DataMeds AI, Inc. 10-Q

Item 1. Financial Statements. DATAMEDS AI, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, December 31, 2026 2025 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 2,456,373 $ 42,571 Accounts receivable, net 1,174,336 1,137,219 Inventories, net 1,510,123 1,639,426 Due from related party 26,068 - Prepaid and other current assets 465,738 - Total current assets 5,632,638 2,819,216 Property, plant and equipment, net 173,879 229,376 Capitalized software 2,297,588 1,850,358 Operating lease, right-of-use-assets 719,645 966,893 Goodwill 14,193,923 14,193,923 Other intangible assets, net 9,656,751 10,314,675 Deposits 85,008 85,008 Total assets $ 32,759,432 $ 30,459,449 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $ 12,612,167 $ 11,665,135 Accounts payable, related party 25,500 25,500 Accounts payable 25,500 25,500 Accrued expenses and other liabilities 7,003,749 6,407,722 Due to related parties - 225,000 Convertible notes payable, net of debt discount 12,101,803 - Current portion of debt obligations, net of debt discount 7,104,225 10,887,520 Operating lease liabilities- current portion 566,379 569,251 Total current liabilities 39,413,823 29,780,128 Notes payable 12,600,000 12,600,000 Operating lease liabilities 249,840 527,122 Total liabilities $ 52,263,663 $ 42,907,250 Commitments and contingencies (Note 14) - - Stockholders’ equity (deficit): 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 283 203 Additional paid-in capital 117,632,998 98,583,686 Accumulated deficit ( 137,137,512 ) ( 111,031,690 ) Total stockholders’ equity (deficit) ( 19,504,231 ) ( 12,447,801 ) Total liabilities and stockholders’ equity (deficit) $ 32,759,432 $ 30,459,449 See the accompanying notes to the unaudited condensed consolidated financial statements 3 DATAMEDS AI, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) 2026 2025 2026 2025 Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Net revenues $ 1,779,860 $ 7,790,865 $ 3,339,423 $ 18,654,308 Cost of net revenues 1,597,656 7,285,113 2,986,998 17,455,915 Gross profit 182,204 505,752 352,425 1,198,393 Operating expenses: General and administrative 7,056,671 4,859,949 11,925,606 36,032,869 Sales and marketing 113,990 343,383 1,073,990 408,600 Depreciation and amortization 356,597 802,796 713,421 1,605,668 Total operating expenses 7,527,258 6,006,128 13,713,017 38,047,137 Loss from operations ( 7,345,054 ) ( 5,500,376 ) ( 13,360,592 ) ( 36,848,744 ) Other income/(expense): Interest expense, net ( 1,561,240 ) ( 1,184,040 ) ( 3,633,919 ) ( 2,278,530 ) Loss on extinguishment of vendor obligation ( 320,000 ) - ( 60,120 ) - Loss on extinguishment of debt ( 8,881,694 ) - ( 8,881,694 ) - Loss on contract termination fee ( 766,394 ) - ( 766,394 ) - Settlement fees - - ( 13,000 ) - Other income 511,157 11,952 609,897 23,907 Total other expense, net ( 11,018,171 ) ( 1,172,088 ) ( 12,745,230 ) ( 2,254,623 ) Net loss before income taxes ( 18,363,225 ) ( 6,672,464 ) ( 26,105,822 ) ( 39,103,367 ) Provision for income taxes Net loss $ ( 18,363,225 ) $ ( 6,672,464 ) $ ( 26,105,822 ) $ ( 39,103,367 ) Weighted average common shares outstanding - basic and diluted 2,574,669 1,235,423 2,335,557 1,137,274 Net loss per common share - basic and diluted $ ( 7.13 ) $ ( 5.40 ) $ ( 11.18 ) $ ( 34.38 ) See the accompanying notes to the unaudited condensed consolidated financial statements 4 DATAMEDS AI, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (Unaudited) Shares Amount Capital Deficit (Deficit) Common Stock Additional Paid-In Accumulated Total Stockholders’ Equity Shares Amount Capital Deficit (Deficit) Balance at December 31, 2024 1,021,110 $ 102 $ 16,491,504 $ ( 9,757,160 ) $ 6,734,446 Common stock issued pursuant to public offering 17,778 2 3,999,998 - 4,000,000 Common stock issued pursuant to consulting agreements 3,040 - 543,520 - 543,520 Vested restricted stock granted to consultants 19,722 2 2,875,558 - 2,875,560 Vested restricted stock granted to directors 167,250 17 24,278,741 - 24,278,758 Vested restricted stock granted to employees 300 - 75,584 - 75,584 Offering costs - - ( 1,598,196 ) - ( 1,598,196 ) Net loss - - - ( 32,430,903 ) ( 32,430,903 ) Balance at March 31, 2025 1,229,200 $ 123 $ 46,666,708 $ ( 42,188,063 ) $ 4,478,768 Common stock issued pursuant to equity purchase agreement 23,101 2 1,149,415 - 1,149,417 Issuance of commitment shares under equity purchase agreement 3,040 - 594,320 - 594,320 Common stock issued in partial settlement of seller’s note 6,667 1 1,499,999 - 1,500,000 Vested restricted stock granted to employees 889 - 354,563 - 354,563 Offering costs - - ( 499,349 ) - ( 499,349 ) Net loss - - ( 6,672,464 ) ( 6,672,464 ) Balance at June 30, 2025 1,262,896 $ 126 $ 49,765,656 $ ( 48,860,527 ) $ 905,255 Balance at December 31, 2025 2,026,150 $ 203 $ 98,583,686 $ ( 111,031,690 ) $ ( 12,447,801 ) Common stock and warrants issued in settlement of accrued compensation 200,000 20 2,589,560 - 2,589,580 Common stock issued in settlement of vendor obligation 129,320 13 1,356,607 - 1,356,620 Common stock issued as settlement and legal fees 8,000 1 51,999 - 52,000 Common stock issued pursuant to consulting agreement 24,490 2 514,283 - 514,285 Issuance of placement agent warrants in connection with convertible notes - - 416,965 - 416,965 Vested restricted stock granted to employees - - 169,853 - 169,853 Vested restricted stock granted to consultants - - 28,646 - 28,646 Net loss - - - ( 7,742,597 ) ( 7,742,597 ) Balance at March 31, 2026 2,387,960 $ 239 $ 103,711,599 $ ( 118,774,287 ) $ ( 15,062,449 ) Balance 2,387,960 $ 239 $ 103,711,599 $ ( 118,774,287 ) $ ( 15,062,449 ) Common stock issued in pursuant to exercise of warrants 200,000 20 11,011 - 11,031 Common stock issued pursuant to consulting agreement 14,085 1 149,717 - 149,718 Common stock issued in settlement of vendor obligation 100,000 10 644,990 - 645,000 Common stock issued pursuant to contract termination fees 125,465 13 766,379 - 766,392 Vested restricted stock granted to employees 8,929 - 1,104,129 - 1,104,129 Issuance of placement agent warrants in connection with convertible notes - - 2,685,666 - 2,685,666 Issuance of PIPE warrants in connection with convertible notes - - 10,047,930 - 10,047,930 Equity issuance costs ( 1,488,423 ) ( 1,488,423 ) Effect of reverse stock split 45 - - - - Net loss - - - ( 18,363,225 ) ( 18,363,225 ) Balance at June 30, 2026 2,836,484 $ 283 $ 117,632,998 $ ( 137,137,512 ) $ ( 19,504,231 ) Balance 2,836,484 $ 283 $ 117,632,998 $ ( 137,137,512 ) $ ( 19,504,231 ) See the accompanying notes to the unaudited condensed consolidated financial statements 5 DATAMEDS AI, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 2026 2025 Six Months Ended June 30, 2026 2025 Cash flows from operating activities: Net loss $ ( 26,105,822 ) $ ( 39,103,367 ) Adjustments to reconcile net loss to net cash used in operating activities: Allowances for credit losses 213,787 200,454 Loss on extinguishment on vendor obligation 60,120 - Loss on extinguishment of debt 8,881,694 - Loss on contract termination fee 766,394 - Amortization of debt discount 2,343,252 33,411 Stock-based compensation 2,562,514 28,708,643 Reserve for inventory obsolescence 72,967 - Depreciation 55,497 79,538 Amortization 657,924 1,526,129 Changes in operating assets and liabilities: Accounts receivable, net ( 250,904 ) 362,911 Inventories, net 56,336 487,465 Prepaid and other current assets ( 410,010 ) ( 65,001 ) Other assets - 332 Accounts payable 2,432,030 3,141,897 Accrued expenses and other liabilities 2,640,868 1,145,749 Operating lease liabilities, net ( 32,906 ) ( 5,720 ) Due from / to related parties, net ( 251,068 ) 61,112 Net cash used in operating activities ( 6,307,328 ) ( 3,426,447 ) Cash flows from investing activities: Investments in capitalized software ( 447,230 ) ( 405,059 ) Net cash used in investing activities ( 447,230 ) ( 405,059 ) Cash flows from financing activities: Proceeds from exercise of warrants 1,000 - Proceeds from promissory note - 615,000 Repayment of promissory note ( 36,751 ) - Repayment of seller promissory note - ( 137,141 ) Proceeds from term loan - 703,366 Proceeds from revolving line of credit - 17,146,000 Repayment of revolving line of credit ( 1,643,923 ) ( 18,697,494 ) Proceeds from convertible notes 14,200,000 - Proceeds from merchant cash advance - 234,157 Repayment of merchant cash advance ( 89,909 ) - Repayment of term loan ( 2,104,557 ) - Proceeds from common stock issued pursuant to equity purchase agreement - 567,722 Proceeds from common stock issued pursuant to public offering - 4,000,000 Equity issuance costs ( 1,157,500 ) ( 1,208,498 ) Net cash provided by financing activities 9,168,360 3,223,112 Net change in cash and cash equivalents 2,413,802 ( 608,394 ) Cash and cash equivalents at beginning of period 42,571 1,028,336 Cash and cash equivalents at end of period $ 2,456,373 $ 419,942 Supplemental disclosure of cash flow information: Cash paid for income taxes $ - $ - Cash paid for interest $ 516,505 $ 1,477,713 Supplemental disclosure of non-cash investing and financing activities: Issuance of common stock and warrants in settlement of accrued compensation $ 2,599,611 $ - Issuance of common stock in settlement of vendor and debt obligation $ 2,001,620 $ - Fair value of PIPE and placement agent warrants $ 12,733,596 $ - Convertible notes issued in lieu of cash for placement agent fee $ 133,985 $ - Subscription receivable $ - $ 581,695 Issuance of commitment shares under equity purchase agreement $ - $ 594,320 Common stock issued in partial settlement of seller’s note $ - $ 1,500,000 See the accompanying notes to the unaudited condensed consolidated financial statements 6 DATAMEDS AI, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DataMeds AI, Inc. (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. 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. The Company operates as a holding company with Wood Sage LLC (“Wood Sage”) as a directly held intermediate holding company subsidiary, Wellgistics Tech & Hub, LLC and Wellgistics Pharmacy, LLC as indirect operating subsidiaries, and Wellgistics, LLC as a direct operating subsidiary. In June 2024, the Company closed on the acquisition of Wood Sage (the “Wood Sage Acquisition”), acquiring two operating subsidiaries: Wellgistics Tech & Hub, LLC (f/k/a Alliance Pharma Solutions LLC d/b/a DelivMeds), a pharmaceutical technology hub, and Wellgistics Pharmacy, LLC (f/k/a Community Specialty Pharmacy, LLC), a retail community specialty pharmacy. On August 30, 2024, the Company closed on the acquisition of Wellgistics, LLC (the “Wellgistics Acquisition”), a wholesale pharmaceutical distributor serving a network of independent pharmacies. 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. Accordingly, 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. Summary of Significant Accounting Policies A description of the Company’s significant accounting policies and other financial information is included in the Company’s audited consolidated financial statements filed on March 20, 2026, with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “ Form 10-K ”). These policies have been applied consistently in these unaudited condensed consolidated interim financial statements. Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of June 30, 2026 and for the three and six months then ended. The accompanying unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2025 included in the Form 10-K filed with the SEC on March 20, 2026. 7 Basis of Presentation and Principles of Consolidation The Company’s fiscal year ends on December 31. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.GAAP”) in all material respects and have been consistently applied in preparing the accompanying unaudited condensed consolidated financial statements. The condensed consolidated financial statements include the consolidated financial statements of Wood Sage since the acquisition on June 16, 2024 and financial statements of Wellgistics, LLC since the acquisition on August 30, 2024. All inter-company balances and transactions are eliminated on consolidation. Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Descriptions of significant accounting policies are included in the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. Actual results could differ from those estimates. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. For the three and six months ended June 30, 2026 and 2025, there was no difference between net loss and comprehensive loss. Segment Reporting In accordance with Accounting Standards Codification (“ASC”) 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. ASC 280 establishes standards for companies to report financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker (“CODM”), or group, in deciding how to allocate resources and assess performance. The CODM has been identified as the Chief Executive Officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has one operating and reportable segment. The key measures of segment profit or loss reviewed by our CODM are 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. See Note 13 for further details. Concentration of Credit Risks, Major Customers and Vendors Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and receivables. The Company places its cash and cash equivalents with financial institutions. Deposits are insured to Federal Deposit Insurance Corp limits. 8 For the three and six months ended June 30, 2026, no single customer accounted for more than 10 % of the Company’s total revenues. For the six months ended June 30, 2025, one customer accounted for approximately 15 % of total revenues. As of June 30, 2026, two customers accounted for approximately 22.37 % and 11.26 %, respectively, of gross accounts receivable. As of June 30, 2025, one customers accounted for approximately 23.68 %, of gross accounts receivable. The Company’s revenues and accounts receivable are subject to concentration risk due to its reliance on a limited number of significant customers. The loss of any one of these customers, or a material reduction in their purchase volumes, could have a material adverse effect on the Company’s business, financial condition, and results of operations. Management continues to actively pursue opportunities to broaden and diversify the Company’s customer base in order to reduce its exposure to this concentration risk. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The financial and nonfinancial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The hierarchy is presented down into three levels based on the reliability of the inputs. Level 1 Quoted prices are available in active markets for identical assets or liabilities. Level 2 Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash flow models or valuations. The carrying amounts of cash, accounts receivable, deposits, accounts payable, accrued liabilities, 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. Accounts Receivable and Allowance for Credit Losses Accounts receivable are recorded at the net invoiced amount, net of allowance for credit losses, and do not bear interest. Expected credit losses include losses expected based on known credit issues with specific customers as well as a general expected credit loss allowance based on relevant information, including historical loss rates, current conditions, and reasonable economic forecasts that affect collectability. The Company reserves for any accounts receivable balances that are determined to be uncollectible in the allowance for credit losses. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance. The Company uses a loss rate method to estimate its allowance for credit losses. The determination of the current expected credit loss rate begins with our review of historical loss experience as a percentage of accounts receivable. To determine the current allowance for credit losses, we combine the historical and expected credit loss rates and apply them to our period end accounts receivable. 9 The Company provides for a 95 % - 100 % loss rate of the accounts receivable which are due over the period of 90 days. For the three months ended 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. Inventories, Net Inventories are stated at the lower of cost and net realizable value. Cost is determined on a first in first out (“FIFO”) basis. Cost of inventory is determined as the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. On a quarterly basis, we evaluate inventory for net realizable value using estimates based on historical experience, current or projected pricing trends, specific categories of inventory, age and expiration dates of on-hand inventory and manufacturer return policies. If actual conditions are less favorable than our assumptions, additional inventory write-downs may be required, and no reserve is maintained as obsolete or expired inventories are written off and are presented in cost of net revenues in the accompanying consolidated statements of operations and comprehensive loss. We believe that the inventory valuation provides a reasonable approximation of the current value of inventory. Capitalized Software The Company complies with the guidance of ASC 350-40, “ Intangibles—Goodwill and Other—Internal Use Software ”, in accounting for our internally developed system projects that it utilizes to provide our services to customers. These system projects generally relate to software of the Company that is not intended for sale or otherwise marketed. Internal and external costs incurred during the preliminary project stage are expensed as they are incurred. Once a project has reached the development stage, the Company capitalizes direct internal and external costs until the software is substantially complete and ready for our intended use. Costs for upgrades and enhancements are capitalized, whereas costs incurred for maintenance are expensed as incurred. These capitalized software costs are amortized on a project-by-project basis over the expected economic life of the underlying software on a straight-line basis, which is generally three to five years. Amortization commences when the software is available for our intended use. As of 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. The platform has not yet been placed in service and accordingly, amortization has not commenced. Property, Plant and Equipment, Net Property, plant and equipment, net (“PP&E”) is stated at cost less accumulated depreciation and amortization and any accumulated impairment losses. Depreciation and amortization are computed using the straight-line method over the assets’ estimated useful lives. The estimated useful lives of PP&E are as follows: Equipment – 5 – 10 years Furniture and Fixtures – 7 years Software – 3 – 5 years Leasehold improvements – Shorter of the estimate useful life or remaining lease term Major renewals and improvements are capitalized. Replacements, maintenance, and repairs, which do not significantly improve or extend the useful life of the assets, are expensed when incurred. Upon the sale or retirement of assets, costs and the related accumulated depreciation and amortization are removed from the accounts and any gain or loss is included in the results of operations. 10 The Company evaluates its long-lived assets or asset groups for indicators of possible impairment by determining whether there were any triggering events that could impact the Company’s assets. If events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable the Company performs a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by such asset or asset group. Should an impairment exist, the impairment loss is measured based on the excess carrying value of the asset over the asset’s fair value generally determined by estimates of future discounted cash flows. The Company has no t identified any such impairment losses for the three and six months ended June 30, 2026 and 2025. Goodwill Goodwill represents the excess of the cost over the fair market value of net assets acquired in business combinations. In accordance with Intangibles – Goodwill and Other (Topic 350), goodwill is not amortized but is tested for impairment at least annually, or more frequently if indicators of potential impairment exist. Goodwill is tested for impairment at the reporting unit level. 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 basis. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors assessed for each of the applicable reporting units include, but are not limited to, changes in macroeconomic conditions, industry and market considerations, cost factors, discount rates, competitive environments, and financial performance of the reporting units. If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, a quantitative test is required. Alternatively, the Company may proceed directly to the quantitative test. Under the quantitative test, the estimated fair value of each reporting unit is compared to its carrying value, including goodwill. If the carrying value of the reporting unit, including goodwill, exceeds its fair value, an impairment charge equal to the excess is recognized, up to the maximum amount of goodwill allocated to that reporting unit. No goodwill impairment was identified during the three and six months ended June 30, 2026 and 2025. Impairment of Long-Lived Assets The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. The Company evaluates its intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. In accordance with ASC 350, “Intangibles—Goodwill and Other,” intangible assets with finite lives, such as trademarks and customer relationships, are amortized over their estimated useful lives. The Company compares the carrying value of the intangible asset to its fair value, which is determined based on projected future cash flows. If the carrying value of the asset exceeds its fair value, an impairment loss is recognized, and the asset is written down to its fair value. 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. 11 Leases The Company accounts for its leases under ASC 842, Leases . Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred. In calculating the right of use asset and lease liability, the Company has elected not to combine lease and non-lease components. The non-lease components are accounted for separately and recognized as expenses when incurred. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term. Revenue Recognition The Company recognizes revenue from contracts with customers under ASC 606, Revenue from Contracts with Customers (“ASC 606”). To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract was determined to be within the scope of ASC 606, the Company assessed the goods or services promised within each contract and determined those that were performance obligations, and assessed whether each promised good or service was distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. The Company recognizes revenue at the point of sale. The majority of orders are placed via the Company’s website. Customers generally pay by credit card at the time they place their order. The Company does have larger customers to whom they have extended terms for payment. Generally, payments from these customers are due within 30 days of their order being shipped. However, a few customers have been given terms extending out to 45 days. Distribution Wellgistics, LLC provides distribution and third party logistics services to both pharmaceutical manufacturers and independent retail pharmacies. The Company recognizes revenue when goods are delivered to the customer. The gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, rebates, sales allowances and sales returns. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are considered when estimating the impact of these revenue deductions on gross sales for a reporting period. All revenue for the Company is recognized at the point-in-time when delivered to customer based on contractual obligations. Any amount collected from customers for goods not yet delivered is recorded as a contract liability. 12 Pharmacy The Company is in the retail pharmacy business. and fills prescriptions for drugs written by a doctor and recognizes revenue at the time the patient confirms delivery of the prescription. Customer returns are not material. The following are the steps taken to recognize revenue. Step One: Identify the contract with the customer — The prescription is written by a doctor for a customer and delivered to the Company. The prescription identifies the performance obligations in the contract. The Company fills the prescription and delivers to the Customer the prescription, fulfilling the contract. The collection is probable because there is confirmation that the customer has insurance for the reimbursement to the Company prior to filling of the prescription. Step Two: Identify the performance obligations in the contract — Each prescription is distinct to the Customer. Step Three: Determine the transaction price — The consideration is not variable. The transaction price is determined to be the price of the prescription at the time of delivery which considers the expected reimbursements from third party payors (e.g., pharmacy benefit managers, insurance companies and government agencies). Step Four: Allocate the transaction price — The price of the prescription invoiced represents the expected amount of reimbursement from third party payors. There is no difference between contract price and “stand-alone selling price”. Step Five: Recognize revenue when or as the entity satisfies a performance obligation — Revenue is recognized upon the delivery of the prescription. Disaggregation of Revenue The following is a summary of the disaggregation of revenue for the three and six months ended June 30, 2026 and 2025: SCHEDULE OF DISAGGREGATION OF REVENUE 2026 2025 2026 2025 Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Product revenue - distribution services $ 66,765 $ 7,548,600 $ 292,430 $ 18,216,887 Pharmacy retail sales 1,590,367 77,756 2,724,783 192,432 Third party logistics services 122,728 164,509 322,210 244,989 Net revenues $ 1,779,860 $ 7,790,865 $ 3,339,423 $ 18,654,308 All revenue for the three and six months ended June 30, 2026, and 2025, were within the United States. Contract Assets and Liabilities Contract assets would include costs and services incurred on contracts with open performance obligations. These amounts would be included in contract assets on the consolidated balance sheets. Contract liabilities include payment received for incomplete performance obligations and are included in Unearned revenue on the unaudited condensed consolidated balance sheets At 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. 13 Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. The Company measures all stock-based awards granted to employees, directors and non-employee consultants based on the fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. For awards with service-based vesting conditions, the Company records the expense for using the straight-line method. For awards with performance-based vesting conditions, the Company records the expense if and when the Company concludes that it is probable that the performance condition will be achieved. The Company classifies stock-based compensation expenses in its statement of operations in the same manner in which the award recipient’s costs are classified. See Note 9 for further details. Net Loss per Share Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share reflects the weighted-average number of common shares outstanding adjusted for the effect of potentially dilutive securities. For periods in which a net loss is reported, all potentially dilutive securities are excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive. Accordingly, basic and diluted net loss per share are the same for the six months ended June 30, 2026 and 2025. The 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 2026 2025 June 30, 2026 2025 Unvested restricted common stock 10,714 201,401 Unissued director share awards 9,200 - Warrants 9,442,355 - Convertible notes 20,323,732 - Total potentially dilutive shares 29,786,001 201,401 Income Taxes The 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 to reverse. 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. For 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. Recent Accounting Pronouncements ASU 2025-05 — Measurement of Credit Losses for Accounts Receivable and Contract Assets In 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. 14 ASU 2024-03 — Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . The ASU requires public business entities to disclose, in the notes to financial statements, specified information about certain costs and expenses included in expense line items presented on the face of the income statement. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of ASU 2024-03 on its condensed consolidated financial statements and related disclosures. ASU 2025-06 — Targeted Improvements to the Accounting for Internal-Use Software In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software . The ASU requires entities to begin capitalizing software development costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform its intended function (the “probable-to-complete recognition threshold”). The amendments are effective for annual reporting periods beginning after December 15, 2027, with early adoption permitted. Entities may apply the amendments using a prospective, modified retrospective, or retrospective transition approach. The Company is currently evaluating the impact of ASU 2025-06 and will assess the impact upon adoption. ASU 2025-11 — Interim Reporting: Narrow-Scope Improvements In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements . The ASU requires entities to disclose events occurring since the end of the last annual reporting period that have a material impact on the entity. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The amendments may be applied either prospectively or retrospectively. The Company expects ASU 2025-11 to impact its disclosures only and does not expect it to affect its results of operations, financial condition, or cash flows. Note 2. LIQUIDITY AND GOING CONCERN For the 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. On 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. Management Plans Management is actively pursuing multiple initiatives to address the Company’s liquidity position and going concern uncertainty: On 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. On 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. On 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. 15 On 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 be obtained. On 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. 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 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. Note 3. ACCOUNTS RECEIVABLE, NET Accounts receivable, net consist of the following: SCHEDULE OF ACCOUNTS RECEIVABLE, NET June 30, December 31, 2026 2025 Billed – Third party $ 2,218,473 $ 1,984,424 Total Accounts receivable 2,218,473 1,984,424 Less: Allowance for credit losses ( 1,044,137 ) ( 847,205 ) Total accounts receivable, net $ 1,174,336 $ 1,137,219 Note 4. INVENTORIES, NET Inventory consists of the following: SCHEDULE OF INVENTORY June 30, December 31, 2026 2025 First Defense Nasal Screen Corp (“FDNS”) $ 5,988,257 $ 5,988,257 Finished goods 2,016,649 2,072,985 Total inventory, at cost 8,004,906 8,061,242 Less: reserve for obsolescence ( 6,494,783 ) ( 6,421,816 ) Inventories, net $ 1,510,123 $ 1,639,426 The FDNS inventory consists of products purchased by Wellgistics, LLC from First Defense Nasal Screen Corp (“FDNS”). Following a legal dispute with the supplier, the Company was awarded $ 4.6 million, which has not been recognized due to uncertainty of receipt. Pursuant to the United States Bankruptcy Court order dated March 15, 2023, the Company was awarded full possession of the FDNS inventory and receives a monthly plan payment of $ 3,014 , which is recognized in other income in the unaudited condensed consolidated statements of operations. The FDNS inventory has experienced minimal sales activity and management has determined there is no active market for the product. Based on this assessment, the carrying value was deemed not recoverable, and a reserve for obsolescence of $ 5,988,257 was fully recorded during the year ended December 31, 2025 and remained unchanged as of June 30, 2026. During 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. 16 Note 5. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment consist of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT, NET June 30, December 31, 2026 2025 Leasehold Improvements $ 766,467 $ 766,467 Equipment 589,208 589,208 Furniture & Fixtures 152,161 152,161 Property, plant and equipment, gross 1,507,836 1,507,836 Less: Accumulated Depreciation ( 1,333,957 ) ( 1,278,460 ) Property, plant and equipment, net $ 173,879 $ 229,376 Depreciation 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. Note 6. INTANGIBLE ASSETS Intangible assets consist of the following: SCHEDULE OF INTANGIBLE ASSETS June 30, December 31, 2026 2025 Software development costs - Delivmeds $ 2,946,773 $ 2,499,543 Accumulated impairment ( 649,185 ) ( 649,185 ) Capitalized software $ 2,297,588 $ 1,850,358 Customer relationships - Woodsage acquisition 393,853 393,853 Customer relationships - Wellgistics acquisition 11,256,067 11,256,067 Trademark - Wellgistics acquisition 10,143,137 10,143,137 License rights 2,500,000 2,500,000 Intangible assets, gross 24,293,057 24,293,057 Accumulated amortization ( 4,757,231 ) ( 4,099,307 ) Accumulated impairment ( 9,879,075 ) ( 9,879,075 ) Other intangible assets, net $ 9,656,751 $ 10,314,675 Capitalized Software Software development costs relate to the Wellgistics Tech & Hub, LLC platform. 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 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 June 30, 2026. Customer Relationships and Trademark Intangible assets of $ 393,853 represent customer relationships identified and measured at fair value pursuant to the Wood Sage business combination completed in June 2024. Amortization expense related to these intangible assets was $ 12,308 and $ 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. Intangible assets of $ 11,256,067 and $ 10,143,137 represent customer relationships and trademarks, respectively, identified and measured at fair value in connection with the Wellgistics, LLC business combination completed in August 2024, amortized over their estimated useful lives. During the year ended December 31, 2025, the Company recognized impairment charges of $ 5,314,027 related to Wellgistics customer relationships and $ 4,565,048 related to the Wellgistics trademark, for a total intangible asset impairment charge of $ 9,879,075 , recorded within goodwill and intangible asset impairment in the consolidated statements of operations. No impairment charges were recognized during the three 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 causes. Based on this evaluation, no impairment was identified as of June 30, 2026. Amortization 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. Amortization 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. Total 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. The following table represents the future amortization of intangible assets: SCHEDULE OF FUTURE AMORTIZATION OF INTANGIBLES ASSETS June 30, 2026 (remaining 6 months) $ 836,495 2027 1,672,991 2028 1,672,991 2029 1,672,991 2030 1,423,045 Thereafter 2,378,238 Intangible assets 9,656,751 17 Note 7. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consist of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES June 30, December 31, 2026 2025 Accrued personnel costs $ 5,016,766 $ 4,588,421 Accrued professional fees 156,454 114,429 Accrued expenses 152,137 199,053 Credit card obligation 166,291 183,943 Unearned revenue 26,000 488,229 Accrued interest 1,486,101 833,647 Accrued expenses and other liabilities $ 7,003,749 $ 6,407,722 Note 8. DEBT Outstanding debt consists of the following: SCHEDULE OF OUTSTANDING DEBT June 30, December 31, 2026 2025 Merchant cash advance $ 1,654,225 $ 1,744,134 Loan payable - 1,601,052 Note payable - owners of Wellgistics 5,000,000 5,000,000 Note payable - third party, net of debt discount 450,000 898,411 Revolving line of credit - 1,643,923 Convertible notes 12,101,803 - Current portion of debt obligations 19,206,028 10,887,520 Third party investor $ 100,000 $ 100,000 Note payable - owners of Wellgistics 12,500,000 12,500,000 Long-term debt 12,600,000 12,600,000 Total debt $ 31,806,028 $ 23,487,520 As of June 30, 2026 and December 31, 2025, unamortized debt discount was $ 8,818,103 and $ 1,568,776 , respectively. Merchant Cash Advance On October 20, 2025, the Company entered into a merchant cash advance agreement with Cedar Advance LLC (the “October 2025 MCA”). Under the October 2025 MCA, the stated purchase price was $ 2,898,000 , of which $ 1,198,800 was applied directly to satisfy the outstanding balance under the Company’s prior merchant cash advance arrangement, and $ 701,200 was remitted to the Company for working capital purposes. The total repayment obligation under the October 2025 MCA resulted in a principal balance of $ 1,900,000 , repayable in fixed weekly installments of $ 56,800 over an estimated 51 -week term. The Company accounts for the merchant cash advance as a debt obligation. The difference between the total repayment obligation and the net proceeds received has been recorded as a debt discount and is amortized to interest expense over the term of the arrangement using the effective interest method. 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. For 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. As of June 30, 2026, the gross contractual repayment obligation under the merchant cash advance was $ 2,250,400 . The related unamortized debt discount was $ 596,175 , resulting in a net carrying amount of $ 1,654,225 , classified as a current liability in the condensed consolidated balance sheet. As of December 31, 2025, the gross contractual repayment obligation was $ 2,547,200 . The related unamortized debt discount was $ 803,066 , resulting in a net carrying amount of $ 1,744,134 , classified as a current liability in the condensed consolidated balance sheet. 18 Loan Payable On October 29, 2025, the Company entered into a financing arrangement with Agile Capital Funding LLC (“Agile”) pursuant to which it received net proceeds of $ 533,889 . Total contractual repayments under the arrangement were $ 2,880,000 , with fixed weekly payments of $ 75,789 over an estimated 38 -week term. A portion of the proceeds was applied directly to satisfy the outstanding balance of the prior Agile obligation. The Company accounts for the arrangement as a debt obligation. The difference between the total contractual repayment amount and the net proceeds received was recorded as a debt discount and is amortized to interest expense over the term of the arrangement using the effective interest method. During the three months ended March 31, 2026, the Company 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. The 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. As of June 30, 2026, there were no amounts outstanding under the Agile arrangement. As of December 31, 2025, the net carrying amount of the Agile obligation was $ 1,601,056 , net of unamortized debt discount of $ 765,710 , and was classified as a current liability in the condensed consolidated balance sheets. Note payable – sellers of Wellgistics, LLC On July 24, 2025, the Company and the owners of Wellgistics LLC executed the Eighth Amendment to the Membership Interest Purchase Agreement (“MIPA”), pursuant to which the principal amount of the seller promissory note was increased from $ 15.0 million to $ 17.5 million. Under the amended note, $ 5,000,000 of principal is payable on each of the first and second anniversaries, and $ 7,500,000 of principal is payable on the third anniversary, of the effective date of the promissory note. The note bears simple interest at a rate equal to the Prime Rate as published by The Wall Street Journal on January 1 of the applicable year. For the three months ended June 30, 2026 and 2025, the Company recognized interest expense of $ 370,856 and $ 327,182 , respectively, related to the seller promissory note. 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. As 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. Note Payable – Third party On January 2, 2025, the Company entered into an unsecured promissory note agreement with Arvoda Consulting LLC for a principal amount of $ 448,411 , bearing interest at a rate of 10 % per annum, with both principal and accrued interest due in full on May 15, 2025. In the event of default, interest accrues at a default rate of 12 % per annum. In connection with this note, the Company received net proceeds of $ 415,000 , with the remaining $ 33,411 recognized as a debt discount, which was fully amortized as of December 31, 2025. During the 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 note. 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. 19 On February 2, 2025, the Company entered into two separate unsecured promissory note agreement, each for a principal amount of $ 100,000 , bearing interest at a rate of 10 % per annum, with both principal and accrued interest originally due in full on August 15, 2025. In the event of default, interest accrues at a default rate of 12 % per annum. Under the terms of the promissory note, an event of default occurs only if the maker fails to pay any amount due within five (5) days after receipt of written notice from the payee. As of 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. For the six months ended June 30, 2026 and 2025, the Company recognized aggregate interest expense of $ 10,000 and $ 8,123 , respectively. As of 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. On April 8, 2025, the Company issued a promissory note to Strategic EP, LLC in the principal amount of $ 250,000 , bearing interest at a rate of 10 % per annum. Under the terms of the agreement, the outstanding principal and accrued interest are payable on the earlier of (i) April 8, 2026, or (ii) within five business days following the Company’s receipt of aggregate gross proceeds of at least $ 10 million from one or more equity or debt financings. On February 27, 2026, the Company received a demand letter from Strategic EP, LLC indicating that the Company was in default under the terms of the promissory note. Upon the occurrence of a default, interest accrues at a default rate of 18 % per annum. For the three months ended 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. 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. In September 2023, the Company entered into a promissory note agreement with a third party investor for a principal amount of $ 100,000 , bearing interest at a rate of 8 % per annum. Under the terms of the note, the lender is entitled to receive 35,000 shares of the Company’s common stock upon the consummation of a SPAC transaction or merger. As of June 30, 2026, this condition had not been met and accordingly no shares have been issued. 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. 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. Revolving line of credit – Wellgistics In 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 . The line 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. On 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. For 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. On 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. 20 Convertible notes payable On January 16, 2026, the Company entered into a Note Purchase Agreement with certain investors pursuant to which the Company issued and sold secured convertible promissory notes (the “Notes”) in an aggregate principal amount of $ 8,125,000 for aggregate gross proceeds of $ 6,500,000 , reflecting a 20 % original issue discount. 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. In 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 . May 27, 2026 Refinancing On 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. In 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. The 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. In 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). The 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. For 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. As 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 sheets. As of December 31, 2025, no amounts were outstanding under the Original Notes or the New Notes. The following table is a summary of annual principal payments of the Company’s outstanding debt: SCHEDULE OF ANNUAL PRINCIPAL PAYMENTS June 30, 2026 (Six months ending December 31, 2026) $ 7,700,400 2027 25,423,731 2028 7,500,000 Principal gross 40,624,131 Less : Unamortized debt discount ( 8,818,103 ) Principal Payment $ 31,806,028 21 Note 9. STOCKHOLDERS’ EQUITY Reverse Stock Split On May 26, 2026, the Company effected a 1-for-50 reverse stock split for its common stock (the “Reverse Stock Split”), as described in Note 2. 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. 2026 Transactions Consulting Agreement On January 13, 2026, the Company issued 24,490 shares of its common stock to Hudson Global Ventures, LLC as consideration for consulting services rendered to the Company. The fair value of the shares, determined based on the closing market price of $ 21 per share on the date of issuance, was $ 514,285 , which was recognized as consulting expense within general and administrative expenses in the condensed consolidated statements of operations for the three and six months ended June 30, 2026. On 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 5, 2026. 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. Settlement Agreement On January 28, 2026, the Company entered into a Settlement Agreement and Stipulation with Silverback Capital Corporation (“Silverback”), which was approved by the Circuit Court of the Twelfth Judicial Circuit in and for Desoto County, Florida on February 4, 2026, pursuant to Section 3(a)(10) of the Securities Act of 1933. Under the terms of the settlement, the Company agreed to issue shares of its common stock to Silverback, the proceeds from the resale of which were applied to satisfy certain outstanding obligations of the Company, including vendor payables and notes payable. Pursuant to the settlement, the Company issued shares to Silverback in three tranches. On February 12, 2026, the Company issued 46,800 shares at an agreed settlement price of $ 12.50 per share, for a total settlement value of $ 585,000 . The fair value of the shares on the date of issuance, based on the closing market price of $ 14 per share, was $ 655,200 . On March 9, 2026, the Company issued an additional 82,520 shares at an agreed settlement price of $ 12.50 per share, for a total settlement value of $ 1,031,500 . The fair value of the shares on the date of issuance, based on the closing market price of $ 8.50 per share, was $ 701,420 . The aggregate carrying amount of the obligations settled through these two tranches exceeded the aggregate fair value of the shares issued, resulting in a net gain on debt extinguishment of $ 259,880 , which is included in other income in the condensed consolidated statements of operations for the three months ended March 31, 2026. On March 23, 2026, the Company issued an aggregate of 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. On 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. On 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. The fair 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. Accrued Compensation Settlement On 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 of 200,000 shares, together with 5 five-year warrants to purchase 100,000 shares of common stock issued to each individual, for an aggregate of 200,000 warrants, originally exercisable at $ 0.50 per share. The shares were issued on March 31, 2026 pursuant to Section 4(a)(2) of the Securities Act of 1933. The fair value of the shares on the date of issuance, based on the closing market price of $ 6.50 per share, was $ 1,300,000 in aggregate. 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. The 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. 22 During 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 . 2023 Equity Incentive Plan The 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 shares. The Plan permits the grant of various types of stock-based awards, including incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares available for issuance as incentive stock options may not exceed the Initial Limit, as adjusted for any Annual Increases, subject to adjustment as provided under the terms of the Plan. Shares subject to awards that expire, are canceled, or otherwise terminate without having been exercised or settled in full will again become available for future grant under the Plan. However, shares repurchased by the Company on the open market will not be added back to the share reserve. Awards that may be settled solely in cash do not count against the share reserve. The Plan also includes a limitation on annual compensation to non-employee directors. The aggregate value of all equity awards granted to any non-employee director under the Plan, together with any cash compensation paid for service as a non-employee director, may not exceed (i) $ 1,000,000 in the first calendar year of service and (ii) $ 750,000 in any subsequent calendar year. The fair value of such awards is determined based on grant date fair value in accordance with ASC Topic 718, excluding the impact of estimated forfeitures related to service-based vesting conditions. Restricted Common Stock A summary of restricted common stock activity for the six months ended June 30, 2026 is as follows: SCHEDULE OF RESTRICTED COMMON STOCKS Restricted Common Stock Weighted Average Fair Value Unvested shares as of December 31, 2025 19,643 $ 131.50 Granted - - Vested ( 8,929 ) 115 Forfeited and cancelled - - Unvested shares as of June 30, 2026 10,714 $ 145.00 For 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. For 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. As 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. Unissued Director Equity Awards Pursuant 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 period. 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. 23 On 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 period. 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. On 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. For 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. As 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. Warrants A summary of warrant activity for the six months ended June 30, 2026 is as follows: SCHEDULE OF WARRANT ACTIVITY Warrants Weighted Average Exercise Price Outstanding, December 31, 2025 87,200 $ 36.00 Issued 9,555,155 6.90 Exercised ( 200,000 ) 0.005 Expired and cancelled - - Unvested shares as of June 30, 2026 9,442,355 $ 7.31 On 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, 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. On 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. During 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 of $ 1,000 . On 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. The 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: SCHEDULE OF FAIR VALUE OF WARRANTS PIPE Warrants PA Warrants Stock price $ 3.16 $ 3.16 Exercise price 7.50 4.275 Risk-free interest rate 4.20 % 4.20 % Expected term (in years) 5.00 5.00 Expected volatility 78.0 % 78.0 % Expected dividend yield 0 % 0 % 24 Note 10. PROPOSED TRANSACTION On May 20, 2026, the Company entered into a Fully Binding Term Sheet, dated May 18, 2026, with EOS Technology Holdings, Inc. (“EOS”), 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. Fortitude is not a party to the LOI, although the proposed transaction contemplates certain rights and obligations relating to Fortitude, as described below. Pursuant 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. 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, 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. The 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. Completion 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. As 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 or the LOI. 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. 25 Note 11. LEASE OBLIGATIONS Rent is classified by function on the consolidated statements of operations as general and administrative. The Company determines whether an arrangement is or contains a lease at inception by evaluating potential lease agreements including services and operating agreements to determine whether an identified asset exists that the Company controls over the term of the arrangement. Lease commencement is determined to be when the lessor provides access to, and the right to control, the identified asset. The rental payments for the Company’s leases are typically structured as either fixed or variable payments. Fixed rent payments include stated minimum rent and stated minimum rent with stated increases. The Company considers lease payments that cannot be predicted with reasonable certainty upon lease commencement to be variable lease payments, which are recorded as incurred each period and are excluded from the calculation of lease liabilities. In May 2024, the Company entered into a lease agreement for office space in Tampa, Florida. As a result, the Company recognized a right-of-use asset and corresponding lease liability, calculated using a discount rate of 8.36 %. The lease includes a monthly base rent of $ 18,792 and expired in June 2027. The lease required a security deposit by Wellgistics Health of $ 35,855 and Wellgistics, LLC of $ 31,871 . On June 9, 2023, Intergra Pharma Solutions entered into First amendment to the Vector Collective lease, which is sublease to Wellgistics Pharmacy. The lease includes a monthly base rent of $ 4,714.41 from and after November 16, 2023 and expires on November 15, 2026 . A right-of-use asset and corresponding lease liability recognized calculated using a discount rate of 8.36 %. In January 2022, Wellgistics LLC entered into lease agreement for warehousing facility located in Lefrois, Florida, which has a lease term of 75 months, set to expire in March 2028, with a monthly base rent of $ 26,303 . Wellgistics LLC recognized a right-of-use asset and corresponding lease liability, calculated using a discount rate of 6.21 %. The following is the summary of operating lease assets and liabilities: SCHEDULE OF OPERATING LEASE ASSETS AND LIABILITIES June 30, December 31, 2026 2025 Operating Leases Right-of-use assets $ 719,645 $ 966,893 Lease liabilities, current portion 566,379 569,251 Long-term lease liabilities 249,840 527,122 Total lease liabilities $ 816,219 $ 1,096,373 Weighted Average Remaining Lease Term 1.50 1.95 Weighted Average Discount Rate 8.36 % 8.36 % The following is the summary of future minimum payments: SCHEDULE OF SUMMARY OF FUTURE MINIMUM PAYMENTS June 30, 2026 (remaining 6 months) $ 310,440 2027 458,657 2028 84,976 Total lease payments 854,073 Less: Imputed interest ( 37,854 ) Total $ 816,219 26 Note 12. 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 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. As of December 31, 2025, the Company had an outstanding obligation of $ 225,000 due to its Chief Executive Officer, which was fully repaid during the three months ended March 31, 2026. As of June 30, 2026, there were no amounts outstanding. As 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. Gerald 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. For 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. During 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: SCHEDULE OF RELATED PARTY TRANSACTION 2026 2025 2026 2025 Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Sales to Integra Pharma Solutions, LLC $ - $ - $ - $ 503,730 Management services fees paid to Nomad Capital $ - $ - $ - $ 160,000 IT expenses paid to Cingo Solutions $ - $ 38,440 $ - $ 199,440 SaaS expenses paid to RxERP $ - $ 150,000 $ - $ 150,000 Related party transaction $ - $ 150,000 $ - $ 150,000 27 Note 13. SEGMENT AND GEOGRAPHIC INFORMATION The Company operates as one operating segment. The Company’s CODM is its chief executive officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated gross margin, operating income and net income to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the rate at which the Company seeks to grow operating income and the allocation of budget between cost of revenues, sales and marketing, general and administrative expenses or technology and development. The following table presents selected financial information with respect to the Company’s single operating segment for the three and six months ended June 30, 2026 and 2025: SCHEDULE OF SEGMENT AND GEOGRAPHIC INFORMATION 2026 2025 2026 2025 Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Net revenues $ 1,779,860 $ 7,790,865 $ 3,339,423 $ 18,654,308 Cost of net revenues 1,597,656 7,285,113 2,986,998 17,455,915 Gross profit (loss) 182,204 505,752 352,425 1,198,393 Operating expenses: General and administrative 7,056,671 4,859,949 11,925,606 36,032,869 Sales and marketing 113,990 343,383 1,073,990 408,600 Depreciation and amortization 356,597 802,796 713,421 1,605,668 Total operating expenses 7,527,258 6,006,128 13,713,017 38,047,137 Loss from operations ( 7,345,054 ) ( 5,500,376 ) ( 13,360,592 ) ( 36,848,744 ) Other income/(expense): Interest expense, net ( 1,561,240 ) ( 1,184,040 ) ( 3,633,919 ) ( 2,278,530 ) Loss on extinguishment of vendor obligation ( 320,000 ) - ( 60,120 ) - Loss on extinguishment of debt ( 8,881,694 ) - ( 8,881,694 ) - Loss on contract termination fee ( 766,394 ) - ( 766,394 ) - Settlement fees - - ( 13,000 ) - Other income 511,157 11,952 609,897 23,907 Total other expense, net ( 11,018,171 ) ( 1,172,088 ) ( 12,745,230 ) ( 2,254,623 ) Net loss before income taxes ( 18,363,225 ) ( 6,672,464 ) ( 26,105,822 ) ( 39,103,367 ) Provision for income taxes - - - - Net loss $ ( 18,363,225 ) $ ( 6,672,464 ) $ ( 26,105,822 ) $ ( 39,103,367 ) All revenues were within the U.S. region. See Note 1, Organization and Summary of Significant Accounting Policies - Revenue Recognition for additional information about disaggregated revenue. The Company’s long-lived tangible assets, as well as the Company’s operating lease right-of-use assets recognized on the unaudited condensed consolidated balance sheets were located as follows: SCHEDULE OF LONG LIVED TANGIBLE ASSETS AND OPERATING LEASE RIGHT OF USE ASSETS June 30, December 31, 2026 2025 United States Property, plant and equipment, net $ 173,879 $ 229,376 Operating lease, right-of-use assets $ 719,645 $ 966,893 Note 14. COMMITMENTS AND CONTINGENCIES From time to time, the Company is involved in legal proceedings arising from the normal course of business activities. The Company, in conjunction with its legal counsel, assesses the need to record a liability for litigation or loss contingencies. A liability is recorded when and if it is determined that such a liability for litigation or loss contingencies is both probable and estimable. Although the results of legal proceedings and claims cannot be predicted with certainty, the Company is not currently a party to any legal proceedings, which would, individually or in the aggregate, have a material adverse effect on its results of operations, cash flows, or financial position. Legal Matters On August 21, 2024, Blythe Global Advisors, LLC filed a demand for arbitration against the Company and the Chairman of the Board for breach of contract, breach of the implied covenant of good faith and fair dealing, and breach of personal guaranty, claiming accounting services of $ 377,947 for which it has not been paid. The Company has answered the arbitration demand and is vigorously defending the matter. 28 Relatedly, Wellgistics, LLC, Wood Sage, LLC, Alliance Pharma Solutions, LLC, and Community Specialty Pharmacy, LLC, all subsidiaries of the Company, have sued Blythe Global Advisors, LLC in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida, asserting claims of improper UCC-1 filings, tortious interference with business relationships, slander of title, and state RICO violations. A motion to dismiss filed by Blythe remains pending. The Company is vigorously prosecuting its claims. Wellgistics, LLC is a defendant in a legal proceeding initiated by Lifsa Drugs LLC in the United States District Court for the District of New Jersey. The complaint alleges that Wellgistics, LLC failed to make payment for certain pharmaceutical products and seeks damages of approximately $ 420,460 , together with interest, legal fees, and other related costs. The underlying amount has been recorded as a liability and is included within accounts payable in the accompanying condensed consolidated balance sheet. 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. Mr. Norton seeks 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. Dispute with Former Management On October 10, 2025, the Company initiated litigation in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida against certain former officers and/or directors of the Company. The complaint asserts claims including breach of fiduciary duty of loyalty, breach of contract, tortious interference with a contract, tortious interference with business relationships, and other applicable claims. In January 2026, the Company served a notice of additional claims against the former management parties for misrepresentations and omissions of material fact in connection with an acquisition of certain limited liability company membership interests. The Company intends to seek, among other relief, rescission and cancellation of any purported commitments related to or resulting from the misrepresentations and omissions, as well as related equitable and monetary remedies. On December 10, 2025, defendants filed a motion to compel arbitration of all claims. A hearing on the motion was held on April 27, 2026. As 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. Because 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. Vendor Demand Letter The Company and certain of its subsidiaries have received demand letters from various vendors requesting payment for goods and services previously provided. The aggregate amount referenced in these demand letters is approximately $ 4.3 million, of which approximately $ 2.8 million is already recorded within accounts payable in the accompanying condensed consolidated balance sheet. The remaining $ 1.5 million relates to claims that are not recorded as liabilities in the accompanying condensed consolidated financial statements. Based on management’s evaluation in accordance with ASC 450, Contingencies, a loss related to these unrecorded claims is not probable as of June 30, 2026. Accordingly, no liability has been recognized for these amounts. Note 15. SUBSEQUENT EVENTS Corporate Name and Trading Symbol Change On 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. Amended and Restated Letter of Intent As previously disclosed, on May 20, 2026, the Company entered into a Fully Binding Term Sheet, dated May 18, 2026, with EOS Technology Holdings, Inc. (“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. Pursuant 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. The 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. No assurance 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. Dream Bowl 2026 Meme Coin Distribution On 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. 29