration for legal fees incurred in connection with the settlement arrangement. The fair value of the shares was determined based on the closing market price of $ 0.13 per share on the date of issuance, resulting in settlement fees of $ 13,000 recognized within other expenses and legal fees of $ 39,000 recognized within general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2026. Accrued Compensation Settlement On March 18, 2026, the Board of Directors approved the settlement of accrued compensation obligations owed to Suren Ajjarapu and Prashant Patel through the issuance of equity securities. Pursuant to the settlement, the Company issued 5,000,000 shares of common stock to each of Mr. Ajjarapu and Mr. Patel, for an aggregate of 10,000,000 shares, together with five-year warrants to purchase 5,000,000 shares of common stock issued to each individual, for an aggregate of 10,000,000 warrants exercisable at $ 0.01 per share. The shares were issued on March 31, 2026 pursuant to Section 4(a)(2) of the Securities Act of 1933. The fair value of the shares on the date of issuance, based on the closing market price of $ 0.13 per share, was $ 1,300,000 in aggregate. The fair value of the warrants was $ 1,289,580 in aggregate, determined using the Black-Scholes option pricing model with the following assumptions: stock price of $ 0.13 , exercise price of $ 0.01 , expected term of 5 years, annualized volatility of 186.0 %, risk-free interest rate of 3.87 %, and no expected dividends. The aggregate fair value of the equity consideration issued of $ 2,589,580 was applied to settle accrued payroll expenses of $ 1,666,667 and accrued bonus of $ 333,333 . The excess of the fair value of equity issued over the carrying amount of the obligations settled of $ 589,580 was recognized as stock-based compensation expense within general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2026. The transaction was entirely non-cash. 2025 Transactions Initial Public Offering On February 24, 2025, the Company closed its initial public offering of 888,889 shares of common stock at a public offering price of $ 4.50 per share, generating gross proceeds of $ 4.0 million and net proceeds of approximately $ 3.1 million after deducting underwriting discounts, commissions, and other offering expenses. Consulting Agreements On February 25, 2025, the Company issued 52,000 shares of restricted common stock to Hudson Global Ventures, LLC as consideration for consulting services. The fair value of the shares, determined based on the closing market price on the grant date, was $ 143,520 , which was recognized as stock-based compensation expense within general and administrative expenses for the three months ended March 31, 2025. On March 17, 2025, the Company issued 100,000 shares of restricted common stock to Draper, Inc. pursuant to a consulting agreement for investor relations and business development services. The total fair value of the shares was $ 400,000 , of which $ 65,217 was recognized as stock-based compensation expense within sales and marketing expenses for the three months ended March 31, 2025. The remaining $ 334,783 was recorded as prepaid expenses as of March 31, 2025. 22 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 4, 2026, the Company granted 200,000 shares of restricted common stock to a newly appointed director under the Plan, vesting in equal annual installments over a three-year period. The grant date fair value of the award was $68,000, determined based on the closing market price of $0.34 per share on the date of grant. In addition, the newly appointed director is entitled to an annual cash retainer of $120,000, payable quarterly in arrears, and an annual equity award of 60,000 shares of common stock under the Plan, issuable in arrears following the end of each calendar year. For the three months ended March 31, 2026, the Company accrued director compensation of $20,000 related to the cash retainer, included within accrued expenses and other liabilities in the condensed consolidated balance sheets, and recognized stock-based compensation expense of $3,400 related to the annual equity award, included within general and administrative expenses in the condensed consolidated statements of operations. A summary of restricted common stock activity for the three months ended March 31, 2026 and 2025 is as follows: SCHEDULE OF RESTRICTED COMMON STOCKS Restricted Common Stock Weighted Average Fair Value Unvested shares as of December 31, 2025 982,121 $ 2.63 Granted 200,000 0.34 Vested - - Forfeited and cancelled - - Unvested shares as of March 31, 2026 1,182,121 $ 2.24 For the three months ended March 31, 2026, the Company recognized stock-based compensation expense of $ 198,499 related to restricted stock awards, included within general and administrative expenses in the condensed consolidated statements of operations. For the three months ended March 31, 2025, the Company recognized stock-based compensation expense of $ 27,229,902 related to restricted stock awards, which included $ 27,021,165 attributable to the immediate vesting of 9,363,617 shares granted on March 14, 2025. As of March 31, 2026, total unrecognized compensation expense related to unvested restricted stock awards was $ 1,560,886 , which is expected to be recognized over a weighted-average remaining period of 1.59 years. Warrants A summary of warrant activity for the three months ended March 31, 2026 is as follows: SCHEDULE OF WARRANT ACTIVITY Warrants Weighted Average Excerise Price Outstanding, December 31, 2025 4,360,004 $ 0.72 Issued 11,097,640 0.05 Exercised - - Expired and cancelled - - Unvested shares as of March 31, 2026 15,457,644 $ 0.24 On January 20, 2026, the Company issued 1,097,640 warrants to the placement agent and its designees in connection with the convertible note offering at an exercise price of $ 0.41 per share, expiring January 20, 2031. The fair value of these warrants and the related Black-Scholes assumptions are disclosed in Note 8. On March 18, 2026, the Company issued an aggregate of 10,000,000 warrants to Suren Ajjarapu and Prashant Patel in connection with the settlement of accrued compensation obligations, exercisable at $ 0.01 per share and expiring March 18, 2031. The fair value of the warrants was determined using the Black-Scholes option pricing model with the following assumptions: SCHEDULE OF FAIR VALUE OF WARRANTS Three Months Ended March 31, 2026 Stock price $ 0.13 Exercise price 0.01 Risk-free interest rate 3.87 % Expected term (in years) 5.00 Expected volatility 186.0 % Expected dividend yield 0 % Fair value of warrants $ 0.13 per warrant and an aggregate fair value of $ 1,289,580 . As of March 31, 2026, all outstanding warrants were exercisable with a weighted average remaining contractual term of approximately 4.82 years. 23 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 %. The following is the summary of operating lease assets and liabilities: SCHEDULE OF OPERATING LEASE ASSETS AND LIABILITIES March 31, December 31, 2026 2025 Operating Leases Right-of-use assets $ 844,400 $ 966,893 Lease liabilities, current portion 567,748 569,251 Long-term lease liabilities 391,272 527,122 Total lease liabilities $ 959,020 $ 1,096,373 Weighted Average Remaining Lease Term 1.72 1.95 Weighted Average Discount Rate 8.36 % 8.36 % The following is the summary of future minimum payments: SCHEDULE OF SUMMARY OF FUTURE MINIMUM PAYMENTS March 31, 2026 (remaining 9 months) $ 467,578 2027 458,657 2028 84,976 Total lease payments 1,011,211 Less: Imputed interest ( 52,191 ) Total $ 959,020 Note 11. RELATED PARTY TRANSACTIONS The Company has 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. As of March 31, 2026 and December 31, 2025, accounts payable to Scietech, LLC was $25,500. No new transactions occurred with Scietech, LLC during the three months ended March 31, 2026. As of December 31, 2025, the Company had an outstanding obligation of $ 225,000 due to its Chief Executive Officer, which was fully repaid during the three months ended March 31, 2026. As of March 31, 2026, there were no amounts outstanding. During the three months ended March 31, 2026, the Company had outstanding advances of $ 4,200 from an officer of the Company, representing amounts paid on behalf of the Company for business purposes, which is included in due from related parties in the unaudited condensed consolidated balance sheets. During the three months ended March 31, 2025, the Company had transactions with certain entities that were considered related parties at that time, including Integra Pharma Solutions, LLC (“IPS”) and companies affiliated with Nomad Capital LLC. These entities are no longer considered related parties as of the date of these financial statements. The following summarizes transactions with these entities for the three months ended March 31, 2025: SCHEDULE OF RELATED PARTY TRANSACTION 2026 2025 Three Months Ended March 31, 2026 2025 Sales to Integra Pharma Solutions, LLC $ - $ 503,730 Management services fees paid to Nomad Capital $ - $ 160,000 IT expenses paid to Cingo Solutions $ - $ 161,000 24 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 three months ended March 31, 2026 and 2025: SCHEDULE OF SEGMENT AND GEOGRAPHIC INFORMATION 2026 2025 Three Months Ended March 31, 2026 2025 Net revenues $ 1,559,563 $ 10,863,443 Cost of net revenues 1,389,342 10,170,802 Gross profit (loss) 170,221 692,641 Operating expenses: General and administrative 4,868,935 31,172,920 Sales and marketing 960,000 65,217 Depreciation and amortization 356,824 802,872 Total operating expenses 6,185,759 32,041,009 Loss from operations ( 6,015,538 ) ( 31,348,368 ) Other income/(expense): Interest expense, net ( 2,072,679 ) ( 1,094,490 ) Gain on extinguishment of vendor obligation 259,880 - Settlement fees ( 13,000 ) - Other income 98,740 11,955 Total other expense, net ( 1,727,059 ) ( 1,082,535 ) Net loss before income taxes ( 7,742,597 ) ( 32,430,903 ) Provision for income taxes - - Net loss $ ( 7,742,597 ) $ ( 32,430,903 ) 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 unaudited condensed consolidated balance sheets were located as follows: SCHEDULE OF LONG LIVED TANGIBLE ASSETS AND OPERATING LEASE RIGHT OF USE ASSETS March 31, December 31, 2026 2025 United States Property, plant and equipment, net $ 201,514 $ 229,376 Operating lease, right-of-use assets $ 844,400 $ 966,893 Note 13. COMMITMENTS 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, claiming accounting services of $ 377,947 for which it has not been paid. The Company has answered the arbitration demand and is vigorously defending the matter. Relatedly, Wellgistics, LLC, Wood Sage, LLC, Alliance Pharma Solutions, LLC, and Community Specialty Pharmacy, LLC, all subsidiaries of the Company, have sued Blythe Global Advisors, LLC in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida, asserting claims of improper UCC-1 filings, tortious interference with business relationships, slander of title, and state RICO violations. A motion to dismiss filed by Blythe 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 and seeks damages of approximately $ 420,460 , together with interest, legal fees, and other related costs. The underlying amount has been recorded as a liability and is included within accounts payable in the accompanying condensed consolidated balance sheet. At this stage of the proceedings, the outcome cannot be reasonably predicted. The Company will record any additional provision if and when the likelihood of loss becomes probable and reasonably estimable. 25 Dispute with Former Management On October 10, 2025, the Company initiated litigation in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida against certain former officers and/or directors of the Company. The complaint asserts claims including breach of fiduciary duty of loyalty, breach of contract, tortious interference with a contract, tortious interference with business relationships, and other applicable claims. In January 2026, the Company served a notice of additional 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. 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. On December 10, 2025, defendants filed a motion to compel arbitration of all claims. A hearing on the motion was scheduled for April 27, 2026. As of March 31, 2026, obligations associated with these arrangements are reflected as liabilities on the Company’s condensed 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 condensed consolidated financial statements for any potential recovery or reduction of the recorded liability. The Company will continue to evaluate this matter and will adjust the related liability, if appropriate, based on developments in the litigation. 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 $ 2.3 million, of which approximately $ 1.7 million is already recorded within accounts payable in the accompanying condensed consolidated balance sheet. The remaining $ 0.6 million relates to claims that are not recorded as liabilities in the accompanying condensed consolidated financial statements. Based on management’s evaluation in accordance with ASC 450, Contingencies, a loss related to these unrecorded claims is not probable as of March 31, 2026. Accordingly, no liability has been recognized for these amounts. Note 14. SUBSEQUENT EVENTS Financing Activity On April 1, 2026, the Company entered into a securities purchase agreement with certain investors pursuant to which the Company issued promissory notes in an aggregate principal amount of up to $ 1,250,000 for aggregate gross proceeds of $ 1,000,000 , reflecting a 20 % original issue discount. The notes bear interest at 0 % per annum, except upon the occurrence of an event of default, in which case interest accrues at 15 % per annum. The notes mature on the earlier of twelve months from the date of issuance or the closing of a qualified financing transaction. Reverse Stock Split Authorization On April 2, 2026, the holders of a majority of the Company’s outstanding shares of common stock approved by written consent, in lieu of a special meeting, one or more amendments to the Company’s Certificate of Incorporation to authorize the Board of Directors to effect one or more reverse splits of the Company’s outstanding common stock at a ratio of not less than 1-for-25 and not more than 1-for-200, as determined by the Board of Directors in its sole discretion. The authorization is valid for a period of twelve months from the date of the written consent. The Board of Directors has not yet determined whether to effect a reverse stock split or, if so, the specific ratio to be applied. The reverse stock split, if effected, would become effective upon the filing of a Certificate of Amendment with the Office of the Secretary of State of the State of Delaware. Silverback Capital Corporation On April 3, 2026, the Company terminated its previously disclosed settlement agreement with Silverback Capital Corporation. Prior to termination, the Company had issued an aggregate of 6,866,000 shares of common stock pursuant to the settlement agreement during the three months ended March 31, 2026. Subsequent to termination, on April 8, 2026 and April 10, 2026, the Company issued an aggregate of 6,273,264 additional shares of its common stock to Silverback Capital Corporation at a settlement price of $ 0.1015 per share, for an aggregate settlement value of $ 636,736 , representing share issuances in connection with the settlement arrangement. On May 18, 2026, the Company and Silverback entered into an Agreement Rescinding Termination and Reinstating Settlement Agreement, pursuant to which the parties agreed to rescind and withdraw the April 3, 2026 termination letter, reinstate the Settlement Agreement in its entirety, and continue performance thereunder. The reinstatement acknowledges that certain creditor claims remain outstanding and shall continue to be processed pursuant to the terms of the Settlement Agreement. The administrative close-out process contemplated following the termination was not completed. Collaboration Agreement On April 13, 2026, the Company entered into a collaboration agreement with Kare Rx Hub, LLC, Kare Pharmtech, LLC, and Healthstar Technologies, LLC related to the formation of a new limited liability company in which the Company is expected to hold a 51% ownership interest. As consideration in connection with the transaction, the Company agreed to issue $ 2.0 million of unregistered shares of its common stock, the number of which will be determined based on the market price of the Company’s common stock at the time of issuance. Nasdaq Compliance On April 13, 2026, the Company received a deficiency notice from The Nasdaq Stock Market LLC indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires listed companies on the Nasdaq Capital Market to maintain a minimum stockholders’ equity of $ 2.5 million. The notice does not result in the immediate delisting of the Company’s common stock. The Company intends to submit a plan of compliance within the timeframe specified by Nasdaq. There can be no assurance that Nasdaq will accept the Company’s compliance plan or that the Company will be able to regain compliance within any extension period that may be granted. Forbearance Agreement On May 1, 2026, Wellgistics, LLC entered into an Acknowledgment of Indebtedness, Forbearance and Repayment Agreement with Marco Capital, Inc. pursuant to which Marco Capital, Inc. agreed to forbear from exercising its rights and remedies with respect to approximately $ 1,770,000 of outstanding obligations owed by Wellgistics, LLC through June 15, 2026, subject to the terms and conditions of the agreement. Definitive Proxy Statement On May 4, 2026, the Company filed a definitive proxy statement with the SEC relating to a special meeting of stockholders. The matters to be considered at the special meeting include, among others, a proposed corporate name change to Vantix Health, Inc., the authorization of a class of preferred stock, and an increase in the number of shares reserved for issuance under the Company’s equity incentive plan. 26