What changed in this filing

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Item 1. Financial Statements

2026-08-17 compared with 2026-05-19 · 789 added, 396 removed, 768 unchanged (61% of the section changed)

Financial Statements.

BALANCE SHEETS

DATAMEDS AI, INC.

CONSOLIDATED BALANCE SHEETS

Current assets:

3 unchanged sentences

Due from related party

Prepaid and other current assets

Total current assets

7 unchanged sentences

Accounts payable, related party

Accounts payable

Accrued expenses and other liabilities

Due to related parties

Convertible notes payable

Convertible notes payable, net of debt discount

Current portion of debt obligations, net of debt discount

6 unchanged sentences

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

Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 2,847,198 and 2,045,792 shares issued and 2,836,484 and 2,026,150 shares outstanding as of June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Six Months Ended

Cost of net revenues

Gross profit (loss)

Operating expenses:

6 unchanged sentences

( 5,500,376 )

( 13,360,592 )

( 36,848,744 )

Other income/(expense):

2 unchanged sentences

( 1,184,040 )

Gain on extinguishment of vendor obligation

( 3,633,919 )

( 2,278,530 )

Loss on extinguishment of vendor obligation

Loss on extinguishment of debt

( 8,881,694 )

Loss on contract termination fee

Settlement fees

2 unchanged sentences

( 1,172,088 )

( 12,745,230 )

( 2,254,623 )

Net loss before income taxes

1 unchanged sentence

( 6,672,464 )

( 26,105,822 )

( 39,103,367 )

Provision for income taxes

1 unchanged sentence

$ ( 6,672,464 )

$ ( 26,105,822 )

$ ( 39,103,367 )

Weighted average common shares outstanding - basic and diluted

1 unchanged sentence

the accompanying notes to the unaudited condensed consolidated financial statements

STATEMENTS OF STOCKHOLDERS’ EQUITY

Equity (Deficit)

Stockholders’

Equity (Deficit)

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

Additional Paid-In

Stockholders’ Equity

Balance at December 31, 2024

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$ ( 42,188,063 )

Common stock issued pursuant to equity purchase agreement

Issuance of commitment shares under equity purchase agreement

Common stock issued in partial settlement of seller’s note

Vested restricted stock granted to employees

Offering costs

( 6,672,464 )

Balance at June 30, 2025

$ ( 48,860,527 )

Balance at December 31, 2025

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$ ( 15,062,449 )

$ 103,711,599

$ ( 118,774,287 )

$ ( 15,062,449 )

Common stock issued in pursuant to exercise of warrants

Common stock issued pursuant to consulting agreement

Common stock issued in settlement of vendor obligation

Common stock issued pursuant to contract termination fees

Vested restricted stock granted to employees

Issuance of placement agent warrants in connection with convertible notes

Issuance of PIPE warrants in connection with convertible notes

Equity issuance costs

( 1,488,423 )

Effect of reverse stock split

( 18,363,225 )

Balance at June 30, 2026

$ 117,632,998

$ ( 137,137,512 )

$ ( 19,504,231 )

$ 117,632,998

$ ( 137,137,512 )

$ ( 19,504,231 )

the accompanying notes to the unaudited condensed consolidated financial statements

STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

Cash flows from operating activities:

3 unchanged sentences

Allowances for credit losses

Gain on extinguishment of vendor obligation

Loss on extinguishment on vendor obligation

Loss on extinguishment of debt

Loss on contract termination fee

Amortization of debt discount

Stock-based compensation

Reserve for inventory obsolescence

Changes in operating assets and liabilities:

Deferred offering costs

Accounts receivable, net

Inventories, net

Prepaid expenses

Prepaid and other current assets

Accounts payable

9 unchanged sentences

Cash flows from financing activities:

Proceeds from exercise of warrants

Proceeds from promissory note

1 unchanged sentence

Repayment of seller promissory note

Proceeds from term loan

Proceeds from revolving line of credit

Repayment of revolving line of credit

( 1,643,923 )

( 18,697,494 )

Proceeds from convertible notes

3 unchanged sentences

( 2,104,557 )

Proceeds from common stock issued pursuant to equity purchase agreement

Proceeds from common stock issued pursuant to public offering

Offering costs

Equity issuance costs

( 1,157,500 )

( 1,208,498 )

Net cash provided by financing activities

6 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Issuance of common stock for prepaid consulting services

Issuance of common stock and warrants in settlement of accrued compensation

Issuance of common stock in settlement of vendor and debt obligation

Fair value of warrants issued as debt issuance cost

Fair value of PIPE and placement agent warrants

Convertible notes issued in lieu of cash for placement agent fee

Subscription receivable

Issuance of commitment shares under equity purchase agreement

Common stock issued in partial settlement of seller’s note

the accompanying notes to the unaudited condensed consolidated financial statements

TO THE CONDENDSED CONSOLDIATED FINANCIAL STATEMENTS

TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(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

(formerly known as 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.

duly authorized Certificate of Amendment to its Certificate of Incorporation.

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.

On July 20, 2026,

the Company filed a further Certificate of Amendment to its Amended and Restated Certificate of Incorporation to change its corporate

name to DataMeds AI, Inc., effective July 22, 2026.

See Note 15 — Subsequent Events for additional information.

Company operates as a holding company with Wood Sage LLC (“Wood Sage”) as a directly held intermediate holding company subsidiary,

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network of independent pharmacies.

Healthstar Technologies, LLC

On April 13, 2026, the Company entered into a Collaboration

Agreement with Kare Rx Hub, LLC (“Kare Hub”) and Kare Pharmtech, LLC (“Kare Pharmtech”), providing for the formation

of Healthstar Technologies, LLC (“Healthstar”), a limited liability company in which the Company holds a 51% membership interest

and Kare Hub holds a 49% membership interest.

Healthstar was formed under the laws of the State of Florida on June 18, 2026, with the

Company’s President serving as its sole authorized manager.

The Company evaluated its interest in Healthstar under

ASC 810, Consolidation , and concluded that the Company holds a controlling financial interest in Healthstar through its 51% membership

interest and sole management authority.

Accordingly, Healthstar is consolidated in the Company’s condensed consolidated financial statements.

As of June 30, 2026, Healthstar had not

commenced operations, and Kare Hub had not transferred any assets to Healthstar pursuant to the Collaboration Agreement.

Healthstar had no assets, liabilities, revenues, or expenses as of and for the three and six months ended June 30, 2026, and its formation

and consolidation had no material impact on the Company’s condensed consolidated financial statements.

There were no material transactions

between the Company and Healthstar during the period from Healthstar’s formation on June 18, 2026 through June 30, 2026.

of Significant Accounting Policies

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the year ended December 31, 2025 (the “ Form 10-K ”).

These policies have been applied consistently in these

unaudited condensed consolidated interim financial statements.

These policies have been applied consistently in these unaudited

condensed consolidated interim financial statements.

Interim Financial Information

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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.

June 30, 2026 and for the three and six months then ended.

accompanying unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements

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than those with stockholders.

For the three months ended March 31, 2026 and 2025, there was no difference between net loss and comprehensive

For the three and six months ended June 30, 2026 and 2025, there was no difference between net loss and

comprehensive loss.

accordance with Accounting Standards Codification (“ASC”) 280, Segment Reporting (“ASC 280”), we identify our

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operating and reportable segment.

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.

The key measures of segment profit or loss reviewed

by our CODM are consolidated gross margin, operating income, and net income.

These metrics are reviewed and monitored by the CODM to manage

and forecast cash.

The CODM also reviews operating costs monitor compliance with the Company’s contractual obligations and budgeted spending.

Note 13 for further details.

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Deposits are insured to Federal Deposit Insurance Corp limits.

the three months ended March 31, 2026, no single customer accounted for more than 10 % of the Company’s total revenues.

three months ended March 31, 2025, one customer accounted for approximately 24.6 % of total revenues.

of March 31, 2026, two customers accounted for approximately 25.4 % and 11.1 %, respectively, of gross accounts receivable.

31, 2025, two customers accounted for approximately 20.2 % and 13.0 %, respectively, of gross accounts receivable.

the three and six months ended June 30, 2026, no single customer accounted for more than 10 % of the Company’s total revenues.

the six months ended June 30, 2025, one customer accounted for approximately 15 % of total revenues.

of June 30, 2026, two customers accounted for approximately 22.37 % and 11.26 %, respectively, of gross accounts receivable.

30, 2025, one customers accounted for approximately 23.68 %, of gross accounts receivable.

Company’s revenues and accounts receivable are subject to concentration risk due to its reliance on a limited number of significant

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pricing inputs that are generally less observable from objective sources, such as discounted cash flow models or valuations.

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.

carrying amounts of cash, accounts receivable, deposits, accounts payable, accrued liabilities, notes payable 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.

Receivable and Allowance for Credit Losses

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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.

For the three

months ended June 30, 2026 and 2025, the Company recognized a provision for credit losses of $ 120,080 and $ 124,300 , respectively.

For the six months ended June 30, 2026 and 2025, the Company recognized a provision for credit losses of $ 213,787 and $ 200,454 ,

respectively, within general and administrative expenses.

are stated at the lower of cost and net realizable value.

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Amortization commences when the software is available for our intended use.

of March 31, 2026 and December 31, 2025, the Company capitalized $ 2,704,641 and $ 2,499,553 , respectively, in software development pertaining

of June 30, 2026 and December 31, 2025, the Company capitalized $ 2,946,773 and $ 2,499,553 , respectively, in software development pertaining

to the Delivmeds platform via its DelivMeds subsidiary.

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value of the asset over the asset’s fair value generally determined by estimates of future discounted cash flows.

Company has no t identified any such impairment losses for the three months ended March 31, 2026 and 2025.

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.

Company has no t identified any such impairment losses for the three and six months ended June 30, 2026 and 2025.

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

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.

As the Company operates as a single operating and reportable segment,

as described in Note 13, and no components below the segment level are separately reviewed by segment management, the Company has determined

that it has a single reporting unit, coextensive with the Company as a whole, and all goodwill is tested for impairment on a consolidated

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

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value, an impairment charge equal to the excess is recognized, up to the maximum amount of goodwill allocated to that reporting unit.

goodwill impairment was identified during the three months ended March 31, 2026 and 2025.

goodwill impairment was identified during the three and six months ended June 30, 2026 and 2025.

of Long-Lived Assets

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carrying value of the asset exceeds its fair value, an impairment loss is recognized, and the asset is written down to its fair value.

impairment of long-lived assets was identified during the three months ended March 31, 2026 and 2025.

As described in Note 6, the Company’s distribution business experienced a significant decline in revenue during the

six months ended June 30, 2026.

Management evaluated this decline and believes the Company has sufficient plans in place, including the

financing transactions and strategic initiatives described in Note 2, to address its underlying causes.

Based on this evaluation, no impairment

of long-lived assets was identified during the three and six months ended June 30, 2026 or 2025.

Company accounts for its leases under ASC 842, Leases .

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Disaggregation

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

following is a summary of the disaggregation of revenue for the three and six months ended June 30, 2026 and 2025:

SCHEDULE OF DISAGGREGATION OF REVENUE

Three Months Ended

Six Months Ended

Product revenue - distribution services

1 unchanged sentence

Third party logistics services

revenue for the three months ended March 31, 2026, and 2025, were within the United States.

revenue for the three and six months ended June 30, 2026, and 2025, were within the United States.

Assets and Liabilities

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included in Unearned revenue on the unaudited condensed consolidated balance sheets

March 31, 2026, and December 31, 2025, the Company had unearned revenue of $ 26,000 and $ 488,229 , respectively, included in accrued expenses

June 30, 2026, and December 31, 2025, the Company had contract liabilities of $ 26,000 and $ 488,229 , respectively, included in accrued expenses

and other current liabilities.

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Accordingly, basic and diluted net loss per share are the same for the

three months ended March 31, 2026 and 2025.

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:

six months ended June 30, 2026 and 2025.

following potentially dilutive securities were excluded from the computation of diluted net loss per share for the six months ended June

30, 2026 and 2025:

SCHEDULE OF POTENTIALLY DILUTIVE ITEMS OUTSTANDING

3 unchanged sentences

Total potentially dilutive shares

Company accounts for income taxes in accordance with ASC 740, Income Taxes , under which deferred tax assets and liabilities are

recognized for the future tax consequences of temporary differences between the financial statement carrying amounts of existing assets

and liabilities and their respective tax bases, using enacted tax rates in effect for the year in which the differences are expected

A valuation allowance is established when it is more likely than not that some portion or all of a deferred tax asset will

not be realized.

As of June 30, 2026, the Company has recorded a full valuation allowance against its net deferred tax assets, as management

has concluded that it is more likely than not that such assets will not be realized.

interim periods, the Company determines its income tax provision by applying an estimated annual effective tax rate to year-to-date pre-tax

income (loss), with the effect of discrete items recognized in the period in which they occur.

As a result of the full valuation allowance

recorded against its net deferred tax assets, the Company did not record a provision for income taxes for the three and six months ended

June 30, 2026 and 2025.

The Company recognizes the effect of a tax position only if it is more likely than not to be sustained upon examination

by the relevant taxing authority, based on the technical merits of the position, and measures the tax benefit as the largest amount that

is more than 50% likely of being realized upon ultimate settlement.

Accounting Pronouncements

2025-05 — Measurement of Credit Losses for Accounts Receivable and Contract Assets

July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05,

Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets .

The ASU provides a practical expedient permitting entities to assume that conditions at the balance sheet date remain unchanged over

the life of current accounts receivable and current contract assets when estimating expected credit losses.

The Company does not expect

ASU 2025-05 to have a material impact on its consolidated financial statements.

2024-03 — Disaggregation of Income Statement Expenses

November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation

Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

The ASU requires public business entities to disclose,

in the notes to financial statements, specified information about certain costs and expenses included in expense line items presented

on the face of the income statement.

The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim

periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of ASU 2024-03

on its condensed consolidated financial statements and related disclosures.

2025-06 — Targeted Improvements to the Accounting for Internal-Use Software

September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software .

The ASU requires entities to begin capitalizing software development

costs when management has authorized and committed to funding the software project and it is probable that the project will be completed

and the software will be used to perform its intended function (the “probable-to-complete recognition threshold”).

The amendments

are effective for annual reporting periods beginning after December 15, 2027, with early adoption permitted.

Entities may apply the amendments

using a prospective, modified retrospective, or retrospective transition approach.

The Company is currently evaluating the impact of

ASU 2025-06 and will assess the impact upon adoption.

2025-11 — Interim Reporting:

Narrow-Scope Improvements

December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements .

The ASU requires entities

to disclose events occurring since the end of the last annual reporting period that have a material impact on the entity.

is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods,

with early adoption permitted.

The amendments may be applied either prospectively or retrospectively.

The Company expects ASU 2025-11

to impact its disclosures only and does not expect it to affect its results of operations, financial condition, or cash flows.

LIQUIDITY AND GOING CONCERN

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.

accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has until June 8, 2026 to regain compliance with the minimum bid price

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 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.

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.

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

the three and six months ended June 30, 2026, the Company had a net loss of $ 18,363,225 and $ 26,105,822 , respectively, and had an accumulated

deficit of $ 137,137,512 as of June 30, 2026.

As of June 30, 2026, the Company had cash and cash equivalents of $ 2,456,373 and net cash

used in operating activities of $ 6,307,328 for the six months then ended.

In addition, the Company had a stockholders’ deficit

of $ 19,504,231 as of June 30, 2026.

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.

December 10, 2025, the Company received a notice from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company

was not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires a minimum bid price of $ 1.00 per share.

On June 9, 2026, Nasdaq notified the Company that it had regained compliance with this requirement following

the reverse stock split described below, and the matter was closed.

On April 13, 2026,

the Company received a further notice from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(b)(1),

which requires a minimum stockholders’ equity of $2.5 million.

The Company was afforded 45 calendar days from the date of the notice, or until May 28, 2026, to submit a plan to regain compliance.

The Company timely submitted such a plan.

On June 9, 2026, Nasdaq granted the Company an extension until October

12, 2026 to evidence compliance with the stockholders’ equity requirement, either by furnishing a public report following completion of a transaction or event that satisfies the requirement,

or by furnishing a public report including a pro forma balance sheet evidencing compliance.

If the Company

does not evidence compliance by the time it files its Annual Report on Form 10-K for the year ending December 31, 2026, the Company’s

common stock may be subject to delisting from the Nasdaq Capital Market.

is actively pursuing multiple initiatives to address the Company’s liquidity position and going concern uncertainty:

January 20, 2026, the Company issued secured convertible promissory notes to a group of investors in an aggregate principal amount of

$ 8,125,000 , reflecting a 20 % original issue discount on net proceeds of $ 6,500,000 .

At closing, $ 2,070,000 of the proceeds was applied

directly to repay in full the Company’s outstanding obligations to Agile Capital Funding LLC.

As described below, these notes were

subsequently extinguished and replaced in May 2026.

April 1, 2026, the Company issued an additional convertible promissory note in the principal amount of $ 1,500,000 , reflecting a 20 % original

issue discount on net proceeds of $ 1,200,000 .

This note was also subsequently extinguished and replaced in May 2026, as described below.

May 20, 2026, the Company filed a Certificate of Amendment to effect a reverse stock split

of its common stock at a ratio of 1-for-50 , which had been approved by stockholders on April 2, 2026 at a ratio to be determined by the

Board of Directors within a range of 1-for-25 to 1-for-200 .

The reverse stock split became effective on May 26, 2026.

May 20, 2026, the Company entered into a Letter of Intent (the “Term Sheet”) with EOS Technology Holdings, Inc., Scilex Holding

Company, Datavault AI, Inc., HealthBridge Advisors, LLC, and Fortitude Advisors, LLC with respect to a proposed transaction, as further

described in Note 10.

In connection with the proposed transaction, the Term Sheet contemplates a concurrent minimum investment of $ 2,000,000

from investors associated with the Company’s placement agent, the filing of an at-the-market offering facility, and additional

financing support for the Company.

The proposed transaction remains subject to negotiation and execution of definitive agreements, stockholder

and other approvals, and other customary closing conditions, and there can be no assurance that any of the contemplated financing will

May 27, 2026, the Company entered into a new Note Purchase Agreement with substantially the same group of investors that held the notes

issued in January and April 2026, together with certain additional investors.

Pursuant to this agreement, the previously outstanding

notes were extinguished and replaced with new convertible promissory notes in an aggregate principal amount comprised of $ 9,625,000

rolled over from the previously outstanding notes and $ 6,500,000

of new money from investors, before giving effect to the original

issue discount.

Additionally, $ 133,985

of the placement agent’s fee payable to Dawson James

Securities, Inc.

in connection with this financing was settled through the issuance of a note in lieu of cash, bringing the aggregate

principal amount of notes issued to $ 20,323,732 .

In connection with this refinancing, the Company recognized a loss on extinguishment of debt of $ 8,378,189

for the three and six months ended June 30, 2026.

Wellgistics, LLC Distribution Business

Product revenue from distribution services declined significantly during the six months ended June 30, 2026 as compared

to the corresponding period in 2025, primarily due to liquidity constraints that limited the Company’s ability to procure and fulfill

product orders, as described under “Results of Operations” in Item 2 of this Quarterly Report.

Management has evaluated this

decline and believes the Company has sufficient plans in place, including the financing transactions and strategic initiatives described

above, to address its underlying causes.

Based on this evaluation, management concluded that the carrying value of the goodwill and other

intangible assets attributable to the distribution business was not impaired as of June 30, 2026.

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 accordance with FASB ASU 2014-15, Disclosures

of Uncertainties about an Entity’s Ability to Continue as a Going Concern , management has concluded that the conditions described

above raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the date

these financial statements are issued.

ACCOUNTS RECEIVABLE, NET

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Allowance for credit losses

( 1,044,137 )

Total accounts receivable, net

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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.

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.

the year ended December 31, 2025 and remained unchanged as of June 30, 2026.

the three and six months ended June 30, 2026, the Company recorded a reserve for obsolescence of $ 55,000 and $ 72,967 , respectively related

to finished goods inventory, included in cost of net revenues in the unaudited condensed consolidated statements of operations.

PROPERTY, PLANT AND EQUIPMENT, NET

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Property, plant and equipment, net

expense was $ 27,862 and $ 39,807 for the three months ended March 31, 2026, and 2025, respectively,

expense was $ 27,635 and $ 39,731 for the three months ended June 30, 2026 and 2025, respectively, and $ 55,497 and $ 79,538 for the six

months ended June 30, 2026 and 2025, respectively.

INTANGIBLE ASSETS

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Customer relationships - Wellgistics acquisition

Trademark - Wellgistics acqusition

Trademark - Wellgistics acquisition

License rights

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development costs relate to the Wellgistics Tech & Hub, LLC platform.

As of March 31, 2026 and December 31, 2025, the Company had

As of June 30, 2026 and December 31, 2025, the Company had

gross capitalized software development costs of $ 2,946,773 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.

during the year ended December 31, 2025, remained unchanged as of June 30, 2026, resulting in a net carrying value of $ 2,297,588 and

$ 1,850,358 as of June 30, 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.

amortization has not commenced as of June 30, 2026.

Relationships and Trademark

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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.

Amortization expense related to these intangible assets was $ 12,308 and $ 24,616 for the three months ended June

30, 2026, and 2025, respectively, and $ 12,308 and $ 24,616 for the six months ended June 30, 2026 and 2025, respectively.

assets of $ 11,256,067 and $ 10,143,137 represent customer relationships and trademarks, respectively, identified and measured at fair

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No impairment charges were recognized during the three

months ended March 31, 2026.

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.

amortization expense related to other intangible assets was $ 328,962 and $ 763,064 for the three months ended March 31, 2026 and 2025,

respectively.

and six months ended June 30, 2026.

The Company’s distribution business experienced a significant decline in

revenue during the six months ended June 30, 2026, as described in Note 2.

Management evaluated this decline and believes the Company

has sufficient plans in place, including the financing transactions and strategic initiatives described in Note 2, to address its underlying

Based on this evaluation, no impairment was identified as of June 30, 2026.

expense related to Wellgistics customer relationships was $ 183,932 and $ 469,003 for the three months ended June 30, 2026 and 2025, respectively

and $ 367,865 and $ 938,006 for the six months ended June 30, 2026 and 2025, respectively.

expense related to the Wellgistics trademark was $ 132,722 and $ 281,754 for the three months ended June 30, 2026 and 2025, respectively

and $ 265,444 and $ 563,508 for the six months ended June 30, 2026 and 2025 respectively.

amortization expense related to other intangible assets was $ 328,962 and $ 763,064 for the three months ended June 30, 2026 and 2025,

respectively and $ 657,924 and $ 1,526,129 for the six months ended June 30, 2026 and 2025, respectively.

following table represents the future amortization of intangible assets:

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Accrued interest

Accrued expenses and other liabilities

Accrued expenses and

other liabilities

debt consists of the following:

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Long-term debt

of March 31, 2026 and December 31, 2025, unamortized debt discount was $ 2,268,898 and $ 1,568,776 , respectively.

of June 30, 2026 and December 31, 2025, unamortized debt discount was $ 8,818,103 and $ 1,568,776 , respectively.

October 20, 2025, the Company entered into a merchant cash advance agreement with Cedar Advance LLC (the “October 2025 MCA”).

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effective interest method.

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.

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 Company and Cedar Advance LLC are currently

in mutual discussions to amend the weekly repayment amount under the October 2025 MCA.

During the three months ended June 30, 2026, the

Company made reduced weekly payments of $ 10,000 , compared to the contractual weekly installment of $ 56,800 .

As of June 30, 2026, the Company

had not received a notice of default under the October 2025 MCA.

the three and six months ended June 30, 2026, the Company made total repayments of $ 115,000 and $ 296,800 , respectively, under the merchant

cash advance arrangement.

For the three months ended June 30, 2026, interest expense of $ 115,000 was recognized from amortization of

the related debt discount.

For the six months ended June 30, 2026, $ 89,909 of the total repayments represented a reduction of the carrying

value of the arrangement.

For the three and six months June 30, 2026, $ 115,372 and $ 206,891 , respectively, represented amortization of

the related debt discount, recorded as interest expense in the condensed consolidated statements of operations.

of June 30, 2026, the gross contractual repayment obligation under the merchant cash advance was $ 2,250,400 .

The related unamortized

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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

October 29, 2025, the Company entered into a financing arrangement with Agile Capital Funding LLC (“Agile”) pursuant to which

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using the effective interest method.

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.

of March 31, 2026, there were no amounts outstanding under the Agile arrangement.

the three months ended March 31, 2026, the Company made a scheduled weekly payment of $ 75,789 ,

of which $ 41,232

represented interest expense from amortization of the related

debt discount and $ 34,557

represented a reduction of principal.

Subsequent to that payment,

the Company repaid the remaining outstanding balance under the Agile arrangement prior to its scheduled maturity for total cash payments

of $ 2,070,000 .

The Company accounted for the settlement as an extinguishment of debt in accordance with ASC 470-50, Debt — Modifications and

Extinguishments .

In connection with the extinguishment, the Company derecognized the remaining gross contractual repayment obligation

and the related unamortized debt discount, resulting in a loss on extinguishment of debt of $ 503,505 ,

representing the excess of the cash paid over the net carrying amount of the obligation immediately prior to settlement.

Company recognized interest expense related to the Agile arrangement of $ 0 and $ 41,232 , and a loss on extinguishment of debt of $ 0 and

$ 503,505 , for the three and six months ended June 30, 2026, respectively.

of June 30, 2026, there were no amounts outstanding under the Agile arrangement.

As of December 31, 2025, the net carrying amount of

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equal to the Prime Rate as published by The Wall Street Journal on January 1 of the applicable year.

the three months ended March 31, 2026 and 2025, the Company recognized interest expense of $ 366,781 and $ 318,750 , respectively, related

the three months ended June 30, 2026 and 2025, the Company recognized interest expense of $ 370,856 and $ 327,182 , 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.

For the six months ended June 30, 2026 and 2025, the Company recognized interest expense of $ 737,637 and

$ 645,932 , respectively, related to the seller promissory note.

of June 30, 2026 and December 31, 2025, accrued interest on the note totaled $ 1,389,692 and $ 652,055 , respectively, and is included in

accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets.

As of June 30, 2026 and December

31, 2025, $ 5,000,000 of the promissory note was classified as a current liability, representing the principal payment due within twelve

months, and the remaining $ 12,500,000 was classified as non-current, in the condensed consolidated balance sheets.

Payable – Third party

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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.

During the six months ended

June 30, 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 June 30, 2026 and 2025, the Company recognized $ 0 and

$ 11,210 , respectively, as interest expense, and $ 0 and $ 11,304 , respectively, as amortization of debt discount, related to the Arvoda

For the six months ended June 30, 2026 and 2025, the Company recognized $ 399 and $ 22,021 , respectively, as interest expense, and

$ 0 and $ 33,411 , respectively, as amortization of debt discount, related to the Arvoda note.

As of June 30, 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.

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 %

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

and $ 18,124 ,

respectively, and the aggregate outstanding principal of $ 200,000

is classified as a current liability in the condensed consolidated balance sheets.

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

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 June 30, 2026,

the Company had not received any such written notice and, accordingly, no event of default had occurred.

For the three months ended June

30, 2026 and 2025, the Company recognized aggregate interest expense of $ 5,000 and $ 5,000 , respectively, related to this note.

six months ended June 30, 2026 and 2025, the Company recognized aggregate interest expense of $ 10,000 and $ 8,123 , respectively.

June 30, 2026 and December 31, 2025, aggregate accrued interest payable on this note was $ 28,124 and $ 18,124 , respectively, and the aggregate

outstanding principal of $ 200,000 is classified as a current liability in the condensed consolidated balance sheets.

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

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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 ,

For the three months ended June 30, 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.

For the six months ended June 30, 2026 and 2025, the

Company recognized interest expense of $ 22,500 and $ 0 , respectively, related to this note, accrued at the default rate of 18 % per annum.

As of June 30, 2026 and December 31, 2025, accrued interest payable on this note was $ 44,622 and $ 22,122 , respectively, and the outstanding

principal of $ 250,000 is classified as a current liability in the condensed consolidated balance sheets.

September 2023, the Company entered into a promissory note agreement with a third party investor for a principal amount of $ 100,000 ,

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common stock upon the consummation of a SPAC transaction or merger.

As of March 31, 2026, this condition had not been met and accordingly

As of June 30, 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

For the three months ended June 30, 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.

For the six months ended June 30, 2026 and 2025, the Company recognized interest expense

of $ 4,000 and $ 4,000 , respectively, related to this note.

As of June 30, 2026 and December 31, 2025, accrued interest payable on this

note was $ 23,666 and $ 19,666 , respectively, and the outstanding principal of $ 100,000 is classified as a non-current liability in the

condensed consolidated balance sheets.

line of credit – Wellgistics

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.

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.

November 2024, Wellgistics, LLC (“Wellgistics”), a wholly owned subsidiary of the Company, entered into a credit agreement

with Marco Capital, Inc.

(“MCI”) for a revolving line of credit with a maximum borrowing capacity of $ 10,000,000 .

of credit bears interest at a rate equal to Term SOFR plus 11.5% per annum, calculated and prorated daily on the outstanding balance,

representing an aggregate rate of approximately 16.84% per annum as of December 31, 2025 .

The line of credit was collateralized by the

accounts receivable and inventory balances of Wellgistics.

May 1, 2026, Wellgistics entered into an Acknowledgment of Indebtedness, Forbearance and Repayment Agreement (the “Forbearance

Agreement”) with MCI, pursuant to which Wellgistics acknowledged approximately $ 1.77 million of outstanding obligations owed to

MCI under the credit agreement.

The Company and certain members of management also entered into the Forbearance Agreement to reaffirm

certain guaranty obligations.

Under the Forbearance Agreement, MCI agreed to temporarily forbear from exercising certain rights and remedies

under the existing loan documents through June 15, 2026, and Wellgistics agreed to make bi-weekly payments of $ 50,000 beginning May 5,

2026, with outstanding obligations continuing to accrue interest at Term SOFR plus 11.5 % per annum.

The Forbearance Agreement also provided

that a portion of net proceeds from certain future financing transactions by the Company or its affiliates during the forbearance period

could be required to be applied toward repayment of the outstanding obligations, subject to specified thresholds.

the three months ended June 30, 2026 and 2025, the Company recognized interest expense of $ 199,075 and $ 332,439 , respectively, related

to the line of credit.

For the six months ended June 30, 2026 and 2025, the Company recognized interest expense of $ 267,302 and $ 614,199 ,

respectively, related to the line of credit.

May 29, 2026, the Company repaid the outstanding balance under the line of credit in full, for a total payment of $ 1,666,132 , in advance

of the forbearance period end date.

As of June 30, 2026, there were no amounts outstanding under the line of credit.

As of December 31,

2025, the outstanding balance under the line of credit was $ 1,643,923 , and was classified as a current liability in the condensed consolidated

balance sheets.

notes payable

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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.

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.

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:

OF GRANT- DATE FAIR VALUE OF WARRANTS

Three Months Ended

Exercise price

Risk-free interest rate

Expected term (in years)

Expected volatility

Expected dividend yield

On April 1, 2026, the Company issued an additional convertible promissory

note in the principal amount of $ 1,250,000 for gross proceeds of $ 1,000,000 , reflecting a 20 % original issue discount.

On May 20, 2026,

the Company issued a further convertible promissory note in the principal amount of $ 250,000 for gross proceeds of $ 200,000 , reflecting

a 20 % original issue discount (together, the “Original Notes”).

The Original Notes bore interest at 0 % per annum, except

upon an event of default, and were convertible into shares of the Company’s common stock at the election of the holder.

connection with the January 2026 Original Note, the Company paid placement agent fees of $ 422,500 and legal fees of $ 75,000 in cash,

and issued warrants to purchase an aggregate of 21,953 shares of common stock, at an exercise price of $ 20.50 per share, to the placement

agent and its designees.

The fair value of these warrants, $ 416,965 , determined using the Black-Scholes option-pricing model, was recorded

as a debt issuance cost.

The Company accounted for the original issue discount, together with debt issuance costs, as a reduction of

the carrying amount of the Original Notes, which is accreted to interest expense over the term of each note using the effective interest

method in accordance with ASC 835-30, Interest — Imputation of Interest .

27, 2026 Refinancing

May 27, 2026, the Company entered into a new Note Purchase Agreement with substantially the same group of investors that held the Original

Notes, together with certain additional investors (the “New Notes”).

Pursuant to this agreement, the Original Notes, with

an aggregate face amount of $ 9,625,000 and a net carrying value of $ 8,501,187 immediately prior to the refinancing, were extinguished,

and the Company issued New Notes in an aggregate principal amount of $ 20,323,731 , comprised of $ 9,625,000 attributable to the rollover

of the Original Notes (grossed up to $ 12,031,250 in face value under the New Notes at a 20 % original issue discount), $ 8,125,000 attributable

to new money of $ 6,500,000 , reflecting a 20 % original issue discount, and $ 167,481 attributable to a note issued in lieu of cash for

a portion of the placement agent’s fee.

connection with the extinguishment, the Company calculated the reacquisition price of the Original Notes as the sum of the fair value

of the New Notes issued in respect of the rollover $ 9,625,000 and the fair value of warrants issued to the holders of the Original Notes

in connection with the refinancing $ 7,254,377 , for a total reacquisition price of $ 16,879,377 .

The Company recognized a loss on extinguishment

of debt of $ 8,378,189 , representing the excess of the reacquisition price over the $ 8,501,187 net carrying amount of the Original Notes

immediately prior to the refinancing.

New Notes mature on May 27, 2027 , and bear interest at 0 % per annum, except upon an event of default.

The New Notes are convertible,

at the election of the holder, into shares of the Company’s common stock and are secured by substantially all of the assets of

the Company and its wholly-owned subsidiaries.

connection with the May 27, 2026 financing, the Company issued warrants to purchase an aggregate of 7,914,758 shares of common stock

to participating investors (“PIPE Warrants”) and warrants to purchase an aggregate of 1,418,444 shares of common stock to

the placement agent and its designees (“PA Warrants”).

The Company allocated the fair value of the PIPE Warrants between

the rollover and new-money tranches on a pro rata basis based on relative principal amounts.

The fair value of the PIPE Warrants allocated

to the rollover tranche, $ 7,254,377 , was included in the reacquisition price described above.

The fair value of the PIPE Warrants allocated

to the new-money tranche, together with the standalone fair value of the New Notes attributable to new money, was allocated between the

New Notes and additional paid-in capital using the relative fair value method, resulting in $ 3,706,446 allocated to the New Notes and

$ 2,793,554 allocated to additional paid-in capital as a debt discount.

The fair value of the PA Warrants, $ 2,685,666 , was recorded as

a debt issuance cost.

Cash legal fees of $ 660,000 and the fair value of the PA Warrants were allocated between debt issuance cost and

equity issuance cost based on the relative fair value of the debt and equity components of the financing, resulting in $ 1,991,227 allocated

to debt issuance cost (a reduction of the carrying amount of the New Notes) and $ 1,488,424 allocated to equity issuance cost (a reduction

of additional paid-in capital).

Company accounts for the resulting discount and debt issuance costs as a reduction of the carrying amount of the New Notes, which is

accreted to interest expense over the term of the New Notes using the effective interest method in accordance with ASC 835-30.

the three months ended June 30, 2026, the Company recognized interest expense related to the Original Notes and New Notes of $ 1,472,095 ,

substantially all of which represented non-cash accretion of debt discount and debt issuance costs.

For the six months ended June 30,

2026, the Company recognized interest expense related to the Original Notes and New Notes of $ 2,343,252 .

There was no comparable amount

for the three or six months ended June 30, 2025.

of June 30, 2026, the gross principal amount of the New Notes was $ 20,323,731 , and the unamortized debt discount and debt issuance costs

were $ 8,221,928 , resulting in a net carrying amount of $ 12,101,803 , classified as a current liability in the condensed consolidated balance

As of December 31, 2025, no amounts were outstanding under the Original Notes or the New Notes.

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

SCHEDULE OF ANNUAL PRINCIPAL PAYMENTS

2026 (nine months ending December 31, 2026)

2026 (Six months ending December 31, 2026)

Principal gross

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STOCKHOLDERS’ EQUITY

May 26, 2026, the Company effected a 1-for-50 reverse stock split for its common stock (the “Reverse Stock Split”), as described

All shares and per share amounts in these condensed consolidated financial statements and notes thereto have been retroactively

restated for all periods presented to reflect Reverse Stock Split.

January 13, 2026, the Company issued 24,490 shares of its common stock to Hudson Global Ventures, LLC as consideration for consulting

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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.

consolidated statements of operations for the three and six months ended June 30, 2026.

March 4, 2026, the Company entered into a Marketing Services Agreement with Outside The Box Capital Inc.

(“OTB”), pursuant

to which OTB agreed to provide marketing and distribution services to the Company for an initial term from March 5, 2026 through September

On May 20, 2026, the Company issued 14,085 shares of common stock to OTB in satisfaction of this obligation.

The fair value

of the shares, based on the closing market price of $ 10.63 per share on the date of issuance, was $ 149,718 .

The Company is recognizing

the fair value of the shares as expense within sales and marketing expenses in the condensed consolidated statements of operations over

the remaining term of the agreement.

For the three and six months ended June 30, 2026, the Company recognized $ 93,990 of expense related

to this agreement, with the remaining unamortized balance of $ 55,728 recorded as a prepaid and other current assets in the condensed

consolidated balance sheets as of June 30, 2026.

January 28, 2026, the Company entered into a Settlement Agreement and Stipulation with Silverback Capital Corporation (“Silverback”),

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of $ 259,880 , which is included in other income in the condensed consolidated statements of operations for the three months ended March

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

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.

March 23, 2026, the Company issued an aggregate of 8,000 shares of its common stock to Silverback in two components — 2,000 shares

as consideration for settlement fees and 6,000 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 $ 6.50 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.

April 3, 2026, the Company delivered a termination letter to Silverback purporting to terminate the Settlement Agreement.

In connection

with the purported termination, the Company issued an aggregate of 125,465 shares of common stock to Silverback during the three months

ended June 30, 2026 — 40,000 shares on April 8, 2026 and 85,465 shares on April 10, 2026 — with an aggregate fair value of

$ 766,392 , based on closing market prices of $ 6.34 and $ 6.00 per share, respectively, on the applicable dates of issuance.

The aggregate

fair value of these shares was recognized as a loss on contract termination fee within the condensed consolidated statements of operations

for the three and six months ended June 30, 2026.

May 18, 2026, the Company and Silverback entered into an Agreement Rescinding Termination and Reinstating Settlement Agreement, pursuant

to which the parties rescinded the April 3, 2026 termination letter and reinstated the Settlement Agreement in its entirety, effective

as of that date.

Following reinstatement, on May 20, 2026, the Company issued 100,000 shares of common stock to Silverback at an agreed

settlement price of $ 3.25 per share, in satisfaction of $ 325,000 of outstanding creditor claims under the Settlement Agreement.

value of the shares issued, based on the closing market price of $ 6.45 per share, was $ 645,000 , which exceeded the carrying amount of

the obligations settled, resulting in a loss on extinguishment of vendor obligation $ 320,000 , which is included in other expense in the

condensed consolidated statements of operations for the three and six months ended June 30, 2026.

Compensation Settlement

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

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.

March 18, 2026, the Board of Directors approved the settlement of accrued compensation obligations owed to our Chairman of the Board

and our President and Interim Chief Executive Officer through the issuance of equity securities.

Pursuant to the settlement, the Company

issued 100,000

shares of common stock to each individual, for an aggregate

shares, together with 5 five-year

warrants to purchase 100,000

shares of common stock issued to each individual, for an aggregate

warrants, originally exercisable at $ 0.50

The shares were issued on March 31, 2026 pursuant

to Section 4(a)(2) of the Securities Act of 1933.

fair value of the shares on the date of issuance, based on the closing market price of $ 6.50 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

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.

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 fair value of the warrants on the date of issuance was $ 1,289,580 in aggregate, determined using the Black-Scholes option pricing

model with the following assumptions:

stock price of $ 6.50 , exercise price of $ 0.50 , expected term of 5 years, annualized volatility

of 186.0 %, risk-free interest rate of 3.87 %, and no expected dividends.

aggregate fair value of the equity consideration issued of $ 2,589,580 was applied to settle accrued payroll expenses and accrued bonus

of $ 2,000,000 .

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.

Public Offering

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.

February 25, 2025, the Company issued 52,000 shares of restricted common stock to Hudson Global Ventures, LLC as consideration for consulting

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.

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.

the three months ended June 30, 2026, the exercise price of the warrants was reduced from $ 0.50 to $ 0.005 per share.

The Company accounted

for the change as a modification in accordance with ASC 718-20, and recognized the incremental fair value of $ 10,031 , determined using

the Black-Scholes option pricing model with the same assumptions as the original grant other than the revised exercise price, as stock-based

compensation expense within general and administrative expenses in the condensed consolidated statements of operations for the three

and six months ended June 30, 2026.

Subsequent to the modification, each individual exercised their warrants in full, and the Company

issued an aggregate of 200,000 shares of common stock for total cash proceeds of $ 1,000 .

Equity Incentive Plan

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”).

Company adopted the 2023 Equity Incentive Plan (the “Plan”), which provides the issuance of up to 870,121 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

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to service-based vesting conditions.

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.

summary of restricted common stock activity for the three months ended March 31, 2026 and 2025 is as follows:

summary of restricted common stock activity for the six months ended June 30, 2026 is as follows:

SCHEDULE OF RESTRICTED COMMON STOCKS

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Forfeited and cancelled

Unvested shares as of March 31, 2026

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.

of March 31, 2026, total unrecognized compensation expense related to unvested restricted stock awards was $ 1,560,886 , which is expected

Unvested shares as of June 30, 2026

the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of $ 1,096,794 and $ 1,291,878 , respectively,

related to restricted common stock awards, included within general and administrative expenses in the condensed consolidated statements

of operations.

the three and six months ended June 30, 2025, the Company recognized $ 935,222 and $ 28,708,643 , respectively, in stock-based compensation

expense in accordance with ASC 718, Compensation — Stock Compensation , based on the grant-date fair value of restricted

stock awards.

Stock-based compensation expense for the three and six months ended June 30, 2025 included within sales and marketing expenses

was $ 65,217 and $ 400,000 , respectively, and stock-based compensation expense included within general and administrative expenses was

$ 870,005 and $ 28,308,643 , respectively.

The six months ended June 30, 2025 included $ 27,154,489 attributable to the immediate vesting

of 187,272 shares granted on March 14, 2025.

of June 30, 2026, total unrecognized compensation expense related to unvested restricted stock awards was $ 1,299,049 , which is expected

to be recognized over a weighted-average remaining period of 2.32 years.

summary of warrant activity for the three months ended March 31, 2026 is as follows:

Director Equity Awards

to the Company’s non-employee director compensation policy, upon appointment to the Board of Directors, each non-employee director

is entitled to a grant of 4,000

shares of restricted common stock, vesting in equal installments

over a 3 three-year

These awards are accounted for as restricted stock units under ASC 718;

the underlying shares are issued upon vesting rather

than at grant, and accordingly are not reflected in the table above.

February 4, 2026, the Company granted 4,000

shares under this policy to a newly appointed independent director,

vesting in equal annual installments over a 3 three-year

The grant date fair value of the award was $ 68,000 ,

determined based on the closing market price of $ 17.00

per share on the date of grant.

In addition, the director an

annual equity award of 1,200

shares of common stock under the Plan, issuable in arrears

following the end of each calendar year.

As of June 30, 2026, no shares had been issued in connection with this annual equity award.

March 19, 2026, the Company granted 4,000

shares under this policy to a second newly appointed independent

director, vesting in equal annual installments over a 4 four-year

period pursuant to the terms of that director’s engagement letter.

The grant date fair value of the award was $ 23,960 ,

determined based on the closing market price of $ 5.99

per share on the date of grant.

the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of $ 7,335 and $ 10,748 , respectively,

related to the unissued director equity awards described above, included within general and administrative expenses in the condensed

consolidated statements of operations.

of June 30, 2026, total unrecognized compensation expense related to unissued director equity awards was $ 81,212 , which is expected to

be recognized over a weighted-average remaining period of 3.16 years.

summary of warrant activity for the six months ended June 30, 2026 is as follows:

SCHEDULE OF WARRANT ACTIVITY

Weighted Average Excerise Price

Weighted Average

Exercise Price

Outstanding, December 31, 2025

Expired and cancelled

Unvested shares as of March 31, 2026

Unvested shares as of June 30, 2026

January 20, 2026, the Company issued 21,953 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.

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:

The fair value of these warrants, determined using the Black-Scholes

option pricing model, was $ 416,965 in aggregate, based on a stock price of $ 19.50 per share, exercise price of $ 20.50 , expected term

of 5.00 years, expected volatility of 196.9 %, risk-free interest rate of 3.86 %, and no expected dividends.

March 18, 2026, the Company issued an aggregate of 200,000 warrants to our Chairman of the Board and our President and Interim Chief

Executive Officer in connection with the settlement of accrued compensation obligations, exercisable at $ 0.50 per share and expiring

March 18, 2031 .

The fair value of the warrants, determined using the Black-Scholes option pricing model, was $ 1,289,580 in aggregate,

$ 6.45 per warrant, based on a stock price of $ 6.50 per share, exercise price of $ 0.50 , expected term of 5.00 years, expected volatility

of 186.0 %, risk-free interest rate of 3.87 %, and no expected dividends.

the three months ended June 30, 2026, the exercise price of these warrants was reduced to $ 0.005 per share.

The Company accounted for

the change as a modification in accordance with ASC 718-20, and recognized incremental fair value of $ 10,031 as stock-based compensation

expense within general and administrative expenses in the condensed consolidated statements of operations.

Subsequent to the modification,

each holder exercised their warrants in full, and the Company issued an aggregate of 200,000 shares of common stock for total cash proceeds

May 27, 2026, in connection with the Note Purchase Agreement described in Note 8, the Company issued warrants to purchase an aggregate

of 7,914,758 shares of common stock to participating investors, exercisable at $ 7.50 per share, and warrants to purchase an aggregate

of 1,418,444 shares of common stock to the placement agent and its designees, exercisable at $ 4.275 per share, in each case expiring

five years from the date of issuance.

following table presents the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of warrants

issued during the three months ended June 30, 2026:

OF FAIR VALUE OF WARRANTS

Three Months Ended

PIPE Warrants

Exercise price

3 unchanged sentences

Expected dividend yield

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.

PROPOSED TRANSACTION

May 20, 2026, the Company entered into a Fully Binding Term Sheet, dated May 18, 2026, with EOS Technology Holdings, Inc.

Scilex Holding Company (“Scilex”), Datavault AI Inc.

(“Datavault”), HealthBridge Advisors, LLC (“HBA”),

and Fortitude Advisors, LLC (“Fortitude”).

On July 29, 2026, the Company entered into an Amended and Restated Letter of Intent

(the “LOI”) with EOS, Scilex, Datavault, and HBA, which superseded and replaced the Term Sheet in its entirety.

is not a party to the LOI, although the proposed transaction contemplates certain rights and obligations relating to Fortitude, as described

to the LOI, and subject to the negotiation and execution of definitive agreements, the Company would acquire or exclusively license certain

intellectual property assets from EOS and Scilex, expand its existing license arrangement with Datavault to include Datavault AI Health,

and acquire a controlling interest in Tollo Health, LLC through an exchange of membership interests with HBA, the controlling member

of Tollo Health, LLC.

Consideration under the LOI consists solely of shares of the Company’s common stock (“Acquisition Stock”).

No preferred stock, convertible securities, or contingent conversion features would be issued as consideration.

issuance of the Acquisition Stock, EOS, Scilex, Datavault, and HBA are expected to own, in the aggregate, approximately 84.6% of the

Company’s common stock, consisting of 19.9% for each of EOS, Scilex, and Datavault, and 24.9% for HBA.

Fortitude is expected to

own approximately 5.0%, and the Company’s existing public stockholders are expected to hold the remaining approximately 10.4%.

These percentages represent target post-closing ownership on a fully diluted basis and are subject to adjustment for a liability reduction

framework, financing transactions, conversion or settlement of convertible debt, transaction expenses, and other adjustments to be set

forth in the definitive agreements.

LOI contemplates that the Company will use one or more liability reduction or financing transactions to address outstanding Company liabilities

prior to closing.

The LOI further contemplates that the definitive agreements will include a registration rights agreement covering the

resale of the Acquisition Stock, post-closing transfer restrictions, including a six-month lock-up period for certain holders, and certain

management and board changes, including the appointment of two new management team members and four board designees following closing.

of the proposed transaction is subject to a number of conditions, including completion of due diligence, negotiation and execution of

definitive agreements, receipt of a fairness opinion, approval by the Company’s board of directors, applicable stockholder approvals,

availability of financing, and satisfaction of Nasdaq requirements, including approval of an initial listing application if the transaction

is treated as a change of control under Nasdaq Listing Rule 5110(a).

Under the exclusivity provisions of the LOI, the parties have agreed

to negotiate exclusively with one another through September 30, 2026, subject to a 30-day due diligence period during which the Company

may terminate the LOI under specified circumstances.

of June 30, 2026, the Company had not entered into definitive agreements with respect to the proposed transaction.

No Acquisition Stock

had been issued, and no assets, liabilities, or other financial statement effects had been recorded in connection with the Term Sheet

There can be no assurance that definitive agreements will be entered into, that the required approvals or financing will

be obtained, or that the proposed transaction will be consummated on the terms described above, or at all.

LEASE OBLIGATIONS

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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

No new transactions occurred with Scietech, LLC during the three months ended March 31, 2026.

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 June 30, 2026 and December 31, 2025, accounts payable to Scietech, LLC was $ 25,500 .

No new transactions

occurred with Scietech, LLC during the three and six months ended June 30, 2026.

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.

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:

As of June 30, 2026, there were no amounts outstanding.

of June 30, 2026, the Company had outstanding advances of $ 4,200 due from an officer of the Company, representing amounts paid on behalf

of the Company for business purposes, which is included in due from related party in the unaudited condensed consolidated balance sheets.

Commissiong, who was appointed Interim Co-Chief Executive Officer of the Company effective May 20, 2026, also serves as Chief Executive

Officer of Tollo Health, LLC and as Managing Partner of Fortitude Advisors, LLC (“Fortitude”), which qualifies Tollo Health

and Fortitude as related parties of the Company effective May 20, 2026.

Fortitude provides Chief Business Officer consulting services

to the Company under an existing consulting agreement.

Tollo Health is a party to, and Fortitude is expected to receive an ownership

interest in connection with, the proposed transaction described in Note 10.

the three and six months ended June 30, 2026, the Company incurred consulting fees to Fortitude of $ 119,995 and $ 169,995 , respectively.

As of June 30, 2026, the Company had a receivable of $ 21,868 due from Tollo Health, included in due from related party in the unaudited

condensed consolidated balance sheets.

As of December 31, 2025, neither Tollo Health nor Fortitude was a related party of the Company.

the three and six months ended June 30, 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 and six months ended June 30, 2026 and 2025:

OF RELATED PARTY TRANSACTION

Three Months Ended

Six Months Ended

Sales to Integra Pharma Solutions, LLC

1 unchanged sentence

IT expenses paid to Cingo Solutions

SaaS expenses paid to RxERP

Related party transaction

SEGMENT AND GEOGRAPHIC INFORMATION

7 unchanged sentences

general and administrative expenses or technology and development.

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:

following table presents selected financial information with respect to the Company’s single operating segment for the three and

six months ended June 30, 2026 and 2025:

SCHEDULE OF SEGMENT AND GEOGRAPHIC INFORMATION

Three Months Ended

Six Months Ended

Cost of net revenues

8 unchanged sentences

( 5,500,376 )

( 13,360,592 )

( 36,848,744 )

Other income/(expense):

2 unchanged sentences

( 1,184,040 )

Gain on extinguishment of vendor obligation

( 3,633,919 )

( 2,278,530 )

Loss on extinguishment of vendor obligation

Loss on extinguishment of debt

( 8,881,694 )

Loss on contract termination fee

Settlement fees

2 unchanged sentences

( 1,172,088 )

( 12,745,230 )

( 2,254,623 )

Net loss before income taxes

1 unchanged sentence

( 6,672,464 )

( 26,105,822 )

( 39,103,367 )

Provision for income taxes

1 unchanged sentence

$ ( 6,672,464 )

$ ( 26,105,822 )

$ ( 39,103,367 )

revenues were within the U.S.

27 unchanged sentences

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.

The underlying amount has been recorded as a liability and is included within

accounts payable in the accompanying condensed consolidated balance sheet.

Lifsa’s underlying claim was subject to a Claim Purchase Agreement,

dated January 28, 2026, between Silverback Capital Corporation (“Silverback”) and Lifsa, pursuant to which Silverback acquired

rights with respect to the claim in the amount of $ 307,900 , as part of the broader settlement process between the Company and Silverback

described in Note 9.

On July 7, 2026, Silverback and Lifsa entered into a Claim Rights Confirmation and Payment Agreement, which the

Company executed solely to acknowledge its terms, confirming the claim amount of $ 307,900 and providing for payment by Silverback of

$ 140,000 on or before July 9, 2026, with the remaining balance of $ 167,900 payable within 90 days thereafter.

Silverback paid the initial

$ 140,000 installment on July 8, 2026.

Upon payment of the claim in full, Lifsa has agreed to dismiss the litigation with prejudice, including

any claims in excess of the $ 307,900 confirmed amount.

In June 2026, Brian Norton, who served as the Company’s

Chief Executive Officer from February 28, 2025 until his resignation on October 6, 2025, and who was a seller of membership interests

in Wellgistics, LLC to the Company, filed suit against the Company in the Court of Chancery of the State of Delaware.

monetary damages and shares of common stock that he claims are due to him in connection with the sale of his membership interests in

Wellgistics, LLC, together with consequential damages allegedly arising from the Company’s claimed nonpayment.

The Company believes Mr.

Norton is not owed any such amounts and intends to vigorously defend the suit.

with Former Management

8 unchanged sentences

December 10, 2025, defendants filed a motion to compel arbitration of all claims.

A hearing on the motion was scheduled for April 27,

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.

A hearing on the motion was held on April 27, 2026.

of June 30, 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 .

Of this amount, $ 5,000,000 was due and payable on July 24, 2026 pursuant to the terms of the underlying promissory note.

this matter remains in dispute, the Company has not made this payment as of the date of this Quarterly Report.

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.

Demand Letter

5 unchanged sentences

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.

evaluation in accordance with ASC 450, Contingencies, a loss related to these unrecorded claims is not probable as of June 30, 2026.

Accordingly, no liability has been recognized for these amounts.

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.

Name and Trading Symbol Change

July 20, 2026, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation with the Secretary

of State of the State of Delaware to change its name from Wellgistics Health, Inc.

to DataMeds AI, Inc.

(the “Name Change”).

The Charter Amendment was duly approved by the Company’s stockholders in accordance with Section 242 of the General Corporation

Law of the State of Delaware and became effective as of 12:01 a.m., Eastern Time, on July 22, 2026.

In connection with the Name Change,

the Company’s common stock began trading on The Nasdaq Capital Market under the new ticker symbol “MEDS” effective

July 22, 2026, replacing the Company’s prior symbol “WGRX.” The Name Change and the change in trading symbol did not

affect the rights of the Company’s stockholders, and the Company’s CUSIP number remains unchanged.

and Restated Letter of Intent

previously disclosed, on May 20, 2026, the Company entered into a Fully Binding Term Sheet, dated May 18, 2026, with EOS Technology Holdings,

(“EOS”), Scilex Holding Company (“Scilex”), Datavault AI Inc.

(“Datavault”), HealthBridge Advisors,

LLC (“HBA”), and Fortitude Advisors, LLC, as further described in Note 10.

On July 29, 2026, the Company entered into an

Amended and Restated Letter of Intent (the “LOI”) with EOS, Scilex, Datavault, and HBA, which superseded and replaced the

May 18, 2026 Term Sheet in its entirety.

to the LOI, subject to negotiation and execution of definitive agreements, the Company would acquire or exclusively license certain intellectual

property assets from EOS and Scilex, expand its existing license arrangement with Datavault, and acquire a controlling interest in Tollo

Health, LLC through an exchange of membership interests with HBA.

Consideration under the LOI consists solely of shares of the Company’s

common stock (“Acquisition Stock”), with no preferred stock or convertible securities to be issued.

Upon issuance of the

Acquisition Stock, EOS, Scilex, Datavault, and HBA are expected to own, in the aggregate, approximately 84.6 % of the Company’s

common stock (EOS – 19.9 %;

Scilex – 19.9 %;

Datavault – 19.9 %;

HBA – 24.9 %), with Fortitude Advisors, LLC expected

to own approximately 5.0 %, and the Company’s existing public stockholders expected to hold the remaining approximately 10.4 %, in

each case on a fully diluted, post-closing basis and subject to adjustment and the terms of definitive agreements.

The LOI contemplates

post-closing registration rights, transfer restrictions, and management and board changes, and provides for exclusive negotiation among

the parties through September 30, 2026, subject to a 30-day due diligence termination right and other customary conditions.

proposed transaction remains subject to due diligence, negotiation and execution of definitive agreements, stockholder and other approvals,

financing availability, and other customary conditions, including potential Nasdaq change-of-control listing requirements.

can be given that definitive agreements will be entered into or that the proposed transaction will be consummated on the terms described

above or at all.

Bowl 2026 Meme Coin Distribution

July 27, 2026, the Company announced an updated record date of August 7, 2026 for the distribution of “Dream Bowl 2026” meme

coins to holders of the Company’s common stock, pursuant to which stockholders as of the record date will be entitled to receive

fifty (50) Dream Bowl 2026 meme coins for each share of common stock held.

The distribution date will be determined by subsequent resolution

in coordination with Datavault AI, Inc.

As of the date these financial statements are issued, the Company had not yet distributed the

meme coins, and financial statement impact, if any, of the distribution had not yet been determined.

Subsidiary Rebranding

On August 10, 2026, the Company announced that it

had completed the renaming of its pharmacy and pharmacy technology subsidiaries to Corexa Pharmacy, LLC (f/k/a Wellgistics Pharmacy,

LLC) and Corexa Tech & Hub, LLC (f/k/a Wellgistics Tech & Hub, LLC), respectively.

The Company also renamed its pharmacy-focused

division to Corexa Health, LLC, under which Corexa Pharmacy and Corexa Tech & Hub operate as subsidiaries.

The Company’s wholesale

pharmaceutical distribution subsidiary continues to operate under the name Wellgistics, LLC.

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

What changed 10-Q

Item 1. Financial Statements