DataMeds AI, Inc. 10-K

ITEM 1A. RISK FACTORS Summary Risk Factors Below is a summary of the principal factors that make an investment in our securities speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Annual Report and our other filings with the SEC, before making an investment decision regarding our securities. ● Our limited operating history as a combined company and our evolving business make it difficult to evaluate our current business and future prospects and increases the risk of your investment. ● Wellgistics Health may experience difficulties in integrating the operations of Wellgistics LLC and Wood Sage thereby hindering Wellgistics Health from realizing the expected benefits of these transactions. ● Reductions in third-party reimbursement levels, from private or governmental agency plans, and potential changes in industry pricing benchmarks for prescription drugs could materially and adversely affect Wellgistics Health’s results of operations. ● A shift in pharmacy mix toward lower margin plans, margin compression on branded medications, increased offering of specialty products, direct and indirect remuneration, “DIR” fees, mail order pharmacy steering, and programs could adversely affect Wellgistics Health’s results of operations. ● Wellgistics Health will derive a portion of its sales from prescription drug sales reimbursed by pharmacy benefit management companies and Wellgistics Health’s participation in the pharmacy provider networks of these companies may be restricted or terminated. ● Wellgistics Health could be adversely affected by a decrease in the introduction of new brand name and generic prescription drugs as well as increases in the cost to procure prescription drugs. ● Consolidation and strategic alliances in the healthcare industry could adversely affect Wellgistics Health’s business operations, competitive positioning, financial condition and results of operations. ● Changes in economic conditions could adversely affect consumer/client buying practices and market adoption of Wellgistics Health’s DelivMeds mobile application and the accompanying revenues to premium access/services. 14 ● Inflationary pressures could have a material impact on Wellgistics Health’s business and operations. ● The industries in which Wellgistics Health will operate are highly competitive and constantly evolving and changes in market dynamics could adversely impact us. ● If Wellgistics Health does not successfully create and implement relevant omni-channel experiences for Wellgistics Health’s customers, Wellgistics Health’s businesses and results of operations could be adversely impacted. ● Wellgistics Health may be unable to achieve Wellgistics Health’s environmental, social and governance goals. ● Wellgistics Health’s business results will depend on Wellgistics Health’s ability to successfully manage ongoing organizational change and business transformation and achieve cost savings and operating efficiency initiatives through Wellgistics Health’s healthcare ecosystem. ● Disruption in Wellgistics Health’s global supply chain could negatively impact Wellgistics Health’s businesses. ● Wellgistics Health’s business and operations will be subject to risks related to climate change. ● Wellgistics Health’s business is primarily focused on certain therapeutic targets, making it vulnerable to risks associated with having therapeutically concentrated operations. ● Failure to retain and recruit, or failure to manage succession of, key personnel could have an adverse impact on Wellgistics Health’s future performance. ● We are highly dependent on the continued service of our directors and officers, whose financial interests may conflict with the interests of investors. ● Failure to renew facility leases in a timely manner could have an adverse impact on Wellgistics Health’s business operations. ● Wellgistics Health may not be able to maintain business, scale for growth, renew pharmacy and wholesale state licenses, and retain commercial and federal contracts while preventing restrictions and termination. ● Wellgistics Health’s relationships with Wellgistics Health’s primary wholesaler for pharmacy operations and Wellgistics Health’s manufacturer relationships for Wellgistics Health’s wholesale and hub technology platform entities will be critical to Wellgistics Health’s success. ● Wellgistics Health will outsource certain business processes to third-party vendors that subject us to risks, including disruptions in business and increased costs. ● Wellgistics Health may not be successful in executing elements of Wellgistics Health’s business strategy, which may have a material adverse impact on Wellgistics Health’s business and financial results. ● Wellgistics Health’s growth strategy is partially dependent upon Wellgistics Health’s ability to identify and successfully complete acquisitions, joint ventures and other strategic partnerships and alliances. ● Businesses acquired by Wellgistics Health could experience losses or liabilities that would result in a material adverse effect on Wellgistics Health’s business operations, results of operation and financial condition. ● Wellgistics Health may make investments in companies over which Wellgistics Health does not have sole control and some of these companies may operate in sectors that differ from Wellgistics Health’s operations and have different risks. ● The success of Wellgistics Health’s hub technology platform and clinical services depends on the willingness of participants in the network of independent partner pharmacies to continue receiving prescriptions and enrolling in a-la-carte services for outsourced work. ● A significant disruption in Wellgistics Health’s information technology and computer systems or those of businesses Wellgistics Health relies on could harm Wellgistics Health. ● Privacy and data protection laws will increase Wellgistics Health’s compliance burden and any failure to comply could harm Wellgistics Health. ● Wellgistics Health and businesses with which Wellgistics Health will interact may experience cybersecurity incidents and might experience significant computer system compromises or data breaches. ● Wellgistics Health will be subject to electronic payment-related and other financial services risks that could increase Wellgistics Health’s operating costs, expose Wellgistics Health to fraud or theft, subject Wellgistics Health to potential liability and potentially disrupt Wellgistics Health’s business operations. 15 ● Wellgistics Health and its subsidiaries have, and entities that Wellgistics Health may acquire could have, significant outstanding debt. The debt and associated payment obligations of Wellgistics Health and its current and future subsidiaries could significantly increase in the future if Wellgistics Health and its current or future subsidiaries incur additional debt and do not retire existing debt. ● Wellgistics Health’s quarterly results may fluctuate significantly based on seasonality and other factors. ● Wellgistics Health has a substantial amount of goodwill and other intangible assets which could, in the future, become impaired and result in material non-cash charges to Wellgistics Health’s results of operations. Wellgistics Health may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations, and stock price. ● Acquisitions Wellgistics Health pursues in its industry and related industries could result in operating difficulties, dilution to Wellgistics Health’s stockholders and other consequences harmful to Wellgistics Health’s business. ● Wellgistics Health may incur non-cash impairment charges in the future associated with its portfolio of intangible assets, including goodwill. ● Wellgistics Health’s level of debt may negatively impact its liquidity, restrict its operations and ability to respond to business opportunities, and increase its vulnerability to adverse economic and industry conditions, especially given that Wellgistics Health’s bank debt contains a variable interest rate component based on its corporate credit ratings. ● Wellgistics Health’s existing credit agreement and any other credit or similar agreements into which Wellgistics Health may enter in the future may restrict its operations, particularly Wellgistics Health’s ability to respond to changes or to take certain actions regarding its business. ● Wellgistics Health’s business is subject to substantial governmental regulation. ● Changes in the healthcare industry and regulatory environments may adversely affect Wellgistics Health’s businesses. ● Wellgistics Health will be exposed to risks related to litigation and other legal proceedings. ● A significant change in, or noncompliance with, governmental regulations and other legal requirements could have a material adverse effect on Wellgistics Health’s reputation and profitability. ● Wellgistics Health could be adversely affected by product liability, product recall, personal injury or other health and safety issues. ● Wellgistics Health could be subject to adverse changes in tax laws, regulations and interpretations or challenges to Wellgistics Health’s tax positions. ● Despite the actions Wellgistics Health will take to defend and protect its intellectual property, Wellgistics Health may not be able to adequately protect or enforce its intellectual property rights or prevent unauthorized parties from copying or reverse engineering its solutions. Wellgistics Health’s efforts to protect and enforce its intellectual property rights and prevent third parties from violating its rights may be costly. ● Third-party claims that Wellgistics Health is infringing intellectual property, whether successful or not, could subject it to costly and time-consuming litigation or expensive licenses, and its business could be adversely affected. ● Wellgistics Health’s intellectual property applications for registration may not issue or be registered, which may have a material adverse effect on Wellgistics Health’s ability to prevent others from commercially exploiting products similar to Wellgistics Health’s. ● In addition to patented technology, Wellgistics Health will rely on its unpatented proprietary technology, trade secrets, designs, experiences, work flows, data, processes, software and know-how. ● Wellgistics Health may be subject to damages resulting from claims that it or its current or former employees have wrongfully used or disclosed alleged trade secrets of its employees’ former employers. Wellgistics Health may be subject to damages if its current or former employees wrongfully use or disclose Wellgistics Health’s trade secrets. ● Wellgistics Health incurs increased costs as a result of operating as a public company, and its management will devote substantial time to compliance with its public company responsibilities and corporate governance practices. ● Wellgistics Health’s management team has limited experience managing a public company. 16 ● Wellgistics Health’s ability to be successful will depend upon the efforts of Wellgistics Health’s board of directors and key personnel and the loss of such persons could negatively impact the operations and profitability of Wellgistics Health’s business. ● Delaware State Law includes anti-takeover provisions. ● Claims for indemnification by Wellgistics Health’s directors and officers may reduce Wellgistics Health’s available funds to satisfy successful third-party claims against Wellgistics Health and may reduce the amount of money available to Wellgistics Health. ● If securities or industry analysts do not publish or cease publishing research or reports about Wellgistics Health, its business, or its market, or if they change their recommendations regarding Wellgistics Health’s securities adversely, the price and trading volume of Wellgistics Health’s securities could decline. ● There can be no assurance that Wellgistics Health common stock will be able to comply with the continued listing standards of the Capital Market tier of The Nasdaq Stock Market LLC (“Nasdaq”). ● Our common stock is publicly traded and may be subject to the penny stock rules which may make it more difficult to sell our common stock. ● An active market for Wellgistics Health’s securities may not develop, which would adversely affect the liquidity and price of Wellgistics Health’s securities. ● The market price of Wellgistics Health common stock may decline as a result of sales, or perceived sales, by Wellgistics Health in the public market or otherwise. ● Future sales, or the perception of future sales, by Wellgistics Health or its stockholders in the public market could cause the market price for Wellgistics Health common stock to decline. ● Wellgistics Health qualifies as an “emerging growth company” and a “smaller reporting company” within the meaning of the Securities Act. If Wellgistics Health takes advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, Wellgistics Health’s securities may be less attractive to investors and, therefore, may make it more difficult to compare Wellgistics Health’s performance with other public companies. ● Certain existing stockholders acquired our securities at a price below the current trading price of such securities and may experience a positive rate of return based on the current trading price. Risk Factors Risks Related to Our Business Our limited operating history as a combined company and our evolving business make it difficult to evaluate our current business and future prospects and increase the risk of your investment. We were incorporated in 2022 for the purpose of acquiring and integrating various companies in the health care industry. Our limited operating history and rapidly evolving business make it difficult to evaluate our current business, future prospects and plan for growth. We will continue to encounter significant risks and uncertainties frequently experienced by growing companies in rapidly changing and heavily regulated industries, such as attracting new customers to our products and services; retaining customers and encouraging them to utilize new products and services that we make available; competition from other companies; hiring, integrating, training and retaining skilled personnel; developing new solutions; determining prices for our solutions; unforeseen expenses; challenges in forecasting accuracy; and new or adverse regulatory developments affecting aspects of the healthcare industry. Further, because we depend, in part, on market acceptance of our newer and future products and services, it is difficult to evaluate trends that may affect our business and whether our expansion will be profitable. If we have difficulty launching new products or services, then our reputation may be harmed and our business, financial condition and results of operations may be adversely affected. If our assumptions regarding these and other similar risks and uncertainties that relate to our business, which we use to plan our business, are incorrect or change as we gain more experience operating as a combined company, or if we do not address these challenges successfully, our operating and financial results could differ materially from our expectations and our business could suffer. 17 Wellgistics Health may experience difficulties in integrating the operations of Wellgistics LLC and Wood Sage thereby hindering Wellgistics Health from realizing the expected benefits of these transactions. Wellgistics Health’s success depends on Wellgistics Health’s ability to realize the anticipated benefits of combining the operations of the Wellgistics LLC and Wood Sage with Wellgistics Health in an efficient and effective manner. The integration process could take longer than anticipated and could result in the loss of key employees from either of Wood Sage or Wellgistics LLC, the disruption of each company’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect Wellgistics Health’s ability to continue relationships with the Wood Sage’s or Wellgistics LLC’s’ customers, employees or other third parties, or Wellgistics Health’s ability to achieve the anticipated benefits of the Wood Sage Acquisition and Wellgistics Acquisition and could harm Wellgistics Health’s financial performance. If Wellgistics Health is unable to successfully or timely integrate the operations of the Wood Sage or Wellgistics LLC with its business, Wellgistics Health may incur unanticipated liabilities and be unable to realize the revenue growth, operating efficiencies, synergies and other anticipated benefits resulting from such transactions and Wellgistics Health’s business, results of operations, and financial condition could be materially and adversely affected. Reductions in third-party reimbursement levels, from private or governmental agency plans, and potential changes in industry pricing benchmarks for prescription drugs could materially and adversely affect Wellgistics Health’s results of operations. The substantial majority of the prescriptions Wellgistics Health will fill at Wellgistics Health’s Wellgistics Pharmacy division will be reimbursed by third-party payers, including private and governmental agency payers. The continued efforts of health maintenance organizations, managed care organizations, PBM companies, governmental agencies, and other third-party payers to reduce prescription drug costs and pharmacy reimbursement rates, as well as litigation and other legal proceedings relating to how drugs are priced, may adversely impact Wellgistics Health’s results of operations. In the U.S., plan changes with rate adjustments often occur in January and July and Wellgistics Health’s reimbursement arrangements may provide for rate adjustments at prescribed intervals during their term. In addition, the timing and amount of periodic contractual reconciliations payments can vary significantly and may not follow a predictable path. Further, in an environment where some PBM clients utilize narrow or restricted pharmacy provider networks, some of these entities may offer pricing terms that Wellgistics Health may not be willing to accept or otherwise restrict Wellgistics Health’s participation in their networks of pharmacy providers. This may also impact the ability for Wellgistics Health’s pharmacy network partners to adjudicate certain prescription claims received via transfer from the DelivMeds hub platform technology which may impact several revenue generating channels in the form of technology-related fees. Further, Wellgistics Health’s wholesale operations may be impacted as pharmacy coverage/ margin is diminished on certain products effecting the ability to carry and move this inventory thereby affecting buying patterns. In addition, many payers in the U.S. are increasingly considering new metrics as the basis for reimbursement rates. It is possible that the pharmaceutical industry or regulators may evaluate and/or develop an alternative pricing reference to replace wholesale acquisition price (WAC) and average wholesale price (AWP), which will be the pricing reference used for Wellgistics Health’s pharmacy and network partner pharmacies contracts. This will also have a direct impact on Wellgistics Health’s secondary wholesalers sourcing and procurement strategies. Future changes to the pricing benchmarks used to establish pharmaceutical pricing, including changes in the basis for calculating reimbursement by third-party payers, could adversely affect Wellgistics Health. A shift in pharmacy mix toward lower margin plans, margin compression on branded medications, increased offering of specialty products, DIR fees, mail order pharmacy steering, and programs could adversely affect Wellgistics Health’s results of operations. Wellgistics Health’s Wellgistics Pharmacy division and network of independent partner pharmacies will seek to grow prescription volume while operating in a marketplace with continuous reimbursement pressure. A shift in the mix of pharmacy prescription volume towards programs offering lower reimbursement rates could adversely affect Wellgistics Health’s results of operations both from an in-house prescription fulfillment perspective and also technology and transactional fees from Wellgistics Health’s network of independent partner pharmacies. General trends Wellgistics Health may observe impacting independent pharmacies include but are not limited to: a shift in pharmacy mix towards 90-day fills which are often reimbursed at lower amounts compared to 30-day fills, DIR fees from PBMs on Medicare Part D prescriptions often leading to negative reimbursements, lower plan paid amounts for branded and specialty medications while simultaneously observing an increase in the number of patients requiring a “specialty-lite” or full specialty medication, narrow networks with unfavorable contract pricing, delivery and shipping-related restrictions impacting the pharmacies ability to gain additional market share, enhanced PBM tactics to steer patients to mail order pharmacies thereby reducing market opportunities, and little to no remuneration for in-demand consumer-driven concierge services from pharmacists. Wellgistics Health’s pharmacy division retains access to all major plans with as expected market competitive reimbursement rates for an independent pharmacy. In-network coverage for PBMs and payors at the independent network partner pharmacy level will vary from store-to-store and Wellgistics Health continue to add more network participants to provide robust coverage. 18 If Wellgistics Health is not able to generate prescription volume and other business from patients participating in these programs that is sufficient to offset the impact of lower reimbursement, or if the degree or terms of Wellgistics Health’s participation in such preferred networks declines in future years, Wellgistics Health’s results of operations could be materially and adversely affected. Furthermore, changes in political, economic, and regulatory influences, as well as industry-wide changes in business practices, including with respect to the imposition of DIR fees by PBMs, may significantly affect Wellgistics Health’s business. Wellgistics Health’s failure to successfully anticipate and respond to, or appropriately adapt to, evolving industry conditions or any of these changes or trends, none of which are within Wellgistics Health’s control, in a timely and effective manner could have a significant negative impact on Wellgistics Health’s competitive position and materially adversely affect Wellgistics Health’s business, financial condition and results of operations. Wellgistics Health will derive a portion of its sales from prescription drug sales reimbursed by PBM companies and Wellgistics Health’s participation in the pharmacy provider networks of these companies may be restricted or terminated. Wellgistics Health will derive a portion of Wellgistics Health’s sales from prescription drug sales reimbursed through prescription drug plans administered by PBM companies. PBM companies typically administer multiple prescription drug plans that expire at various times and provide for varying reimbursement rates, and often limit coverage to specific drug products on an approved list, known as a formulary, which might not include all of the approved drugs for a particular indication. Changes in pricing and other terms of Wellgistics Health’s contracts with PBM companies can significantly impact Wellgistics Health’s results of operations. There can be no assurance that Wellgistics Health will participate in any particular PBM company’s pharmacy provider network in any particular future time period or on terms reasonably acceptable to Wellgistics Health. If Wellgistics Health’s participation in the pharmacy provider network for a prescription drug plan administered by one or more of the large PBM companies is restricted or terminated, Wellgistics Health expects that Wellgistics Health’s sales would be adversely affected, at least in the short-term. If Wellgistics Health is unable to replace any such lost sales, either through an increase in other sales or through a resumption of participation in those plans, Wellgistics Health’s operating results could be materially and adversely affected. If Wellgistics Health exits a pharmacy provider network and later resumes participation, there can be no assurance that Wellgistics Health will achieve any particular level of business on any particular pace, or that all clients of the PBM company will choose to include us again in the pharmacy network for their plans, initially or at all. In addition, in such circumstances Wellgistics Health may incur increased marketing and other costs in connection with initiatives to regain former patients and attract new patients covered by such plans. Wellgistics Health could be adversely affected by a decrease in the introduction of new brand name and generic prescription drugs as well as increases in the cost to procure prescription drugs. The profitability of Wellgistics Health’s healthcare ecosystem business model depends upon the utilization of prescription drugs. Utilization trends are affected by, among other factors, the introduction of new and successful prescription drugs, coverage on payor/PBM formularies, as well as lower-priced generic alternatives to existing brand name drugs. Inflation in the price of drugs also can adversely affect utilization, particularly given the increased prevalence of high-deductible health insurance plans and related plan design changes. New brand name drugs with coverage on formularies can result in increased drug utilization and associated sales, while the introduction of lower priced generic alternatives typically results in relatively lower sales, but relatively higher gross profit margins. In addition, if Wellgistics Health experiences an increase in the amounts it pays to procure pharmaceutical drugs, including generic drugs, Wellgistics Health’s gross profit margins would be adversely affected to the extent Wellgistics Health is not able to offset such cost increases. Any failure to fully offset any such increased prices and costs or to modify Wellgistics Health’s activities to mitigate the impact could have a material adverse effect on Wellgistics Health’s results of operations. Also, any future changes in drug prices could be significantly different than Wellgistics Health’s expectations. 19 A 2019 study performed by NACDS entitled “Cost of Dispensing Study” found that the overall cost of dispensing for all drugs was $12.40 per fill. After factoring inflation, that same cost is estimated to be $14.68 per fill. The latter does not account for other costs associated with medication dispensing noted in this “ Risk Factors” section which clearly demonstrates further strain to gross profit margin on prescription-related fills. Accordingly, a decrease in the number or magnitude of significant new brand name drugs or generics successfully introduced, delays in their introduction, a decrease in the utilization of previously introduced prescription drugs, and or rising costs associated with medication dispensing could materially and adversely affect Wellgistics Health’s business, financial condition and results of operations. Consolidation and strategic alliances in the healthcare industry could adversely affect Wellgistics Health’s business operations, competitive positioning, financial condition and results of operations. Many organizations in the healthcare industry, including PBM companies, have consolidated in recent years to create larger healthcare enterprises with greater bargaining power, which has resulted in greater pricing pressures. If this consolidation trend continues, it could give the resulting enterprises even greater bargaining power, which may lead to further pressure on the prices for Wellgistics Health’s products and services. If these pressures result in reductions in Wellgistics Health’s prices, Wellgistics Health’s businesses would become less profitable unless Wellgistics Health are able to achieve corresponding reductions in costs or develop profitable new revenue streams. Changes in economic conditions could adversely affect consumer/client buying practices and market adoption of Wellgistics Health’s DelivMeds mobile application and the accompanying revenues to premium access/services. Wellgistics Health’s performance may be adversely impacted by changes in global, national, regional or local economic conditions and consumer confidence. These conditions can also adversely affect Wellgistics Health’s key vendors and customers. External factors that affect consumer confidence and over which Wellgistics Health exercises no influence include unemployment rates, inflation, levels of personal disposable income, levels of taxes and interest and global, national, regional or local economic conditions, health epidemics or pandemics. For example, COVID-19 exposes Wellgistics Health to the risks of continued impact of global supply chain disruptions, and the uncertain economic and geopolitical environment, as well as looting, vandalism, acts of war or terrorism. Changes in economic conditions and consumer confidence could adversely affect consumer preferences, purchasing power and spending patterns, which could lead to a decrease in overall consumer spending as well as in prescription drug, services, and digital health services utilization and which could be exacerbated by the increasing prevalence of high-deductible health insurance plans and related plan design changes. From a client perspective, increasing pressures from margin compression, prescription pricing negotiations, and other known stressors as outlined in this “ Risk Factors ” section may negatively impact a manufacturer’s willingness to adopt and utilize various a-la-carte services Wellgistics Health will provide through Wellgistics Health’s hub platform and clinical services. Further threats from market competitors to offer additional products at promotional pricing could lead to lower pricing floors as well. Inflationary pressures could have a material impact on Wellgistics Health’s business and operations. Wellgistics Health will be subject to risk of specific inflationary pressures on product prices and its impact on consumer spending. For example, increases in prescription drug costs could impact consumers ability to afford initial or on-going therapy. Wellgistics Health’s focus on the relatively expensive specialty lite business segment (i.e., $500 - $3,000 therapies) could be particularly impacted by increasing costs. Additionally, consumer discretionary funds could be reduced, impacting the ability to pay for digital services and subscription models that Wellgistics Health offers. If inflation continues to increase, sourcing and procuring specialty lite products may prove to be capital intensive. Wellgistics Health may not be able to adjust prices sufficiently to offset the effect without negatively impacting consumer demand or Wellgistics Health’s gross margin. All of these inflationary risk factors could materially and adversely impact Wellgistics Health’s business operations, financial condition and results of operations. 20 The industries in which Wellgistics Health will operate are highly competitive and constantly evolving and changes in market dynamics could adversely impact us. The level of competition in the pharmacy (i.e., retail, independent, specialty, and digital), healthcare and clinical concierge like services, and pharmaceutical wholesale industries is high. Changes in market dynamics or actions of competitors or manufacturers, including industry consolidation and the emergence of new competitors and strategic alliances, could materially and adversely impact us. Disruptive innovation, or the perception of potentially disruptive innovation, by existing or new competitors could alter the competitive landscape in the future and require us to accurately identify and assess such changes and if required make timely and effective changes to Wellgistics Health’s strategies and business model to compete effectively. All of Wellgistics Health’s businesses will face intense competition from multiple existing and new businesses, some of which are aggressively expanding in markets Wellgistics Health will serve. Wellgistics Health will develop Wellgistics Health’s offerings to respond to market dynamics; however, if Wellgistics Health’s customers are not receptive to these changes, if Wellgistics Health is unable to expand successful programs in a timely manner, or Wellgistics Health otherwise does not effectively respond to changes in market dynamics, Wellgistics Health’s businesses and financial performance could be materially and adversely affected. There are a significant number of competitors that provide one or more comprehensive services, including distribution, with respect to specialty pharmacy drugs, hub and clinical services to perform patient financial assistance; prior authorization coordination; copay tiered reductions; tele-pharmacy; and access to digital health resources, some of whom have greater resources than Wellgistics Health does, including: PBMs; retail pharmacy chains and independent retail pharmacies; digital pharmacies; national, regional and niche specialty pharmacies; home and specialty infusion therapy companies; provider practices and systems; and GPOs. The leading payors and drug chains have completed extensive mergers and acquisitions transactions and business combinations, and, therefore, have significantly greater market share, resources and purchasing power than Wellgistics Health does and, in the aggregate, these competitors generally have access to substantially the same limited distribution drugs that will be in Wellgistics Health’s portfolio. These companies also benefit from their acquisition activity with healthcare organizations, as Wellgistics Health has seen recent acquisitions in the home healthcare and primary care services arena (i.e., One Medical, Signify Health, Village MD, Summit Health, CareCentrix, among others). Digital pharmacies both national and regional have been increasingly entering the market over the course of the last decade with well-known players such as Roman, Lemonaid Health, ForHims, TruePill, and Amazon’s acquisition of PillPack. At the regional level, Wellgistics Health has seen the emergence of companies like Cule, Alto, and many others outlined below looking to penetrate markets and gain access to lives by looking for additional points of differentiation. The competitive healthcare landscape along with macroeconomic pressures has also seen increased chapter 11 filings for bankruptcy and or other means of dissolution including Medley, NowRx, AmazonCare, Haven (i.e., joint venture of Amazon, Berkshire Hathaway, and JPMorgan Chase) over recent years. Many of these companies leverage access to telehealth services and backend partnerships with mail order pharmacies to provide consumers with cash-paying models for access to niche services. The evolution of centralized digital patient support networks with network pharmacies has also recently been gaining steam. As Wellgistics Health will increase in scale and market share, or provide additional healthcare services, Wellgistics Health expects more direct competition for certain drugs, payer and patient access, and services from this myriad of companies. These factors together with the impact of the competitive marketplace or other significant differentiating factors between us and Wellgistics Health’s competitors may make it difficult to gain market access and penetration all of which could materially and adversely impact Wellgistics Health’s business operations, financial condition and results of operations. If Wellgistics Health does not successfully create and implement relevant omni-channel experiences for Wellgistics Health’s customers, Wellgistics Health’s businesses and results of operations could be adversely impacted. The portion of total consumer expenditures from various business sectors completing online shopping has drastically changed over the last two decades. Wellgistics Health is seeing a complete paradigm shift, as consumer sentiment and behavior has moved towards mobile application use. The COVID-19 pandemic was an accelerant, and Wellgistics Health expects this pace of increase exponentially. Consumers are now able to have more have more and more services delivered to their homes or work and more recently Wellgistics Health is seeing this same push with healthcare services. Moreover, prescription related deliveries have become the new normal versus waiting for pharmacy pick-up which is often not as efficient or convenient for this everchanging mindset and expectation of the consumer. 21 In order to be successful with executing on this service delivery, Wellgistics Health’s strategy must offer enhanced value services while also being convenient to the consumer. To accomplish this, an omni-channel approach, intelligent user experience, and home health differentiated model is a necessity to keep up with the rapidly evolving pace of changing customer expectations and new developments by Wellgistics Health’s competitors. Wellgistics Health must compete by offering a consistent and convenient shopping experience for Wellgistics Health’s customers regardless of the ultimate sales channel and by investing in, providing and maintaining digital tools for Wellgistics Health’s customers. If Wellgistics Health is unable to make, improve, or develop relevant customer-facing technology in a timely manner that keeps pace with technological developments and dynamic customer expectations, Wellgistics Health’s ability to compete and Wellgistics Health’s results of operations could be materially and adversely affected. In addition, if Wellgistics Health’s online activities or Wellgistics Health’s other customer-facing technology systems do not function as designed, Wellgistics Health may experience a loss of customer confidence, data security breaches, lost sales, or be exposed to fraudulent purchases, any of which could materially and adversely affect Wellgistics Health’s business operations, reputation and results of operations. Wellgistics Health may be unable to achieve Wellgistics Health’s environmental, social and governance goals. Wellgistics Health recognizes the rising importance of environmental, social, and governance matters among Wellgistics Health’s team members, customers, and certain stockholders and will be committed to upholding a culture dedicated to corporate responsibility. Wellgistics Health will establish certain goals that allow us to better communicate and align to Wellgistics Health’s environmental, social, and governance strategy. However, these goals are subject to risks and uncertainties, which are outside of Wellgistics Health’s control and might prohibit us from meeting the goals. Further, there is a risk that team members, customers, or certain stockholders might not be satisfied with Wellgistics Health’s goals or strategy and efforts to meet the goals. Some of the risks that Wellgistics Health will be subject to include, but are not limited to: Wellgistics Health’s ability to execute Wellgistics Health’s operational strategy within the timeframe or costs projected; the availability or cost of renewable energy, materials, goods, and/or services required, and evolving regulations or requirements that change or limit Wellgistics Health’s ability to set standards or gather information from Wellgistics Health’s supplier partners or third party contractors. Failure to meet Wellgistics Health’s goals could negatively impact public perception of Wellgistics Health’s company with interested stakeholders. Environmental, social, and governance matters are also increasingly important to current and potential employees. In order to retain and attract talent Wellgistics Health knows that it is critical that Wellgistics Health clearly communicate Wellgistics Health’s environmental, social, and governance strategy, and a delay or inability to meet Wellgistics Health’s goals on time could impact Wellgistics Health’s reputation as a desirable place to work. With increased interest from certain stockholders, an inability to meet Wellgistics Health’s goals could also have a negative impact on Wellgistics Health’s stock price. These impacts could make it more difficult for us to operate efficiently and effectively and could have a negative effect on Wellgistics Health’s business, operating results and financial conditions. Wellgistics Health’s business results will depend on Wellgistics Health’s ability to successfully manage ongoing organizational change and business transformation and achieve cost savings and operating efficiency initiatives through Wellgistics Health’s healthcare ecosystem. The key to Wellgistics Health’s success will be executing on Wellgistics Health’s win-win strategy for all stakeholders in the healthcare delivery model. Through leveraging Wellgistics Health’s portfolio of subsidiaries, Wellgistics Health’s leadership will need to deliver on a value proposition to patients, pharmacies, providers, payors/ PBMs, and pharmaceutical manufacturers. This is obtained by making healthcare services affordable and convenient in a centralized model. Wellgistics Health’s success will hinge on the Wellgistics Health’s leadership team to improve operational efficiency, decreasing costs, market access and insights, data transparency, value-based outcomes, and innovative technology via automation. 22 There can be no assurance that Wellgistics Health will realize, in full or in part, the anticipated benefits of leveraging these subsidiaries and what that market adoption will be like. Wellgistics Health’s financial goals assume a level of productivity improvement and other business optimization initiatives. If Wellgistics Health is unable to implement the programs or deliver these expected productivity improvements, while continuing to invest in business growth, or if the volume and nature of change overwhelms available resources, Wellgistics Health’s business operations, financial condition and results of operations could be materially and adversely impacted. Risks Relating to Wellgistics Health’s Operations Disruption in Wellgistics Health’s global supply chain could negatively impact Wellgistics Health’s businesses. The pharmaceutical products for Wellgistics Health’s wholesale division are sourced from pharmaceutical manufacturers with a wide variety of domestic and international vendors, and any future disruption in Wellgistics Health’s supply chain or inability to find qualified vendors and access products that meet requisite quality and safety standards in a timely and efficient manner could adversely impact Wellgistics Health’s businesses. The loss or disruption of such supply arrangements for any reason, including for issues such as COVID-19 or other health epidemics or pandemics, labor disputes, loss or impairment of key manufacturing sites, inability to procure sufficient raw materials, quality control issues, ethical sourcing issues, a supplier’s financial distress, natural disasters, looting, vandalism or acts of war (such as the conflict in Ukraine) or terrorism, trade sanctions or other external factors over which Wellgistics Health has no control, could interrupt product supply and, if not effectively managed and remedied, have a material adverse impact on Wellgistics Health’s business operations, financial condition and results of operations. Wellgistics Health’s pharmacy division and to the greater extent, Wellgistics Health’s independent network of partner pharmacies, may also be impacted by disruptions in global supply chain as listed above based on primary wholesaler and direct pharmaceutical manufacturing contracts. Wellgistics Health’s business and operations will be subject to risks related to climate change. The long-term effects of global climate change present both physical risks (such as extreme weather conditions or rising sea levels) and transition risks (such as regulatory or technology changes), are expected to be widespread and unpredictable. These changes could over time affect, for example, the availability and cost of products, commodities and energy (including utilities), which in turn may impact Wellgistics Health’s ability to procure goods or services required for the operation of Wellgistics Health’s business at the quantities and levels Wellgistics Health require. In addition, Wellgistics Health’s facilities may be in locations that may be impacted by the physical risks of climate change, and Wellgistics Health may face the risk of losses incurred as a result of physical damage to stores, distribution or fulfillment centers, loss or spoilage of inventory and business interruption caused by such events. Wellgistics Health will also use natural gas, diesel fuel, gasoline and electricity in Wellgistics Health’s operations, all of which could face increased regulation as a result of climate change or other environmental concerns. Whether internally or via Wellgistics Health’s third-party relationships with Wellgistics Health’s national and regional ride- sharing partners (i.e., Lyft and Roadie) for prescription delivery; and shipping carriers (i.e., USPS, UPS, FedEx), rising fuel costs will lead to an increase in tiered rates for mileage/distance which will increase Wellgistics Health’s costs associated with prescription delivery or shipping. Regulations limiting greenhouse gas emissions and energy inputs may also increase in coming years, which may increase Wellgistics Health’s costs associated with compliance and merchandise. These events and their impacts could otherwise disrupt and adversely affect Wellgistics Health’s operations and could materially adversely affect Wellgistics Health’s financial performance. 23 Wellgistics Health’s business is primarily focused on certain therapeutic targets, making it vulnerable to risks associated with having therapeutically concentrated operations. Wellgistics Health’s operates within the “specialty-lite” or niche sector of the pharmaceutical industry. It is well documented in the literature that the specialty drug market accounts for less than 10% of total drugs in the market. As a result, Wellgistics Health’s business, financial condition and results of operations are susceptible to economic downturns within this sector of the industry, whether cause by state regulations, budget constraints, severe weather conditions, catastrophic events, or other disruptions. As Wellgistics Health seeks to expand its existing operations, opportunities for growth within the “specialty-lite” or niche sector of the pharmaceutical industry may become more limited. Failure to retain and recruit, or failure to manage succession of, key personnel could have an adverse impact on Wellgistics Health’s future performance. Wellgistics Health’s ability to attract, engage, develop and retain qualified and experienced employees at all levels, including in executive and other key strategic positions, is essential for us to meet Wellgistics Health’s objectives. Competition among potential employers might result in increased salaries, benefits or other employee-related costs, or in Wellgistics Health’s failure to recruit and retain employees which could have a materially adverse impact on Wellgistics Health’s business operations, financial condition and results of operations. Additionally, any failure to adequately plan for and manage succession of key management roles or the failure of key employees to successfully transition into new roles could have a material adverse effect on Wellgistics Health’s business and results of operations. While Wellgistics Health has succession plans in place and employment arrangements with certain key executives, these do not guarantee the services of these executives will continue to be available to us. We are highly dependent on the continued service of our directors and officers, whose financial interests may conflict with the interests of investors. Our directors and officers, including Brian Norton, Chief Executive Officer, and Vishnu Balu, Chief Financial Officer, have years of significant experience in the pharmaceutical industry and other sectors related to our business. Our success depends upon the continued service of these directors and officers. The loss of any of these directors and officers might significantly delay or prevent the achievement of our business objectives and could materially harm our business, financial condition and results of operations. Failure to renew facility leases in a timely manner could have an adverse impact on Wellgistics Health’s business operations. Wellgistics Health’s facilities will include multiple corporate offices, physical location of the pharmacy, and multiple warehouse facilities for wholesale product warehousing and distribution. These locations are subject to competition with other retailers and businesses for suitable locations for Wellgistics Health’s facilities. Local land use and zoning regulations, environmental regulations and other regulatory requirements may impact Wellgistics Health’s ability to find suitable locations and influence the cost of constructing, renovating and operating Wellgistics Health’s stores. In addition, real estate, zoning, construction and other delays may adversely affect Wellgistics Health’s business and increase Wellgistics Health’s costs. Further, changing local demographics may adversely affect revenue and profitability levels. The terms of leases at existing facility locations may adversely affect Wellgistics Health if the renewal terms of, or requested modifications to, those leases are unacceptable to Wellgistics Health, and Wellgistics Health will be forced to close or relocate operations. If Wellgistics Health is unable to maintain Wellgistics Health’s facility locations or open/move to new facility locations in desirable places and on favorable terms, Wellgistics Health’s results of operations could be materially and adversely affected. Wellgistics Health may not be able to maintain business, scale for growth, renew pharmacy and wholesale state licenses, and retain commercial and federal contracts while preventing restrictions and termination. The ability to maintain business channels, service existing pharmacies from a wholesale product distribution perspective, and service Wellgistics Health’s patient base at the pharmacy will all be potential areas for adverse impacts to Wellgistics Health’s financial condition and operations due to everchanging regulations and requirements to maintain contracts and licenses. Wellgistics Health’s wholesale operations will retain state licenses for whole distribution from the various state boards of pharmacy or equivalent along with the federal level as maintained by the FDA, third-party logistics and controlled substance licenses from all state boards of pharmacy, and an accreditation with the NABP and Accredited Drug Distributor. 24 Wellgistics Health’s pharmacy division has the equivalent of 32 state board of pharmacy licenses along with the District of Columbia. Many of these licenses include the ability to dispense controlled substance with only a few states retaining waivers for exemption. The pharmacy will also have a Florida state Medicaid contract, several National Provider Identifier numbers, and a Drug Enforcement Agency (“DEA”) certificate. The pharmacy formerly had accreditation status with Accreditation Commission for Health Care (“ACHC”) and URAC as a specialty pharmacy and plans on pursing reaccreditation along with URAC Small Business Mail Order accreditation. The pharmacy will retain all major PBM/payor direct contracts with little to no restrictions. The pharmacy will be affiliated with Elevate as its Pharmacy Services Administration Organization to provide the relevant minor PBM contracts. The ability to retain all of these state board, federal, and PBM/payor contracts through the renewal process while expanding Wellgistics Health’s reach is critical to conducting business and generating revenues. Contract restrictions, termination, and or an inability to expand would be deemed as events that could disrupt and adversely affect Wellgistics Health’s operations and could materially adversely affect Wellgistics Health’s financial performance. Wellgistics Health’s relationships with Wellgistics Health’s primary wholesaler for pharmacy operations and Wellgistics Health’s manufacturer relationships for Wellgistics Health’s wholesale and hub technology platform entities will be critical to Wellgistics Health’s success. Wellgistics Health’s internal pharmacy division has a primary contract with AmerisourceBergen for pharmaceutical distribution agreement pursuant to which Wellgistics Health sources branded and generic pharmaceutical products from AmerisourceBergen. Wellgistics Pharmacy executed this agreement in October 2022, and the agreement requires the pharmacy to purchase a certain volume per month while also maintain compliance with the generic compliance ratio. Wellgistics Health has a relationship with HD Smith and Scienture Holdings, Inc. (f/k/a TRxADE Health, Inc.) (“Scienture”) to acquire products via the secondary channel. This is seen as a potential risk for the business as the secondary channel providers often do not provide full spectrum catalogs and more specifically used to assist with cost savings opportunities through the purchase of short-dated products and or access to specialty or niche therapeutic category products. Consequently, Wellgistics Health’s business may be adversely affected by any operational, financial or regulatory difficulties that these wholesalers or pharmaceutical manufacturers experience, including those resulting from COVID-19. For example, if operations are seriously disrupted for any reason, whether due to a natural disaster, pandemic, labor disruption, regulatory action, computer or operational systems or otherwise, it could adversely affect Wellgistics Health’s business and Wellgistics Health’s results of operations. Wellgistics Health’s distribution agreement with AmerisourceBergen is subject to early termination in certain circumstances and, upon the expiration or termination of the agreement, there can be no assurance that Wellgistics Health or AmerisourceBergen will be willing to renew the agreement or enter into a new agreement, on terms favorable to us or at all. If such expiration or termination occurred, Wellgistics Health believes that alternative sources of supply for most generic and brand- name pharmaceuticals are readily available and that Wellgistics Health could obtain and qualify alternative sources, which may include self-distribution in some cases, for substantially all of the prescription drugs Wellgistics Health will sell on an acceptable basis, such that the impact of any such expiration or termination would be temporary. However, there can be no assurance Wellgistics Health would be able to engage alternative supply sources as a primary wholesaler for generic and branded products in a timely basis or on terms favorable to us, or effectively manage these transitions, any of which could adversely affect Wellgistics Health’s business operations, financial condition and results of operations. At the wholesale level, Wellgistics Health now has, upon closing of the Wellgistics Acquisition, relationships with over 60 manufacturers to distribute products to retail, independent, and specialty pharmacies. At the hub technology platform division, Wellgistics Health will leverage the wholesale operation to expand pharmaceutical manufacturer relationships. Wellgistics Health’s combined portfolio will work synergistically to provide additional value to pharmaceutical manufacturers. This will in turn will help lower costs and provide additional market access. In recent years, an increasing number of pharmaceutical manufacturers have attempted to significantly limit the number of pharmacies that may dispense their drugs. Pharmacies dispensing products from direct manufacturer relationships need to ensure they can manage a drug’s rollout, obtain real-time data, and confirm the unique patient population’s receipt of the necessary services and support to remain adherent. Access to limited-distribution drugs provides us with significant competitive advantages in developing relationships with payers and physicians. If Wellgistics Health cannot obtain access to new limited-distribution pharmaceuticals or lose access to limited-distribution pharmaceuticals Wellgistics Health currently distribute this could have a material and adverse impact on Wellgistics Health’s business, profitability and results of operations. 25 Wellgistics Health will obtain access to limited-distribution drugs primarily from small to mid-size pharmaceutical companies, often many of these are boutique companies, many of whom are bringing their first or second drug to market. Wellgistics Health will incur significant expense, time and opportunity cost to educate and assist emerging small and mid-size manufacturers in bringing these products to the marketplace without any guarantee of a successful drug launch or future sales. The failure to monetize these relationships and supply Wellgistics Health’s independent network of pharmacies with prescriptions could adversely impact Wellgistics Health’s profitability and Wellgistics Health’s prospects. Wellgistics Health will also provide a significant amount of direct and indirect services for the benefit of Wellgistics Health’s pharmaceutical manufacturer customers and Wellgistics Health’s patients to gain access to these products, and Wellgistics Health’s failure to provide services at optimal quality could result in losing access to existing and future drugs. In addition, Wellgistics Health will incur significant costs in providing these services and if manufacturers require significant additional services and products to obtain access to their drugs without a corresponding increase in service fees paid to Wellgistics Health, Wellgistics Health’s profitability could be adversely impacted. Wellgistics Health’s contracts with pharmaceutical manufacturers and wholesalers will be generally for one-year terms on the hub technology platform and clinical services and three years on the wholesale side and are terminable on reasonably short notice by either party before or after the contract term. If several of these contractual relationships are terminated or materially altered by the pharmaceutical manufacturers or wholesalers or if Wellgistics Health is otherwise unable to renew these contracts or enter into similar contracts on favorable terms, Wellgistics Health could lose a major source of revenue from the pharmaceuticals Wellgistics Health will dispense or distribute, and also prescriptions Wellgistics Health is able to generate and pass through to Wellgistics Health’s network of independent pharmacy partners which would materially impact Wellgistics Health’s operations and financial condition. Wellgistics Health will outsource certain business processes to third-party vendors that subject us to risks, including disruptions in business and increased costs. Wellgistics Health will outsource certain business, administrative, and development functions and rely on third-party technologies such as plug-ins and advanced programming interfaces (“APIs”) to perform certain services for Wellgistics Health’s hub technology platform and other divisions on Wellgistics Health’s behalf. Various examples of this will include relationships with both domestic and foreign developers for Wellgistics Health’s mobile solutions as part of Wellgistics Health’s hub technology platform, relationships with various PMS system providers, relationships with various ride-sharing platform providers and their network of drivers, carrier relationships for shipping of products, and various relationships with third party clinical service providers or technology solutions to be able to offer Wellgistics Health’s end- to-end holistic approach to patient- centered care services. Wellgistics Health will rely on third-party vendors and their licenses to meet Wellgistics Health’s quality and performance requirements. Wellgistics Health will utilize these third-party vendors for some of the technology to be used in Wellgistics Health’s products, and intends to license technologies from third parties. Most of these licenses can be renewed only by mutual consent and may be terminated if Wellgistics Health breaches the terms of the license and fails to cure the breach within a specified period of time. Wellgistics Health may not be able to obtain these licenses on commercially reasonable terms, or at all. Wellgistics Health’s inability to obtain or renew these licenses or find suitable alternatives could delay development of new products or prevent us from selling Wellgistics Health’s existing products until suitable substitute technology can be identified, licensed, integrated, or developed by us. Wellgistics Health cannot assure you as to when Wellgistics Health would be able to do so, if at all. 26 Most of Wellgistics Health’s third-party licenses will be non-exclusive. Wellgistics Health’s competitors may obtain the right to use any of the technology covered by these licenses and use the technology to attempt to compete more effectively with us. In addition, Wellgistics Health’s use of third-party technologies will expose it to risks associated with the integration of components from various sources into Wellgistics Health’s products, such as unknown software errors or defects or unanticipated incompatibility with Wellgistics Health’s systems and technologies, or unintended infringement resulting from the combination of intellectual property rights. Further, Wellgistics Health will be dependent on Wellgistics Health’s vendors’ support of the technology Wellgistics Health will use. If a vendor chooses to discontinue or is unable to support a licensed technology, Wellgistics Health may not be able to modify or adapt Wellgistics Health’s products to fit other available technologies in a timely manner, which would lead us to experience operational difficulties, reputational harm, and increased costs that could materially and adversely affect Wellgistics Health’s business operations and results of operations. Risks Relating to Wellgistics Health’s Business Strategy Wellgistics Health may not be successful in executing elements of Wellgistics Health’s business strategy, which may have a material adverse impact on Wellgistics Health’s business and financial results. Wellgistics Health’s ability to successfully implement Wellgistics Health’s comprehensive strategy of leveraging product warehousing/distribution while simultaneously facilitating the hub technology platform to transfer prescriptions to Wellgistics Health’s network of independent partner pharmacies will be crucial to Wellgistics Health’s operations and financial condition. Wellgistics Health’s wholesale operations will enable pharmaceutical companies to have a single entity for contracting which assists with minimizing product returns and eliminates chargebacks. Now that the Wellgistics Acquisition has closed, Wellgistics Health’s warehouse’s distribution capabilities assist manufacturers with preventing inventory loss in the form of having to sell short-dated products at a lower margin and or potentially destroy expired and unusable products. Wellgistics Health’s portfolio of products along with Wellgistics Health’s sales strategy will enable Wellgistics Health to move niche specialty products that have a distinct place in the market and help maximize returns. The ability to provide pharmaceutical manufacturer and provider groups like ACOs with a hub technology platform with an accompanying robust network of independent pharmacies is crucial to the success of Wellgistics Health’s health eco-system strategy. Wellgistics Health’s technology platform along with Wellgistics Health’s mobile solutions will enable patients to access digital health resources for added visibility in their prescription journey, which leads to cost savings opportunities, convenience, and healthier outcomes. This is especially important for pharmaceutical manufacturers and provider group clients looking to improve health outcomes for the patient populations they serve. Wellgistics Health will provide both of these clients with a reliable pharmacy network, clinical services, and transparent reporting with a primary focus on boosting medication adherence. Wellgistics Health’s platform will be able to identify high-risk patients and provide actionable and meaningful outcomes geared towards patient engagement to boost medication adherence and preserve compliance to therapy. The ability to transfer these prescriptions to integrated and non-integrated pharmacies will be key to receiving the data which can then be mined and presented to various stakeholders and clients to improve operational efficiency, customize marketing, and share in cost savings. Additionally, Wellgistics Health will engage in strategic initiatives to, among other reasons, maximize long-term stockholder value, expand on Wellgistics Health’s consumer-centric approach, strengthen Wellgistics Health’s partnerships with local healthcare providers and improve health outcomes. These strategic initiatives do not guarantee improvements in future financial performance. Wellgistics Health cannot provide any assurance that Wellgistics Health will be able to successfully execute these strategic initiatives, or that these initiatives will not result in additional unanticipated costs. The failure to realize the benefits of any strategic initiatives or successfully structure Wellgistics Health’s business to meet market conditions could have a material adverse effect on Wellgistics Health’s business, financial condition, cash flows, or results of operations. 27 Wellgistics Health’s growth strategy is partially dependent upon Wellgistics Health’s ability to identify and successfully complete acquisitions, joint ventures and other strategic partnerships and alliances. A significant element of Wellgistics Health’s growth strategy is to identify, pursue and successfully complete and integrate acquisitions, joint ventures and other strategic partnerships and alliances that either expand or complement Wellgistics Health’s existing operations. Acquisitions and other strategic transactions involve numerous risks, including difficulties in successfully integrating the operations and personnel, navigating the necessary regulatory approval requirements, distraction of management from overseeing, and disruption of, Wellgistics Health’s existing operations, difficulties in entering markets or lines of business in which Wellgistics Health has no or limited direct prior experience, the possible loss of key employees and customers, and difficulties in achieving the synergies Wellgistics Health anticipated. Any failure to select suitable opportunities at fair prices, conduct appropriate due diligence, acquire and successfully integrate the acquired company, including particularly when acquired businesses operate in new geographic markets or areas of business, could materially and adversely impact Wellgistics Health’s growth strategies, financial condition and results of operations. Apart from acquisitions in the healthcare space and emerging technologies such as artificial intelligence and blockchain technologies, Wellgistics Health’s strategy is to engage in business-to-business relationships that can help us gain further market penetration and adoption, all of which are imperative given the highly saturated healthcare market. Partnerships with strategic clients such as pharmaceutical manufacturers and provider groups will help us source products at lower costs and drive prescriptions through Wellgistics Health’s hub technology platform. Other strategic partnerships range from PMS systems, ridesharing and shipping companies GPOs, and other clinical providers to provide robust and complementary services that are value adds for all stakeholders. Currently, the hub technology platform has partnered with Best Rx pharmacy software system. There are approximately 1,400 independent pharmacies utilizing this software which accounts for greater than 6% of the independent pharmacy market share. These pharmacies are ideal candidates to be members of Wellgistics Health’s integrated pharmacy network based on the various integrations Wellgistics Health will develop to communicate with their systems. These locations are predominately located on the east coast. Wellgistics Health’s ability to onboard pharmacies in an effective manner and being located on the east coast is a risk associated with gaining market share and providing patients with an adequate solution for fulfillment. To combat this, Wellgistics Health will identify strategic partners within this network that are able to ship prescription medications through Wellgistics Health’s integrations which aids in providing more coverage area options. Wellgistics Health management has a relationship with PrimeRx MARKET and Pioneer Rx. Wellgistics Health believes that these relationships could provide access to more than 16,500 pharmacies using a wide array of pharmacy management software systems which accounts for 87% of the independent PMS. Through Wellgistics Health’s fax modality integrations and solutions for data capture for non-integrated pharmacies, Wellgistics Health will have the means to provide patients with more robust network coverage. Wellgistics Health’s team has identified additional PMS systems to partner with such as Prime Rx, Pioneer Rx, Liberty, Transactional Data Systems, and Digital Business Solutions. These additional PMS systems will help with Wellgistics Health’s ability expand the integrated network which help drive additional value in the form of data capture elements. By integrating with the PMS system, Wellgistics Health will then in turn able to recruit the pharmacies utilizing this software to join Wellgistics Health’s network. Risks associated with this strategy include the PMS corporate team’s willingness to partner, Wellgistics Health’s ability to integrate the software into Wellgistics Health’s overall solution in a timely manner, and the pharmacies willingness to join the network. Wellgistics Health’s software solution will be integrated with two national ride-sharing logistics providers and all of the major shipping carriers to offer both pharmacies and patients with multiple means for sending and receiving their prescriptions. From the ride-sharing prospective, Wellgistics Health’s core technology will be integrated with Lyft Healthcare, Inc., and Roadie. These integrations will help us provide nationwide coverage for same-day and next-day prescription delivery and a system with built in redundancies between both networks to ensure prompt delivery. Wellgistics Health’s strategy is to onboard pharmacies across the United States and mapping out ride-sharing coverage to ensure adequate turnaround time for prescription delivery. Risks associated with this strategy include maintaining an on-going relationship with these entities, providing a significant number of transactions to ensure profitability for all partners, and Wellgistics Health’s ability to renew contracts. Wellgistics Health’s contractual relationships will be for one-year terms with one-year autorenewal terms. Either party will be able to terminate the relationship with proper notice. Wellgistics Health’s integrations with carriers include USPS, UPS, and FedEx. Wellgistics Health will be able to transmit the respective rates to end users based on the network partner pharmacy’s availability and allow patients to price compare options due to the redundancies. Future risks associated with this include changes to rates based on factors such as inflation, fuel, and other variables that are not in control which could impact Wellgistics Health’s business operations and financial condition. 28 Wellgistics Health’s strategy to increase Wellgistics Health’s network of independent partner pharmacies also leverages GPOs. By partnering with these entities, Wellgistics Health will be able to onboard a larger cohort of pharmacies vs. individual sign-up, and in return, these GPOs will be able to promote Wellgistics Health’s services as a business opportunity to help network pharmacies increase their business and improve their bottom line. Risks associated with this strategy include successfully presenting the value proposition to the corporate team and obtaining a contract, ability to convert pharmacy’s part of the GPO through combined marketing initiatives, execution of Wellgistics Health’s onboarding strategies, and the pharmacies willingness to remain in the network and pay associated fees. It should be noted that each participating pharmacy within the GPO uses different PMS systems and that by successfully striking a partnership with the GPO, there is no guarantee that Wellgistics Health will be able to onboard each pharmacy to the integrated network. Wellgistics Health can however onboard them to the “soft network” which allows us to transfer the prescription via fax. Integrating third-party clinical features and services is vital to the success of Wellgistics Health’s business strategy as being an end-to-end solution for end users and Wellgistics Health’s clients. Wellgistics Health’s partners that offer these types of value-add services include patient enrollment campaigns, prior authorization coordination, digital health resources, calendar-based refill reminder systems, and other key pieces that will help boost the lifetime value and net promoter score for market adoption. Risks associated with these partnerships include willingness to integrate, costs associated with these services, end clients need for these services to continue driving growth, Wellgistics Health’s ability to engage in cost-sharing with the pharmacies for the various service levels being provided, and the dependency on the quality of the services being performed by these third-party companies. These acquisition transactions and potential partnerships may also cause us to significantly increase Wellgistics Health’s interest expense, leverage and debt service requirements if Wellgistics Health incurs additional debt to pay for an acquisition or investment, issue common stock that would dilute Wellgistics Health’s current stockholders’ percentage ownership, or incur asset write-offs and restructuring costs and other related expenses that could have a material adverse impact on Wellgistics Health’s operating results. Acquisitions, joint ventures and strategic investments also involve numerous other risks, including potential exposure to assumed litigation and unknown environmental and other liabilities, as well as undetected internal control, regulatory or other issues, or additional costs not anticipated at the time the transaction was completed. The failure to realize the benefits of any strategic initiatives and partnerships to meet market conditions could have a material adverse effect on Wellgistics Health’s business, financial condition, or results of operations. Businesses acquired by Wellgistics Health could experience losses or liabilities that would result in a material adverse effect on Wellgistics Health’s business operations, results of operation and financial condition. Healthcare and technology businesses acquired could experience losses or liabilities, including medical liability claims, causing us to incur significant expenses and requiring Wellgistics Health to pay significant damages if not covered by insurance. These businesses will be subject to medical liability claims in the ordinary course of business, and although Wellgistics Health will carry insurance covering medical malpractice claims, including professional liability insurance, in amounts Wellgistics Health believes is appropriate in light of the risks attendant to Wellgistics Health’s business, successful medical liability claims could result in substantial damage awards that exceed the limits of Wellgistics Health’s insurance coverage. Professional liability insurance is expensive and insurance premiums may increase significantly in the future, particularly as Wellgistics Health expands Wellgistics Health’s services. As a result, adequate professional liability insurance may not be available to Wellgistics Health in the future at acceptable costs or at all. Any claims made against Wellgistics Health or its acquired businesses that are not fully covered by insurance could be costly to defend against, result in substantial damage awards against us and divert the attention of Wellgistics Health’s management and Wellgistics Health’s providers from Wellgistics Health’s operations, which could harm Wellgistics Health’s business. In addition, any claims may significantly harm Wellgistics Health’s business or reputation. In addition, businesses acquired expose Wellgistics Health to risks that are inherent in the provision of healthcare services. If patients, clients or partners assert liability claims against Wellgistics Health, any ensuing litigation, regardless of outcome, could result in a substantial cost to Wellgistics Health, divert management’s attention from operations, and decrease market acceptance of Wellgistics Health’s services and care delivery model. Wellgistics Health does exert control over any provider led entities now or in the future with respect to the practice of medicine and the provision of healthcare services, and the risk of liability, including through unexpected medical outcomes, is inherent to the healthcare industry. 29 Wellgistics Health may make investments in companies over which Wellgistics Health does not have sole control and some of these companies may operate in sectors that differ from Wellgistics Health’s operations and have different risks. From time to time, Wellgistics Health may make debt or equity investments in companies that Wellgistics Health may not control or over which Wellgistics Health may not have sole control but would be of strategic value to bolster Wellgistics Health’s service and capabilities. Investments in these businesses, among other risks, subject Wellgistics Health to the operating and financial risks of the businesses Wellgistics Health invests in and to the risk that Wellgistics Health does not have sole control over the operations of these businesses. Wellgistics Health relies on the internal controls and financial reporting controls of these entities and their failure to maintain effectiveness or comply with applicable standards may materially and adversely affect Wellgistics Health. Investments in entities over which Wellgistics Health does not have sole control, including joint ventures and strategic partnerships and alliances, present additional risks such as having differing objectives from Wellgistics Health’s partners or the entities in which Wellgistics Health will be invested, becoming involved in disputes, or competing with those persons. The success of Wellgistics Health’s hub technology platform and clinical services depends on the willingness of participants in the network of independent partner pharmacies to continue receiving prescriptions and enrolling in a-la-carte services for outsourced work. Wellgistics Health’s pharmacy network will be segregated into three networks: integrated network, soft network, and general pharmacy network. The integrated network would be any pharmacy that has completed onboarding and using a PMS system which Wellgistics Health will have integrated with for the bidirectional exchange of electronic information including prescription transfer. The soft network would be any onboarded pharmacy who Wellgistics Health will not have an integration with but that can still receive prescription transfers in the form of facsimile and who Wellgistics Health will establish alternative means for data capture. Lastly, the general network is any pharmacy irrespective of whether they would be deemed as an independent pharmacy and that the patient has elected to transfer their prescription to thereby preserving patient autonomy. Accordingly, a general downturn in the pharmacy industry, or healthcare industry more generally, could materially harm Wellgistics Health’s hub services offerings. In addition, demand for Wellgistics Health’s hub services may be affected by Wellgistics Health’s customers’ perceptions regarding outsourcing as a whole. For example, other digital pharmacies or hub services companies could engage in conduct or fail to detect malfeasance that could render Wellgistics Health’s customers less willing to do business with them or any digital pharmacy or hub services company. If any such event causing industry-wide reputational harm were to occur, even though outside Wellgistics Health’s control, confidence in the industry generally could be impaired and the willingness of Wellgistics Health’s customers to outsource services to organizations that provide digital pharmacy and hub services like Wellgistics Health’s could diminish. Moreover, demand for Wellgistics Health’s digital pharmacy hub services will depend to a significant extent on the trust Wellgistics Health’s customers place in the combined company and Wellgistics Health’s reputation for independent, high-quality service. To maintain client satisfaction and compliance, Wellgistics Health will keep certain information and software systems, infrastructure, and employees “firewalled” on a need-to-know basis. In the event that Wellgistics Health’s protocols or procedures are not followed or contain undetected errors or defects that are subsequently discovered by Wellgistics Health, Wellgistics Health’s customers or a third-party, Wellgistics Health’s reputation with current and potential customers could be harmed. If one or more of the foregoing events were to occur, it could have a material adverse effect on Wellgistics Health’s business, financial condition and results of operations. Risks Related to Cybersecurity, Data Privacy, and Information Security A significant disruption in Wellgistics Health’s information technology and computer systems or those of businesses Wellgistics Health relies on could harm Wellgistics Health. At Wellgistics Health’s internal pharmacy division, Wellgistics Health will rely extensively on Wellgistics Health’s computer/software systems to manage Wellgistics Health’s ordering, pricing, point-of-sale, pharmacy fulfillment, inventory replenishment, finance and other processes. Additionally, Wellgistics Health’s core architecture will be housed on Amazon Web Services servers, and Wellgistics Health will rely on various third-party vendors and partners who will provide various plug-ins and APIs that drive Wellgistics Health’s end-to-end solution on the hub technology platform that could significantly impact Wellgistics Health’s business operations and financial condition. To a greater extent, Wellgistics Health’s PMS system partners will be used by various network pharmacies and may impact Wellgistics Health’s ability to electronically transmit information. 30 Wellgistics Health’s systems will be subject to damage or interruption from power outages, facility damage, computer and telecommunications failures, computer viruses, security breaches including credit card or personally identifiable information breaches, vandalism, theft, natural disasters, catastrophic events, human error and potential cyber threats, including malicious codes, worms, phishing attacks, denial of service attacks, ransomware and other sophisticated cyber-attacks, and Wellgistics Health’s disaster recovery planning cannot account for all eventualities. If any of Wellgistics Health’s systems are damaged, fail to function properly or otherwise become unavailable, Wellgistics Health may incur substantial costs to repair or replace them, and may experience loss or corruption of critical data and interruptions or disruptions and delays in Wellgistics Health’s ability to perform critical functions, which could materially and adversely affect Wellgistics Health’s businesses and results of operations. In addition, Wellgistics Health expects to make substantial investments in Wellgistics Health’s information technology systems and infrastructure, some of which are significant. Implementing new systems carries significant potential risks, including failure to operate as designed, potential loss or corruption of data or information, changes in security processes, cost overruns, implementation delays, disruption of operations, and the potential inability to meet business and reporting requirements. Wellgistics Health will rely on strategic partners and other service providers to help us with certain significant information technology projects and services. Information technology projects or services frequently are long-term in nature and may take longer to complete and cost more than Wellgistics Health expects and may not deliver the benefits Wellgistics Health projects once they are complete. Any system implementation and transition difficulty may result in operational challenges, reputational harm, and increased costs that could materially and adversely affect Wellgistics Health’s business operations and results of operations. Wellgistics Health also could be adversely affected by any significant disruption in the systems of third parties Wellgistics Health interact with, including strategic and business partners, key payers and vendors. Privacy and data protection laws will increase Wellgistics Health’s compliance burden and any failure to comply could harm Wellgistics Health. The regulatory environment surrounding data security and privacy is increasingly demanding, with the frequent imposition of new and changing requirements across businesses and geographic areas. Wellgistics Health will be required to comply with increasingly complex and changing data security and privacy regulations in the jurisdictions in which Wellgistics Health will operate that regulate the collection, use and transfer of personal data, including the transfer of personal data between or among countries. In the U.S., for example, HIPAA imposes extensive privacy and security requirements governing the transmission, use and disclosure of health information by covered entities in the healthcare industry, including healthcare providers such as pharmacies. In addition, the California Consumer Privacy Act, which went into effect on January 1, 2020, imposes stringent requirements on the use and treatment of “personal information” of California residents, and other jurisdictions have enacted, or are proposing similar laws related to the protection of personal data. Moreover, there are specific privacy requirements from Apple and Google’s respective mobile application stores that Wellgistics Health will need to be up to date with as Wellgistics Health’s mobile application is currently available on both stores. Compliance with changes in privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes. Failure to comply with these laws subjects us to potential regulatory enforcement activity, fines, private litigation including class actions, and other costs. Wellgistics Health will have contractual obligations that might be breached if Wellgistics Health fails to comply a significant privacy breach or failure to comply with privacy and information security laws could have a materially adverse impact on Wellgistics Health’s reputation, business operations, financial position and results of operations. 31 Wellgistics Health and businesses with which Wellgistics Health will interact may experience cybersecurity incidents and might experience significant computer system compromises or data breaches. The protection of customer, employee and company data will be critical to Wellgistics Health’s businesses. Cybersecurity and other information technology security risks, such as a significant breach or theft of customer, employee, or company data, could create significant workflow disruption, attract media attention, damage Wellgistics Health’s customer relationships, reputation and brand, and result in lost sales, fines or lawsuits. Throughout Wellgistics Health’s future operations, Wellgistics Health will receive, retain and transmit certain personal information that Wellgistics Health’s customers and others provide to purchase products or services, fill prescriptions, enroll in clinical and promotional programs, register on Wellgistics Health’s website or mobile applications, or otherwise communicate and interact with us. In addition, aspects of Wellgistics Health’s operations will depend upon the secure transmission of confidential information over public networks. Wellgistics Health will also depend on and interact with the information technology networks and systems of third parties for many aspects of Wellgistics Health’s business operations, strategic partners, and cloud service providers. These third parties may have access to information Wellgistics Health will maintain about Wellgistics Health’s company, operations, customers, employees and vendors, or operating systems that are critical to or can significantly impact Wellgistics Health’s business operations. Like other healthcare technology companies, Wellgistics Health and the businesses Wellgistics Health interact with will experience threats to data and systems, including from vandalism or theft of physical systems or media and from perpetrators of random or targeted malicious cyber- attacks, computer viruses, worms, phishing attacks, bot attacks or other destructive or disruptive software and attempts to misappropriate customer information, and cause system failures and disruptions. Compromises of Wellgistics Health’s data security systems or of those of businesses with which Wellgistics Health interacts that result in confidential information being accessed, obtained, damaged or used by unauthorized or improper persons, could in the future adversely impact Wellgistics Health. Any such compromise could harm Wellgistics Health’s reputation and expose it to regulatory actions, customer attrition, remediation expenses, and claims from customers, financial institutions, payment card associations and other persons, any of which could materially and adversely affect Wellgistics Health’s reputation, business operations, financial condition and results of operations. In addition, security incidents may require that Wellgistics Health expend substantial additional resources related to the security of information systems and disrupt Wellgistics Health’s businesses. The risks associated with data security and cybersecurity incidents have increased during COVID-19 given the increased reliance on remote work arrangements. Wellgistics Health will be subject to electronic payment-related and other financial services risks that could increase Wellgistics Health’s operating costs, expose Wellgistics Health to fraud or theft, subject Wellgistics Health to potential liability and potentially disrupt Wellgistics Health’s business operations. Across Wellgistics Health’s businesses, Wellgistics Health will accept payments using a variety of methods, including cash, checks, credit and debit cards, mobile payment technologies such as Apple Pay or PayPal, and Wellgistics Health may offer new payment options over time. Acceptance of these payment options will subject Wellgistics Health to rules, regulations, contractual obligations, and compliance requirements, including payment network rules and operating guidelines, data security standards and certification requirements, and rules governing electronic funds transfers. These requirements and related interpretations may change over time, which has made and could continue to make compliance more difficult or costly. For certain payment methods, including credit and debit cards, Wellgistics Health will pay interchange and other fees, which could increase over time and raise Wellgistics Health’s operating costs. Wellgistics Health will rely on third parties such as Stripe to provide payment processing services, including the processing of credit cards, debit cards, and other forms of electronic payment. Wellgistics Health will not store credit card information on file for Wellgistics Health’s mobile technology to remain in payment card industry compliance, however, Wellgistics Health’s other business entities may store this information on file for clients, partners, and vendors. If these companies become unable to provide these services, or if their systems are compromised, it could disrupt Wellgistics Health’s business. The payment methods that Wellgistics Health will offer also subject Wellgistics Health to potential fraud and theft by persons who seek to obtain unauthorized access to or exploit any weaknesses that may exist in the payment systems. If Wellgistics Health fails to comply with applicable rules or requirements, or if data is compromised due to a breach or misuse of data relating to Wellgistics Health’s payment systems, Wellgistics Health may be liable for costs incurred by payment card issuing banks and other third parties or subject to fines and higher transaction fees, or Wellgistics Health’s ability to accept or facilitate certain types of payments could be impaired. In addition, Wellgistics Health’s reputation could suffer, and Wellgistics Health’s customers could lose confidence in certain payment types, which could result in higher costs and/or reduced sales and materially and adversely affect Wellgistics Health’s results of operations. 32 Risks Related to Financial and Accounting Matters Wellgistics Health and its subsidiaries have, and entities that Wellgistics Health may acquire could have, significant outstanding debt. The debt and associated payment obligations of Wellgistics Health and its current and future subsidiaries could significantly increase in the future if Wellgistics Health and its current or future subsidiaries incur additional debt and do not retire existing debt. Wellgistics Health and Wood Sage are holding companies with no business operations of their own. Their assets primarily consist of direct ownership interest in, and their business is conducted through, subsidiaries which are separate legal entities. As a result, they are dependent on funding from their investors and operating subsidiaries to pay dividends and meet their debt obligations. As of December 31, 2024, the outstanding debt and credit obligations of Wellgistics Health and its subsidiaries was $33.3 million. Wellgistics Health’s subsidiaries may continue to experience negative cash flows and be restricted in their ability to pay cash dividends or to make other distributions to Wellgistics Health, which may limit the payment of cash dividends or other distributions to the holders of Wellgistics Health’s common stock. Credit facilities and other debt obligations of Wellgistics Health, as well as statutory provisions, may further limit the ability of Wellgistics Health and its subsidiaries to pay dividends. Payments to Wellgistics Health by its subsidiaries are also contingent upon the subsidiaries’ earnings, if any, and business considerations. Future dividends to Wellgistics Health will be determined based on earnings, if any, capital requirements, financial condition and other factors considered relevant by its board of directors. Wellgistics Health’s quarterly results may fluctuate significantly based on seasonality and other factors. Wellgistics Health’s operating results have historically varied on a quarterly basis, including increased variability during COVID-19, and may continue to fluctuate significantly in the future. For instance, Wellgistics Health’s pharmacy business and its PBM and payor contracts often experience significant changes twice per year as new formularies are introduced in January and July which often restrict certain products, allow new products to be covered, or products change covered insurance tiers thereby making them more difficult access for members. This same effect can be extrapolated to Wellgistics Health’s hub technology platform division and the corresponding network pharmacies that are part of Wellgistics Health’s network in the form of reduced transaction fees from transferred prescriptions. This in turn may impact Wellgistics Health’s wholesale division as for the exact same reason which may negatively impact Wellgistics Health’s ability to move certain products and increase Wellgistics Health’s liabilities in the form of inventory. In addition, both prescription and non-prescription drug sales are affected by the timing and severity of the cough, cold and flu season, which can vary considerably from year to year. Other factors that may affect Wellgistics Health’s quarterly operating results, some of which are beyond the control of management, include, but are not limited to the timing of the introduction of new generic and brand name prescription drugs; inflation (i.e., generic drug procurement costs); changes in payer reimbursement rates and terms; the timing and amount of periodic contractual reconciliation payments, fluctuations in inventory, energy, transportation, labor, healthcare and other costs; significant acquisitions, dispositions, joint ventures and other strategic initiatives; asset impairment charges, including the performance of and impairment charges related to Wellgistics Health’s equity method investments; market conditions; and many of the other risk factors discussed herein. Accordingly, Wellgistics Health believes that quarter- to-quarter comparisons of Wellgistics Health’s operating results are not necessarily meaningful, and investors should not place undue reliance on the results of any particular quarter as an indication of Wellgistics Health’s future performance. 33 Wellgistics Health has a substantial amount of goodwill and other intangible assets which could, in the future, become impaired and result in material non-cash charges to Wellgistics Health’s results of operations. Wellgistics Health may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations, and stock price. There can be no assurances that all material issues that may be present in Wellgistics Health’s operations, including from the Wood Sage Acquisition and Wellgistics Acquisition, or that factors outside of its control will not later arise. As a result, Wellgistics Health may be forced to write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in losses. Unexpected risks may arise and previously known risks may materialize in a manner not consistent with each company’s preliminary risk analysis. Even though these charges may not have an immediate impact on Wellgistics Health’s liquidity, the fact that Wellgistics Health will report charges of this nature could contribute to negative market perceptions about Wellgistics Health or its securities and may make its future financing difficult to obtain on favorable terms or at all. From time to time, Wellgistics Health’s intangible assets are subject to impairment testing. Under current accounting standards, Wellgistics Health’s goodwill, including acquired goodwill, is tested for impairment on an annual basis and may be subject to impairment losses as circumstances change (e.g., after an acquisition). If Wellgistics Health records an impairment loss, it could have a material adverse effect on Wellgistics Health’s results of operations for the year in which the impairment is recorded. Acquisitions Wellgistics Health pursues in its industry and related industries could result in operating difficulties, dilution to Wellgistics Health’s stockholders and other consequences harmful to Wellgistics Health’s business. As part of Wellgistics Health’s growth strategy, it may selectively pursue strategic acquisitions in its industry and related industries. Wellgistics Health may not be able to consummate such acquisitions, which could adversely impact Wellgistics Health’s growth. If Wellgistics Health does consummate acquisitions, integrating an acquired company, business or technology may result in unforeseen operating difficulties and expenditures, including: ● increased expenses due to transaction and integration costs; ● potential liabilities of the acquired businesses; ● potential adverse tax and accounting effects of the acquisitions; ● diversion of capital and other resources from our existing businesses; ● diversion of management’s attention during the acquisition process and any transition periods; ● loss of key employees of the acquired businesses following the acquisition; and ● inaccurate budgets and projected financial statements due to inaccurate valuation assessments of the acquired businesses. Wellgistics Health’s evaluations of potential acquisitions may not accurately assess the value or prospects of acquisition candidates, and the anticipated benefits from its future acquisitions may not materialize. In addition, future acquisitions or dispositions could result in potentially dilutive issuances of Wellgistics Health’s equity securities, including Wellgistics Health’s common stock, the incurrence of debt, contingent liabilities or amortization expenses, or write-offs of goodwill, any of which could harm Wellgistics Health’s financial condition. Wellgistics Health may incur non-cash impairment charges in the future associated with its portfolio of intangible assets, including goodwill. As a result of the Wood Sage Acquisition and the Wellgistics Acquisition, Wellgistics Health has significant goodwill and other acquired intangible assets on its consolidated balance sheet. Goodwill and intangible assets, net, accounted for approximately 64% of the total assets on its consolidated balance sheet as of December 31, 2024. Wellgistics Health tests goodwill for impairment annually as of December 31 of each year and Wellgistics Health tests goodwill and intangible assets, net, for impairment at other times if events have occurred or circumstances exist that indicate the carrying value of such assets may no longer be recoverable. It is possible Wellgistics Health may incur impairment charges in the future, particularly in the event of a prolonged economic recession or loss of a key client or clients. A significant non-cash impairment could have a material adverse effect on Wellgistics Health’s results of operations. Wellgistics Health’s level of debt may negatively impact its liquidity, restrict its operations and ability to respond to business opportunities, and increase its vulnerability to adverse economic and industry conditions, especially given that Wellgistics Health’s bank debt contains a variable interest rate component based on its corporate credit ratings. Wellgistics Health utilizes debt financing in its capital structure and may incur additional debt, including under its revolving credit facility subject to customary conditions in its loan agreements. Wellgistics Health’s level of debt could have significant consequences, which include, but are not limited to, the following: ● limiting Wellgistics Health’s ability to obtain additional financing for working capital, capital expenditures, acquisitions or other general corporate purposes; 34 ● requiring a substantial portion of Wellgistics Health’s cash flows to be dedicated to debt service payments instead of other purposes; ● imposing financial and other restrictive covenants on Wellgistics Health’s operations, including minimum liquidity and free cash flow requirements and limitations on Wellgistics Health’s ability to (i) declare or pay dividends or repurchase shares of Wellgistics Health’s common stock; (ii) purchase assets, make investments, complete acquisitions, consolidate or merge with or into, or sell all or substantially all of Wellgistics Health’s assets to, another person; (iii) enter into sale/leaseback transactions or certain transactions with affiliates; (iv) incur additional indebtedness and (v) incur liens; and ● making Wellgistics Health more vulnerable to economic downturns and limiting Wellgistics Health’s ability to withstand competitive pressures or take advantage of new opportunities to grow Wellgistics Health’s business. Wellgistics Health’s ability to meet its debt service obligations, comply with Wellgistics Health’s debt covenants and deleverage depends on its cash flows and financial performance, which are affected by financial, business, economic and other factors. The rate at which Wellgistics Health will be able to or choose to deleverage is uncertain. Failure to meet Wellgistics Health’s debt service obligations or comply with Wellgistics Health’s debt covenants could result in an event of default under the applicable indebtedness. Wellgistics Health may be unable to cure, or obtain a waiver of, an event of default or otherwise amend Wellgistics Health’s debt agreements to prevent an event of default thereunder on terms acceptable to Wellgistics Health or at all. In that event, the debt holders could accelerate the related debt, which may result in the cross-acceleration or cross-default of other debt, leases or other obligations. If Wellgistics Health does not have sufficient funds available to repay indebtedness when due, whether at maturity or by acceleration, Wellgistics Health may be required to sell important strategic assets; refinance Wellgistics Health’s existing debt; incur additional debt or issue common stock or other equity securities, which Wellgistics Health may not be able to do on terms acceptable to it, in amounts sufficient to meet Wellgistics Health’s needs or at all. Wellgistics Health’s inability to service Wellgistics Health’s debt obligations or refinance Wellgistics Health’s debt could harm Wellgistics Health’s business. Further, if Wellgistics Health is unable to repay, refinance or restructure its secured indebtedness, the holder of such debt could proceed against the collateral securing the Indebtedness. Refinancing Wellgistics Health’s indebtedness may also require Wellgistics Health to expense previous debt issuance costs or to incur new debt issuance cost. Wellgistics Health’s financial performance is exposed to interest rate risks as the Company funds its working capital with bank asset-based lending (“ABL”) debt that carries a variable interest rate linked to the Company’s corporate credit ratings. Consequent to higher interest rates in the economy, the Company has had to pay higher interest rates on its own ABL debt. Given the competitive nature of the drug wholesale business, the company has not been able to, and may not be able in the future, pass on the higher borrowing costs to its customers. The company continues to be exposed to interest rate movements in the market. Also, any adverse changes in its own credit ratings can lead to higher risk spread on its debt, and directly increase the borrowing costs of the Company. As Wellgistics Health expands its business in the future, its investment in working capital is expected to increase, and consequently the ABL debt drawdown will also be higher, which further increases the exposure to interest rate risks. All these factors could materially and adversely impact Wellgistics Health’s business operations, financial condition and results of operations. In addition, its ratings impact the cost and availability of future borrowings and, accordingly, its cost of capital. Wellgistics Health’s ratings reflect the opinions of the ratings agencies as to our financial strength, operating performance and ability to meet Wellgistics Health’s debt obligations. There can be no assurance that Wellgistics Health will achieve a particular rating or maintain a particular rating in the future. Wellgistics Health’s existing credit agreement and any other credit or similar agreements into which Wellgistics Health may enter in the future may restrict its operations, particularly Wellgistics Health’s ability to respond to changes or to take certain actions regarding its business. Wellgistics Health’s existing credit agreement contains a number of restrictive covenants that may impose operating and financial restrictions on Wellgistics Health and limit its ability to engage in acts that may be in Wellgistics Health’s long-term best interests, including restrictions on Wellgistics Health’s ability to incur indebtedness, grant liens, undergo certain fundamental changes, dispose of assets, make certain investments, enter into certain transactions with affiliates, and make certain restricted payments, in each case subject to limitations and exceptions set forth in the existing credit agreement. 35 The existing credit agreement also contains customary events of default that include, among other things, certain payment defaults, covenant defaults, cross-defaults to other indebtedness, change of control defaults, judgment defaults, and bankruptcy and insolvency defaults. Such events of default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies, which could have a material adverse effect on our business, operations, and financial results. Furthermore, if Wellgistics Health is unable to repay the amounts due and payable under the existing credit agreement, those lenders could proceed against the collateral granted to them to secure that indebtedness, which could force Wellgistics Health into bankruptcy or liquidation. In the event that Wellgistics Health’s lenders accelerated the repayment of the borrowings, Wellgistics Health may not have sufficient assets to repay that indebtedness. Any acceleration of amounts due under the existing credit agreement would likely have a material adverse effect on Wellgistics Health. As a result of these restrictions, Wellgistics Health may be limited in how Wellgistics Health conducts business, unable to raise additional debt or equity financing to operate during general economic or business downturns, or unable to compete effectively or to take advantage of new business opportunities. In addition, Wellgistics Health may enter into other credit agreements or other debt arrangements from time to time which contain similar or more extensive restrictive covenants and events of default, in which case Wellgistics Health may face similar or additional limitations as a result of the terms of those credit agreements or other debt arrangements. Risks Related to Regulatory and Legal Considerations Wellgistics Health’s business is subject to substantial government regulation. The health care industry is heavily regulated, and Wellgistics Health must comply with extensive and complex laws and regulations at the federal, state and local government levels. A number of these laws specifically relate to the provision of Medicare and Medicaid billing. Anti-Kickback Statutes The federal Anti-Kickback Statute prohibits the knowing and willful offer, payment, solicitation or receipt of remuneration to induce the referral of a patient or the purchase, lease or order (or the arranging for or recommending of the purchase, lease or order) of health care items or services paid for by federal health care programs, including Medicare or Medicaid. A violation does not require proof that a person had actual knowledge of the statute or specific intent to violate the statute, and court decisions under the Anti-Kickback Statute have consistently held that the law is violated where one purpose of a payment is to induce or reward referrals. Violation of the federal anti-kickback statute could result in felony conviction, administrative penalties, civil liability (including penalties) under the False Claims Act and/or exclusion from federal health care programs. A number of states have enacted anti-kickback laws (including so-called “fee splitting” laws) that sometimes apply not only to state-sponsored health care programs but also to items or services that are paid for by private insurance and self-pay patients. State anti-kickback laws can vary considerably in their applicability and scope and sometimes have fewer statutory and regulatory exceptions than does the federal law. Enforcement of state anti-kickback laws varies widely and is often inconsistent and erratic. Our management carefully considers the importance of such anti-kickback laws when structuring company operations. That said, we cannot assure that the applicable regulatory authorities will not determine that some of our arrangements with hospitals, surgical facilities, physicians, or other referral sources violate the Anti-Kickback Statute or other applicable laws. An adverse determination could subject us to different liabilities, including criminal penalties, civil monetary penalties and exclusion from participation in Medicare, Medicaid or other health care programs, any of which could have a material adverse effect on our business, financial condition or results of operations. 36 Physician Self- Referral (“Stark”) Laws The federal Stark Law, 42 U.S.C. § 1395nn, also known as the physician self-referral law, generally prohibits a physician from referring Medicare and Medicaid patients to an entity (including hospitals) providing “designated health services,” if the physician has a “financial relationship” with the entity, unless an exception applies. Designated health services include, among other services, inpatient hospital services, outpatient prescription drug services, clinical laboratory services, certain diagnostic imaging services, and other services that our affiliated physicians may order for their patients. The prohibition applies regardless of the reasons for the financial relationship, unless an exception applies. The exceptions to the federal Stark Law are numerous and often complex. The penalties for violating the Stark Law include civil penalties of up to $15,000 for each violation and potential civil liability (including penalties) under the False Claims Act. Some states have enacted statutes and regulations concerning physician self-referrals ( i.e ., referrals by a physician to a health care entity in which the physician has an ownership interest). Such physician self- referrals laws may apply to the referral of patients regardless of payor source and/or type of health care service. These state laws may contain statutory and regulatory exceptions that are different from those of the federal law and that may vary from state to state. Enforcement of state physician self-referral laws varies widely and is often inconsistent and erratic. Our management carefully considers the importance of physician self-referral laws when structuring company operations. That said, we cannot assure that the applicable regulatory authorities will not determine that some of our arrangements with physicians violate the Federal Stark Law or other applicable laws. An adverse determination could subject us to different liabilities, including criminal penalties, civil monetary penalties and exclusion from participation in Medicare, Medicaid or other health care programs, any of which could have a material adverse effect on our business, financial condition or results of operations. False Claims Act The federal False Claims Act, 31 U.S.C. § 3729, imposes civil penalties for knowingly submitting or causing the submission of a false or fraudulent claim for payment to a government-sponsored program, such as Medicare and Medicaid. Violations of the False Claims Act present civil liability of treble damages plus a penalty of at least $11,803 per false claim. The False Claims Act has “whistleblower” or “ qui tam ” provisions that allow individuals to commence a civil action in the name of the government, and the whistleblower is entitled to share in any subsequent recovery (plus attorney’s fees). Many states also have enacted civil statutes that largely mirror the federal False Claims Act, but allow states to impose penalties in a state court. The False Claims Act has been used by the federal government and qui tam plaintiffs to bring enforcement actions under so-called “fraud and abuse” laws like the federal Anti-Kickback Statute and the Stark Law. Such actions are not based on a contention that claims for payment were factually false or inaccurate. Instead, such actions are based on the theory that accurate claims are deemed to be false/ fraudulent if there has been noncompliance with some other material law or regulation. The existence of the False Claims Act, under which so-called qui tam plaintiffs can allege liability for a wide range of regulatory noncompliance, increases the potential for such actions to be brought and has increased the potential financial exposure for such actions. These actions are costly and time-consuming to defend. Our management carefully considers the importance of compliance with all applicable laws and when structuring company operations. Our management is aware of and actively works to minimize risk related to potential qui tam plaintiffs. That said, we cannot assure that the applicable enforcement authorities or qui tam plaintiffs will not allege violations of the False Claims Act or analogous state false claims laws. A finding of liability under the False Claims Act could have a material adverse effect on our business, financial condition or results of operations. State Licensure and Accreditation States have a wide variety of health care laws and regulations that potentially affect our operations and the operations of our partners. For example: (1) many states have implemented laws and regulations related to so-called “tele-health,” but whether those laws apply to our operations, and the obligations they impose, vary significantly; (2) some states have so-called corporate practice of medicine prohibitions, and such prohibitions are used to indirectly regulate ownership of heath care companies and/or management companies; and (3) some states have “surprise billing” or out-of-network billing laws that impose a variety of obligations on health care providers and health plans. The failure to comply with all state regulatory obligations could be used by health plans to deny payment or to recoup funds, and any noncompliance could subject us to penalties or limitations that could have a material adverse effect on our business, financial condition or results of operations. 37 In addition, our partners’ health care facilities and professionals are subject to professional and private licensing, certification and accreditation requirements. These include, but are not limited to, requirements imposed by Medicare, Medicaid, state licensing authorities, voluntary accrediting organizations and third-party private payors. Receipt and renewal of such licenses, certifications and accreditations are often based on inspections, surveys, audits, investigations or other reviews, some of which may require affirmative compliance actions by us that could be burdensome and expensive. The applicable standards may change in the future. There can be no assurance that we will be able to maintain all necessary licenses or certifications in good standing or that they will not be required to incur substantial costs in doing so. The failure to maintain all necessary licenses, certifications and accreditations in good standing, or the expenditure of substantial funds to maintain them, could have an adverse effect on our business. Health Information Privacy and Security Standards The privacy and data security regulations under HIPAA, as amended, contain detailed requirements concerning (1) the use and disclosure of individually identifiable patient health information (“PHI”); (2) computer and data security standards regarding the protection of electronic PHI including storage, utilization, access to and transmission; and (3) notification to individuals and the federal government in the event of a breach of unsecured PHI. HIPAA covered entities and business associates must implement certain administrative, physical, and technical security standards to protect the integrity, confidentiality and availability of certain electronic health information received, maintained, or transmitted. Violations of the HIPAA privacy and Security Rules may result in civil and criminal penalties. In the event of a breach, a HIPAA covered entity must promptly notify affected individuals of a breach. All breaches must also be reported to the federal government. Where a breach affects more than 500 individuals, additional reporting obligations apply. In addition to federal enforcement, State attorneys general may bring civil actions on behalf of state residents for violations of the HIPAA privacy and Security Rules, obtain damages on behalf of state residents, and enjoin further violations. Many states also have laws that protect the privacy and security of confidential, personal information, which may be similar to or even more stringent than HIPAA. Some of these state laws may impose fines and penalties on violators and may afford private rights of action to individuals who believe their personal information has been misused. We expect increased federal and state privacy and security enforcement efforts. Our management carefully considers the importance of compliance with patient privacy and data security regulations when structuring company operations. Our management is aware of and actively works to minimize risk related to patient privacy and data security. That said, we cannot assure that a breach will not occur or that the applicable enforcement authorities will not allege violations of HIPAA’s patient privacy and data security regulations. A breach or an allegation of noncompliance with HIPAA’s patient privacy and data security regulations could have a material adverse effect on our business, financial condition or results of operations. Changes in the healthcare industry and regulatory environments may adversely affect Wellgistics Health’s businesses. Political, economic and regulatory influences are subjecting the healthcare industry to significant changes that could adversely affect Wellgistics Health’s results of operations. In recent years, the healthcare industry has undergone significant changes in an effort to reduce costs and government spending. These changes include an increased reliance on managed care; cuts in certain Medicare and Medicaid funding in the U.S. and the funding of governmental payers in foreign jurisdictions; consolidation of competitors, suppliers and other market participants; and the development of large, sophisticated purchasing groups. In addition, the Inflation Reduction Act of 2022 (the “IRA”) took effect in 2023. The IRA includes, among other things, policies that are designed to have a direct impact on drug prices and reduce drug spending by the federal government. For example, the IRA requires drug manufacturers to pay rebates to Medicare if they increase prices faster than inflation for drugs used by Medicare beneficiaries. The mechanics of the rebate calculation would mimic those of the Medicaid rebate, but the expansion of inflation-based rebates may further complicate pricing strategies, particularly as to the launch of Wellgistics Health’s new products. The IRA could have the effect of reducing the prices Wellgistics Health can charge and reimbursement Wellgistics Health receives for Wellgistics Health’s products, thereby reducing Wellgistics Health’s profitability. 38 Wellgistics Health expects the healthcare industry continue to change significantly in the future. Some of these potential changes, such as a reduction in governmental funding for certain healthcare services or adverse changes in legislation or regulations governing prescription drug pricing, healthcare services or mandated benefits, may cause customers to reduce the amount of Wellgistics Health’s products and services they purchase or the price they are willing to pay for Wellgistics Health’s products and services. Wellgistics Health expects continued governmental and private payer pressure to reduce pharmaceutical pricing, and these pressures could be further exacerbated if payer deficits or shortfalls increase due to COVID-19 or otherwise. Changes in pharmaceutical manufacturers’ pricing or distribution policies and practices as well as applicable government regulations, including, for example, in connection with the federal 340B drug pricing program, could also significantly reduce Wellgistics Health’s profitability. Wellgistics Health will be exposed to risks related to litigation and other legal proceedings. Wellgistics Health operates in a highly regulated and litigious environment. Wellgistics Health may become involved in the following types of legal proceedings but not limited to litigation, investigations, inspections, audits, claims, inquiries and similar actions by pharmacy, healthcare, tax, and other governmental authorities. Like other companies in the retail pharmacy, healthcare services and pharmaceutical wholesale industries, Wellgistics Health is subject to extensive regulation by federal, state and local government agencies in the U.S. and other countries in which it operates. There continues to be a heightened level of review and/or audit by regulatory authorities of, and increased litigation regarding business, compliance and reporting practices of Wellgistics Health and other industry participants. If Wellgistics Health were to be exposed to litigation or other legal proceedings, it could have a material adverse effect on Wellgistics Health’s business, financial condition, cash flows, or results of operations. A significant change in, or noncompliance with, governmental regulations and other legal requirements could have a material adverse effect on Wellgistics Health’s reputation and profitability. Wellgistics Health operates in complex, highly regulated environments around the world and could be materially and adversely affected by changes to applicable legal requirements including the related interpretations and enforcement practices, new legal requirements and/or any failure to comply with applicable regulations. Wellgistics Health’s businesses is subject to numerous country, state and local regulations including licensing, billing practices, utilization and other requirements for pharmacies and reimbursement arrangements. The regulations to which Wellgistics Health is subject include, but are not limited to: country and state registration and regulation of pharmacies and drug discount card programs; dispensing and sale of controlled substances and products containing pseudoephedrine; applicable governmental payer regulations including Medicare and Medicaid; data privacy and security laws and regulations including HIPAA; the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010, or any successor thereto; laws and regulations relating to the protection of the environment and health and safety matters, each of which continues to evolve, including those governing exposure to, and the management and disposal of, hazardous substances; regulations regarding food and drug safety including those of the FDA and the DEA, trade regulations including those of the U.S. Federal Trade Commission, and consumer protection and safety regulations including those of the Consumer Product Safety Commission, as well as state regulatory authorities, governing the availability, sale, advertisement and promotion of products Wellgistics Health will sell as well as Wellgistics Health’s loyalty and drug discount card programs; anti-kickback laws; false claims laws; laws against the corporate practice of medicine; and national and state laws governing healthcare fraud and abuse and the practice of the profession of pharmacy. For example, in the U.S., the DEA, FDA and various other regulatory authorities regulate the distribution and dispensing of pharmaceuticals and controlled substances. Wellgistics Health is required to hold valid DEA and state-level licenses, meet various security and operating standards and comply with the federal and various state-controlled substance acts and related regulations governing the sale, dispensing, disposal, holding and distribution of controlled substances. The DEA, FDA and state regulatory authorities have broad enforcement powers, including the ability to seize or recall products and impose significant criminal, civil and administrative sanctions for violations of these laws and regulations. As noted above, the IRA includes policies that are designed to have a direct impact on drug prices and reduce drug spending by the federal government. Wellgistics Health is also governed by national and state laws of general applicability, including laws regulating matters of working conditions, health and safety and equal employment opportunity and other labor and employment matters as well as employee benefit, competition and antitrust matters. In addition, Wellgistics Health could have significant exposure if Wellgistics Health is found to have infringed another party’s intellectual property rights. 39 Changes in laws, regulations and policies and the related interpretations and enforcement practices may alter the landscape in which Wellgistics Health will do business and may significantly affect Wellgistics Health’s cost of doing business. The impact of new laws, regulations and policies and the related interpretations and enforcement practices generally cannot be predicted, and changes in applicable laws, regulations and policies and the related interpretations and enforcement practices may require extensive system and operational changes, be difficult to implement, increase Wellgistics Health’s operating costs and require significant capital expenditures. Untimely compliance or noncompliance with applicable laws and regulations could result in the imposition of civil and criminal penalties that could adversely affect the continued operation of Wellgistics Health’s businesses, including: suspension of payments from government programs; loss of required government certifications; loss of authorizations to participate in or exclusion from government programs, including the Medicare and Medicaid programs; loss of licenses; and significant fines or monetary penalties. Any failure to comply with applicable regulatory requirements in which Wellgistics Health will operate could result in significant legal and financial exposure, damage to Wellgistics Health’s reputation and brand, and have a material adverse effect on Wellgistics Health’s business operations, financial condition and results of operations. Wellgistics Health could be adversely affected by product liability, product recall, personal injury or other health and safety issues. Wellgistics Health could be adversely impacted by the supply of defective or expired products, including the infiltration of counterfeit products into the supply chain, errors in re-labeling of products, product tampering, product recall and contamination or product mishandling issues. Through Wellgistics Health’s pharmacy, wholesale distribution centers, and Wellgistics Health’s wholesale and manufacturer relationships acquired by Wellgistics Health as a result of the Wellgistics Acquisition, Wellgistics Health will also be exposed to risks relating to the products and services Wellgistics Health will offer. Errors in the dispensing and packaging of pharmaceuticals, including related counseling, and in the provision of other healthcare services could lead to serious injury or death. Product liability or personal injury claims may be asserted against Wellgistics Health and mandatory or voluntary product recalls may apply to Wellgistics Health with respect to any of the retail products or pharmaceuticals Wellgistics Health will sell or services Wellgistics Health will provide. For example, from time to time, the FDA issues statements alerting patients that products in Wellgistics Health’s supply chain may contain impurities or harmful substances, and claims relating to the sale or distribution of such products may be asserted against Wellgistics Health or arise from these statements. Wellgistics Health could suffer significant reputational damage and financial liability if Wellgistics Health, or any affiliated entities or third-party healthcare providers that Wellgistics Health will do business with, experience any of the foregoing health and safety issues or incidents, which could have a material adverse effect on Wellgistics Health’s business operations, financial condition and results of operations. Wellgistics Health could be subject to adverse changes in tax laws, regulations and interpretations or challenges to Wellgistics Health’s tax positions. As a corporation operating within the U.S., from time to time, changes in tax laws or regulations may be proposed or enacted that could adversely affect Wellgistics Health’s overall tax liability. There can be no assurance that changes in tax laws or regulations will not materially and adversely affect Wellgistics Health’s effective tax rate, tax payments, financial condition and results of operations. Similarly, changes in tax laws and regulations that impact Wellgistics Health’s customers and counterparties, or the economy generally may also impact Wellgistics Health’s financial condition and results of operations. Tax laws and regulations are complex and subject to varying interpretations, and Wellgistics Health is subject to regular review and audit by tax authorities. Any adverse outcome of such a review or audit could have a negative impact on Wellgistics Health’s effective tax rate, tax payments, financial condition and results of operations. In addition, the determination of Wellgistics Health’s income tax provision and other tax liabilities requires significant judgment, and there are many transactions and calculations where the ultimate tax determination is uncertain. The ultimate tax determination may differ from the amounts recorded in Wellgistics Health’s financial statements and may materially affect Wellgistics Health’s results of operations in the period or periods for which such determination is made. Any significant failure to comply with applicable tax laws and regulations in all relevant jurisdictions could give rise to substantial penalties and liabilities. Any changes in enacted tax laws, rules or regulatory or judicial interpretations; or any change in the pronouncements relating to accounting for income taxes could materially and adversely impact Wellgistics Health’s effective tax rate, tax payments, financial condition and results of operations. 40 Risks Related to Wellgistics Health’s Intellectual Property Despite the actions Wellgistics Health will take to defend and protect its intellectual property, Wellgistics Health may not be able to adequately protect or enforce its intellectual property rights or prevent unauthorized parties from copying or reverse engineering its solutions. Wellgistics Health’s efforts to protect and enforce its intellectual property rights and prevent third parties from violating its rights may be costly. The success of Wellgistics Health’s products and its business depend in part on Wellgistics Health’s ability to obtain patents and other intellectual property rights and maintain adequate legal protection for its products in the United States and other international jurisdictions. Wellgistics Health will rely on a combination of patent, service mark, trademark and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect its proprietary rights, all of which provide only limited protection. Wellgistics Health cannot assure that any patents will be issued with respect to its currently pending patent applications or that any trademarks will be registered with respect to its currently pending applications in a manner that gives Wellgistics Health adequate defensive protection or competitive advantages, if at all, or that any patents issued to Wellgistics Health or any trademarks registered by it will not be challenged, invalidated or circumvented. Wellgistics Health has filed for patents and trademarks in the United States and in certain international jurisdictions, but such protections may not be available in all countries in which it operates or in which Wellgistics Health seeks to enforce its intellectual property rights, or may be difficult to enforce in practice. Wellgistics Health’s currently-issued patents and trademarks and any patents and trademarks that may be issued or registered, as applicable, in the future with respect to pending or future applications may not provide sufficiently broad protection or may not prove to be enforceable in actions against alleged infringers. Wellgistics Health’s foreign intellectual property portfolio will not as comprehensive as its U.S. intellectual property portfolio and may not protect its intellectual property in some countries where its products are sold or may be sold in the future. Wellgistics Health cannot be certain that the steps it has taken will prevent unauthorized use of its technology or the reverse engineering of its technology. Moreover, others may independently develop technologies that are competitive to Wellgistics Health or infringe Wellgistics Health’s intellectual property. Protecting against the unauthorized use of Wellgistics Health’s intellectual property, products and other proprietary rights is expensive and difficult, particularly internationally. Wellgistics Health believes that its patents are foundational in the area of healthcare products and intends to enforce Wellgistics Health’s intellectual property portfolio. Unauthorized parties may attempt to copy or reverse engineer Wellgistics Health’s healthcare technology or certain aspects of Wellgistics Health’s solutions that it considers proprietary. Litigation may be necessary in the future to enforce or defend Wellgistics Health’s intellectual property rights, to prevent unauthorized parties from copying or reverse engineering its solutions, to determine the validity and scope of the proprietary rights of others or to block the importation of infringing products into the United States. Any such litigation, whether initiated by Wellgistics Health or a third party, could result in substantial costs and diversion of management resources, either of which could adversely affect Wellgistics Health’s business, operating results and financial condition. Even if it obtains favorable outcomes in litigation, Wellgistics Health may not be able to obtain adequate remedies, especially in the context of unauthorized parties copying or reverse engineering its solutions. Further, many of Wellgistics Health’s competitors have the ability to dedicate substantially greater resources to defending intellectual property infringement claims and to enforcing their intellectual property rights than Wellgistics Health has. Attempts to enforce its rights against third parties could also provoke these third parties to assert their own intellectual property or other rights against Wellgistics Health or result in a holding that invalidates or narrows the scope of Wellgistics Health’s rights, in whole or in part. Effective patent, trademark, service mark, copyright and trade secret protection may not be available in every country in which Wellgistics Health’s products will be available and competitors based in other countries may sell infringing products in one or more markets. Failure to adequately protect Wellgistics Health’s intellectual property rights could result in Wellgistics Health’s competitors offering similar products, potentially resulting in the loss of some of Wellgistics Health’s competitive advantage and a decrease in its revenue, which would adversely affect Wellgistics Health’s business, operating results, financial condition and prospects. 41 Third-party claims that Wellgistics Health is infringing intellectual property, whether successful or not, could subject it to costly and time-consuming litigation or expensive licenses, and its business could be adversely affected. Although Wellgistics Health may hold key patents related to its products, a number of companies, both within and outside of the healthcare industry, hold other patents covering aspects of healthcare products. In addition to these patents, participants in this industry typically also protect their technology, especially embedded software, through copyrights and trade secrets. As a result, there is frequent litigation based on allegations of infringement, misappropriation or other violations of intellectual property rights. Wellgistics Health in the future may receive inquiries from other intellectual property holders and may become subject to claims that it infringes their intellectual property rights, particularly as Wellgistics Health expands its presence in the market, expands to new use cases and faces increasing competition. In addition, parties may claim that the names and branding of Wellgistics Health’s products infringe their trademark rights in certain countries or territories. If such a claim were to prevail, Wellgistics Health may have to change the names and branding of its products in the affected territories and it could incur other costs. Wellgistics Health will have a number of agreements in effect, pursuant to which it has agreed to defend, indemnify and hold harmless its customers, suppliers, and channel partners and other partners from damages and costs which may arise from the infringement by Wellgistics Health’s products of third-party patents or other intellectual property rights. The scope of these indemnity obligations varies, but may, in some instances, include indemnification for damages and expenses, including attorneys’ fees. Wellgistics Health’s insurance may not cover all intellectual property infringement claims. A claim that its products infringe a third party’s intellectual property rights, even if untrue, could adversely affect Wellgistics Health’s relationships with its customers, may deter future customers from purchasing its products and could expose Wellgistics Health to costly litigation and settlement expenses. Even if Wellgistics Health is not a party to any litigation between a customer and a third party relating to infringement by its products, an adverse outcome in any such litigation could make it more difficult for Wellgistics Health to defend its products against intellectual property infringement claims in any subsequent litigation in which it is a named party. Any of these results could adversely affect Wellgistics Health’s brand and operating results. Wellgistics Health may in the future need to initiate infringement claims or litigation in order to try to protect its intellectual property rights. In addition to litigation where Wellgistics Health is a plaintiff, Wellgistics Health’s defense of intellectual property rights claims brought against it or its customers, suppliers and channel partners, with or without merit, could be time-consuming, expensive to litigate or settle, divert management resources and attention and force Wellgistics Health to acquire intellectual property rights and licenses, which may involve substantial royalty or other payments and may not be available on acceptable terms or at all. Further, a party making such a claim, if successful, could secure a judgment that requires Wellgistics Health to pay substantial damages or obtain an injunction, and Wellgistics Health may also lose the opportunity to license its technology to others or to collect royalty payments. An adverse determination also could invalidate or narrow Wellgistics Health’s intellectual property rights and adversely affect its ability to offer its products to its customers and may require that Wellgistics Health procure or develop substitute products that do not infringe, which could require significant effort and expense. Any of these events could adversely affect Wellgistics Health’s business, reputation, operating results, financial condition and prospects. Wellgistics Health’s intellectual property applications for registration may not issue or be registered, which may have a material adverse effect on Wellgistics Health’s ability to prevent others from commercially exploiting products similar to Wellgistics Health’s. Wellgistics Health cannot be certain that it is the first inventor of the subject matter to which it has filed a particular patent application, or if it is the first party to file such a patent application. If another party has filed a patent application to the same subject matter as Wellgistics Health has, Wellgistics Health may not be entitled to the protection sought by the patent application. Wellgistics Health also cannot be certain whether the claims included in a patent application will ultimately be allowed in the applicable issued patent or the timing of any approval or grant of a patent application. Further, the scope of protection of issued patent claims is often difficult to determine. As a result, Wellgistics Health cannot be certain that the patent applications that it intends to file will issue, or that its issued patents will afford, protection against competitors with similar technology. In addition, Wellgistics Health’s competitors may design around Wellgistics Health’s issued patents, which may adversely affect Wellgistics Health’s business, prospects, financial condition and operating results. 42 In addition to patented technology, Wellgistics Health will rely on its unpatented proprietary technology, trade secrets, designs, experiences, work flows, data, processes, software and know-how. Wellgistics Health will rely on proprietary information (such as trade secrets, designs, experiences, work flows, data, know-how and confidential information) to protect intellectual property that may not be patentable or subject to copyright, trademark, trade dress or service mark protection, or that Wellgistics Health believes is best protected by means that do not require public disclosure. Wellgistics Health generally will seek to protect this proprietary information by entering into confidentiality agreements, or consulting, services or employment agreements that contain non-disclosure and non-use provisions with its employees, consultants, contractors and third parties. However, Wellgistics Health may fail to enter into the necessary agreements, and even once entered into, these agreements may be breached or may otherwise fail to prevent disclosure, third-party infringement or misappropriation of its proprietary information, may be limited as to their term and may not provide an adequate remedy in the event of unauthorized disclosure or use of proprietary information. Wellgistics Health will have limited control over the protection of trade secrets used by its current or future manufacturing partners and suppliers and could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, Wellgistics Health’s proprietary information may otherwise become known or be independently developed by its competitors or other third parties. To the extent that its employees, consultants, contractors, advisors and other third parties use intellectual property owned by others in their work for Wellgistics Health, disputes may arise as to the rights in related or resulting know-how and inventions. Costly and time- consuming litigation could be necessary to enforce and determine the scope of Wellgistics Health’s proprietary rights, and failure to obtain or maintain protection for its proprietary information could adversely affect its competitive business position. Furthermore, laws regarding trade secret rights in certain markets where Wellgistics Health operates may afford little or no protection to its trade secrets. Wellgistics Health also will rely on physical and electronic security measures to protect its proprietary information, but it cannot provide assurance that these security measures will not be breached or provide adequate protection for its property. There is a risk that third parties may obtain and improperly utilize Wellgistics Health’s proprietary information to its competitive disadvantage. Wellgistics Health may not be able to detect or prevent the unauthorized use of such information or take appropriate and timely steps to enforce its intellectual property rights. Wellgistics Health may be subject to damages resulting from claims that it or its current or former employees have wrongfully used or disclosed alleged trade secrets of its employees’ former employers. Wellgistics Health may be subject to damages if its current or former employees wrongfully use or disclose Wellgistics Health’s trade secrets. Wellgistics Health may be subject to claims that it or its current or former employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of a current or former employee’s former employer. Litigation may be necessary to defend against these claims. If Wellgistics Health fails in defending such claims, in addition to paying monetary damages, it may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent Wellgistics Health’s ability to commercialize its products, which could severely harm its business. Even if Wellgistics Health is successful in defending against these claims, litigation could result in substantial costs and demand on management resources. Risks Related to Being a Public Company Wellgistics Health incurs increased costs as a result of operating as a public company, and its management will devote substantial time to compliance with its public company responsibilities and corporate governance practices. Wellgistics Health incurs significant legal, accounting and other expenses that it did not incur as a private company. As a public company, Wellgistics Health is subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the Dodd-Frank Act, as well as rules adopted, and to be adopted, by the SEC and Nasdaq, and other applicable securities rules and regulations, which impose various requirements on public companies, including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. 43 Wellgistics Health’s management and other personnel currently and will continue to need to devote a substantial amount of time to these public company requirements. Moreover, Wellgistics Health expects these rules and regulations to substantially increase its legal and financial compliance costs and to make some activities more time-consuming and costly as compared to when Wellgistics Health was a private company. Wellgistics Health may need to hire additional legal, accounting and financial staff with appropriate public company experience and technical accounting knowledge and maintain an internal audit function. In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. These laws, regulations, and standards are subject to varying interpretations and may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Wellgistics Health intends to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If Wellgistics Health’s efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against Wellgistics Health and its business may be adversely affected. The rules and regulations applicable to public companies make it more expensive for Wellgistics Health to obtain and maintain director and officer liability insurance. These factors could also make it more difficult for Wellgistics Health to attract and retain qualified members of its board of directors, particularly to serve on Wellgistics Health’s audit committee and compensation committee, and qualified executive officers. Wellgistics Health’s management team has limited experience managing a public company. Most of the members of Wellgistics Health’s management team have limited to no experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. Wellgistics Health’s management team has not worked together at prior companies that were publicly traded and the team may not successfully or efficiently manage their new roles and responsibilities. Wellgistics Health’s ability to be successful will depend upon the efforts of Wellgistics Health’s board of directors and key personnel and the loss of such persons could negatively impact the operations and profitability of Wellgistics Health’s business. Wellgistics Health’s ability to be successful will be dependent upon the efforts of Wellgistics Health’s board of directors and key personnel. Wellgistics Health’s cannot guarantee that its board of directors and key personnel will be effective or successful or remain with Wellgistics Health. In addition to the other challenges they will face, such individuals may be unfamiliar with the requirements of operating a public company, which could cause Wellgistics Health’s management to have to expend time and resources helping them become familiar with such requirements. Risks Related to Ownership of Wellgistics Health’s Common Stock Delaware State Law includes anti-takeover provisions. Delaware law contains provisions that could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our board of directors, such as: ● authorizing the issuance of “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt; 44 ● establishing a classified board of directors so that not all members of our board of directors are elected at one time; ● requiring cause to remove directors; ● prohibiting the use of cumulative voting for the election of directors; ● limiting the ability of stockholders to call special meetings or amend our bylaws; ● requiring all stockholder actions to be taken at a meeting of our stockholders; and ● establishing advance notice and duration of ownership requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings. These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management to the extent permitted, whether by our certificate of incorporation, bylaws, or merely as a function of Delaware law. Any provision of our certificate of incorporation, bylaws, or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock. Claims for indemnification by Wellgistics Health’s directors and officers may reduce Wellgistics Health’s available funds to satisfy successful third-party claims against Wellgistics Health and may reduce the amount of money available to Wellgistics Health. Delaware law empowers us to indemnify our directors and officers against expenses relating to certain actions, suits or proceedings as provided for therein. In order for such indemnification to be available, the applicable director or officer must not have acted in a manner that constituted a breach of his or her fiduciary duties and involved intentional misconduct, fraud or a knowing violation of law, or must have acted in good faith and reasonably believed that his or her conduct was in, or not opposed to, our best interests. In the event of a criminal action, the applicable director or officer must not have had reasonable cause to believe his or her conduct was unlawful. We may indemnify each of our present and future directors, officers, employees or agents who becomes a party or is threatened to be made a party to any suit or proceeding, whether pending, completed or merely threatened, and whether said suit or proceeding is civil, criminal, administrative, investigative, or otherwise, except an action by or in the right of Wellgistics Health, by reason of the fact that he is or was a director, officer, employee, or agent of Wellgistics Health, or is or was serving at the request of Wellgistics Health as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses, including, but not limited to, attorneys’ fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit, proceeding or settlement, provided such person acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of Wellgistics Health, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The expenses of directors, officers, employees or agents of Wellgistics Health incurred in defending a civil or criminal action, suit, or proceeding may be paid by Wellgistics Health as they are incurred and in advance of the final disposition of the action, suit, or proceeding, if and only if the director, officer, employee or agent undertakes to repay said expenses to Wellgistics Health if it is ultimately determined by a court of competent jurisdiction, after exhaustion of all appeals therefrom, that he is not entitled to be indemnified by the corporation. No indemnification shall be applied, and any advancement of expenses to or on behalf of any director, officer, employee or agent must be returned to Wellgistics Health, if a final adjudication establishes that the person’s acts or omissions involved a breach of any fiduciary duties, where applicable, intentional misconduct, fraud or a knowing violation of the law which was material to the cause of action. Delaware law further provides that a corporation may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses. We have secured a directors’ and officers’ liability insurance policy. We expect that we will continue to maintain such a policy. 45 If securities or industry analysts do not publish or cease publishing research or reports about Wellgistics Health, its business, or its market, or if they change their recommendations regarding Wellgistics Health’s securities adversely, the price and trading volume of Wellgistics Health’s securities could decline. The trading market for Wellgistics Health’s securities is influenced by the research and reports that industry or securities analysts may publish about Wellgistics Health, its business, market or competitors. Securities and industry analysts may never publish research on Wellgistics Health. If no securities or industry analysts commence coverage of Wellgistics Health, Wellgistics Health’s share price and trading volume would likely be negatively impacted. If any of the analysts who may cover Wellgistics Health change their recommendation regarding Wellgistics Health common stock adversely, or provide more favorable relative recommendations about Wellgistics Health’s competitors, the price of shares of Wellgistics Health common stock would likely decline. If any analyst who may cover Wellgistics Health were to cease coverage of Wellgistics Health or fail to regularly publish reports on it, Wellgistics Health could lose visibility in the financial markets, which in turn could cause its share price or trading volume to decline. There can be no assurance that Wellgistics Health will be able to comply with the continued listing standards of Nasdaq. Wellgistics Health’s common stock is listed on Nasdaq under the symbol “WGRX.” If Nasdaq delists Wellgistics Health’s shares from trading on its exchange for failure to meet the listing standards, Wellgistics Health and its stockholders could face significant material adverse consequences including, but not limited to: ● a limited availability of market quotations for Wellgistics Health’s securities; ● reduced liquidity for Wellgistics Health’s securities; ● a determination that Wellgistics Health common stock is a “penny stock” which will require brokers trading in Wellgistics Health common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for Wellgistics Health common stock; ● a limited amount of analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future. The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because Wellgistics Health common stock is listed on Nasdaq, it is a covered security. Although the states are preempted from regulating the sale of Wellgistics Health securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While Wellgistics Health is not aware of a state, other than the State of Idaho, having used these powers to prohibit or restrict the sale of securities issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if Wellgistics Health was no longer listed on Nasdaq, Wellgistics Health’s securities would not be covered securities and Wellgistics Health would be subject to regulation in each state in which Wellgistics Health offers its securities. Our common stock is publicly traded and may be subject to the penny stock rules which may make it more difficult to sell our common stock. The SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price, as defined, less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our common stock is publicly traded and may be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors, such as institutions with assets in excess of $5,000,000 or an individual with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with his or her spouse. For transactions covered by this rule, the broker-dealers must make a special suitability determination for the purchase and receive the purchaser’s written agreement of the transaction prior to the sale. Consequently, the rule may affect the ability of broker/dealers to sell our securities and also affect the ability of our stockholders to sell their shares in the secondary market. 46 An active market for Wellgistics Health’s securities may not develop, which would adversely affect the liquidity and price of Wellgistics Health’s securities. The price of Wellgistics Health’s securities may vary significantly due to factors specific to Wellgistics Health as well as to general market or economic conditions. Furthermore, an active trading market for Wellgistics Health’s securities may never develop or, if developed, it may not be sustained. Holders of Wellgistics Health’s securities may be unable to sell their securities unless a market can be established and sustained. The market price of Wellgistics Health common stock may decline as a result of various market factors. Fluctuations in the price of Wellgistics Health’s securities could contribute to the loss of all or part of your investment. Prior to the effectiveness of the registration statement of which this prospectus forms a part, there has not been a public market for Wellgistics Health common stock. Accordingly, the valuation ascribed to Wellgistics Health may not be indicative of the price that will prevail in the trading market. If an active market for Wellgistics Health’s securities develops and continues, the trading price of Wellgistics Health’s securities could be volatile and subject to wide fluctuations in response to various factors, some of which will be beyond Wellgistics Health’s control. Any of the factors listed below could have a material adverse effect on your investment in Wellgistics Health’s securities and Wellgistics Health’s securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of Wellgistics Health’s securities may not recover and may experience a further decline. The market price of Wellgistics Health common stock may decline for a number of reasons including if: ● investors react negatively to the prospects of Wellgistics Health’s business; ● Wellgistics Health’s business and prospects is not consistent with the expectations of financial or industry analysts; ● Wellgistics Health does not achieve the perceived benefits of the initial public offering as rapidly or to the extent anticipated by financial or industry analysts; ● actual or anticipated fluctuations in Wellgistics Health’s quarterly financial results or the quarterly financial results of companies perceived to be similar to it; ● changes in the market’s expectations about Wellgistics Health’s operating results; ● success of competitors; ● changes in financial estimates and recommendations by securities analysts concerning Wellgistics Health or the health care industry in general; ● operating and share price performance of other companies that investors deem comparable to Wellgistics Health; ● Wellgistics Health’s ability to market new and enhanced products and technologies on a timely basis; ● changes in laws and regulations affecting Wellgistics Health’s business; ● Wellgistics Health’s ability to meet compliance requirements; ● commencement of, or involvement in, litigation involving Wellgistics Health; ● changes in Wellgistics Health’s capital structure, such as future issuances of securities or the incurrence of additional debt; ● the volume of Wellgistics Health’s shares of common stock available for public sale; or ● any major change in Wellgistics Health’s board of directors or management. Furthermore, broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. Certain companies have at times experienced extreme price run-ups followed by rapid price declines and high volatility unrelated or disproportionate to the operating performance of the particular companies affected. Recently, this has especially been seen with companies conducting an initial public offering, particularly among companies with smaller public floats. The trading prices and valuations of these stocks, and of our securities, may not be predictable and may make it difficult for prospective investors to assess the rapidly changing value of our securities. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to Wellgistics Health could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect its ability to issue additional securities and its ability to obtain additional financing in the future. 47 Future sales, or the perception of future sales, by Wellgistics Health or its stockholders in the public market could cause the market price for Wellgistics Health common stock to decline. The sale of shares of Wellgistics Health common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of Wellgistics Health common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for Wellgistics Health to sell equity securities in the future at a time and at a price that it deems appropriate. In the future, Wellgistics Health may also issue its securities in connection with investments or acquisitions. The amount of shares of Wellgistics Health common stock issued in connection with an investment or acquisition could constitute a material portion of the then-outstanding shares of Wellgistics Health common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to Wellgistics Health stockholders. Wellgistics Health qualifies as an “emerging growth company” as well as a smaller reporting company within the meaning of the Securities Act, and if Wellgistics Health takes advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make Wellgistics Health’s securities less attractive to investors and may make it more difficult to compare Wellgistics Health’s performance with other public companies. Wellgistics Health qualifies as an “emerging growth company” within the meaning of the Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, Wellgistics Health may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies for as long as Wellgistics Health continues to be an emerging growth company, including, but not limited to: (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in Wellgistics Health’s periodic reports and proxy statements and (iii) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, Wellgistics Health’s stockholders may not have access to certain information they may deem important. Wellgistics Health will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of Wellgistics Health common stock that is held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter, (ii) the last day of the fiscal year in which Wellgistics Health has total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation), (ii) the date on which Wellgistics Health has issued more than $1 billion in non-convertible debt in the prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common stock in the initial public offering. Wellgistics Health cannot predict whether investors will find Wellgistics Health’s securities less attractive because it will rely on these exemptions. If some investors find Wellgistics Health’s securities less attractive as a result of its reliance on these exemptions, the trading prices of Wellgistics Health’s securities may be lower than they otherwise would be, there may be a less active trading market for its securities and the trading prices of its securities may be more volatile. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. Wellgistics Health has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, Wellgistics Health, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of Wellgistics Health’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. 48 Additionally, Wellgistics Health qualifies as a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. Wellgistics Health will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of Wellgistics Health common stock held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, or (ii) its annual revenues exceeded $100 million during such completed fiscal year and the market value of Wellgistics Health common stock held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter. To the extent Wellgistics Health takes advantage of such reduced disclosure obligations, it may also make comparison of its financial statements with other public companies difficult or impossible. Certain existing stockholders acquired our securities at a price below the current trading price of such securities and may experience a positive rate of return based on the current trading price. Given the relatively lower purchase prices that some of our stockholders—including certain of our officers and directors—paid to acquire some of their securities compared to the current trading price of our shares of common stock, these stockholders in some instances may earn a positive rate of return on their investment, which may be a significant positive rate of return, depending on the market price of our shares of common stock at the time that such stockholders choose to sell their shares of common stock. Sales of significant amounts of shares held by our officers and directors, or the prospect of these sales, in the future, could adversely affect the market price of our common stock. Public stockholders may not be able to experience the same positive rates of return, especially in the case that our management’s stock ownership discourages a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.