DataMeds AI, Inc. 10-Q

Item 1. Financial Statements. WELLGISTICS HEALTH, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, December 31, 2025 2024 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 419,942 $ 1,028,336 Accounts receivable, related party 775,027 271,298 Accounts receivable, net 1,386,423 2,453,517 Inventories, net 9,031,143 9,518,608 Prepaid expenses 65,525 524 Due from related parties 1,249,888 1,021,000 Subscription receivable 581,695 - Deferred offering costs - 875,385 Total current assets 13,509,643 15,168,668 Property, plant and equipment, net 308,642 388,180 Capitalized software 2,023,076 1,618,017 Operating lease, right-of-use-assets 1,280,459 1,528,128 Goodwill 16,219,929 16,219,929 Other intangible assets, net 19,219,880 20,746,009 Note receivable 139,771 139,771 Other assets 1,438,607 1,438,940 Deposits 85,008 85,008 Total assets $ 54,225,015 $ 57,332,650 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 9,450,651 $ 6,308,754 Accounts payable, related party 25,500 25,500 Accounts payable 25,500 25,500 Accrued expenses and other current liabilities 5,466,166 4,320,417 Due to related parties 5,234,770 4,944,770 Due to seller 8,500,000 10,000,000 Due to related parties 5,234,770 4,944,770 Current portion of debt obligations, net of debt discount 13,180,200 11,927,816 Operating lease liabilities- current portion 546,255 519,490 Total current liabilities 42,403,542 38,046,747 Notes payable 10,100,000 10,100,000 Note payable, related party - 1,300,000 Note payable - 1,300,000 Loan payable - 55,085 Operating lease liabilities 816,218 1,096,372 Total liabilities $ 53,319,760 $ 50,598,204 Commitments and contingencies (Note 14) - - Stockholders’ equity: Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 72,881,535 and 51,055,508 shares issued and 63,144,817 and 51,055,508 shares outstanding as of June 30, 2025 and December 31, 2024, respectively 6,315 5,105 Additional paid-in capital 49,759,467 16,486,501 Accumulated deficit ( 48,860,527 ) ( 9,757,160 ) Total stockholders’ equity 905,255 6,734,446 Total liabilities and stockholders’ equity $ 54,225,015 $ 57,332,650 See the accompanying notes to the unaudited condensed consolidated financial statements 3 WELLGISTICS HEALTH, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) 2025 2024 2025 2024 Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Net revenues $ 7,790,865 $ 44,540 $ 18,654,308 $ 44,540 Cost of revenues 7,285,113 47,148 17,455,915 47,148 Gross profit (loss) 505,752 ( 2,608 ) 1,198,393 ( 2,608 ) Operating expenses: General and administrative 4,859,949 570,408 36,032,869 650,172 Sales and marketing 343,383 - 408,600 - Depreciation and amortization 802,796 - 1,605,668 - Total operating expenses 6,006,128 570,408 38,047,137 650,172 Loss from operations ( 5,500,376 ) ( 573,016 ) ( 36,848,744 ) ( 652,780 ) Other income (expense) Interest expense, net ( 1,184,040 ) ( 1,309 ) ( 2,278,530 ) ( 4,667 ) Other income 11,952 - 23,907 - Total other expense, net ( 1,172,088 ) ( 1,309 ) ( 2,254,623 ) ( 4,667 ) Net loss before income taxes ( 6,672,464 ) ( 574,325 ) ( 39,103,367 ) ( 657,447 ) Provision for income taxes - - - - Net loss $ ( 6,672,464 ) $ ( 574,325 ) $ ( 39,103,367 ) $ ( 657,447 ) Net loss per common share - basic and diluted $ ( 0.11 ) $ ( 0.01 ) $ ( 0.69 ) $ ( 0.01 ) Weighted average common shares outstanding - basic and diluted 61,771,127 45,898,175 56,863,720 46,843,308 See the accompanying notes to the unaudited condensed consolidated financial statements 4 WELLGISTICS HEALTH, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) Additional Total Stockholders’ Common Stock Paid-In Accumulated Equity Shares Amount Capital Deficit (Deficit) Balance at December 31, 2023 44,720,000 $ 4,472 $ ( 3,972 ) $ ( 2,900,934 ) $ ( 2,900,434 ) Net loss - - - ( 83,122 ) ( 83,122 ) Balance at March 31, 2024 44,720,000 $ 4,472 $ ( 3,972 ) $ ( 2,984,056 ) $ ( 2,983,556 ) Founder’s initial contribution - - 10,000 - 10,000 Shares issued to employees 2,274,012 227 ( 227 ) - - Shares issued pursuant to business combination 173,961 17 399,983 - 400,000 Net loss - - - ( 574,325 ) ( 574,325 ) Balance at June 30, 2024 47,167,973 $ 4,717 $ 405,783 $ ( 3,558,381 ) $ ( 3,147,881 ) Balance at December 31, 2024 51,055,508 $ 5,105 $ 16,486,501 $ ( 9,757,160 ) $ 6,734,446 Common stock issued pursuant to public offering 888,889 89 3,999,911 - 4,000,000 Common stock issued pursuant to consulting agreements 152,000 15 543,505 - 543,520 Vested restricted stock granted to consultants 986,123 99 2,875,461 - 2,875,560 Vested restricted stock granted to directors 8,362,494 836 24,277,922 - 24,278,758 Vested restricted stock granted to employees 15,000 2 75,582 - 75,583 Offering costs - - ( 1,598,196 ) - ( 1,598,196 ) Net loss - - - ( 32,430,903 ) ( 32,430,903 ) Balance at March 31, 2025 61,460,014 $ 6,146 $ 46,660,685 $ ( 42,188,063 ) $ 4,478,768 Balance 61,460,014 $ 6,146 $ 46,660,685 $ ( 42,188,063 ) $ 4,478,768 Common stock issued pursuant to equity purchase agreement 1,155,030 116 1,149,301 - 1,149,417 Issuance of commitment shares under equity purchase agreement 152,000 15 594,305 - 594,320 Common stock issued in partial settlement of seller’s note 333,333 33 1,499,967 - 1,500,000 Vested restricted stock granted to employees 44,440 4 354,559 - 354,563 Offering costs - - ( 499,349 ) - ( 499,349 ) Net loss - - - ( 6,672,464 ) ( 6,672,464 ) Balance at June 30, 2025 63,144,817 $ 6,315 $ 49,759,467 $ ( 48,860,527 ) $ 905,255 Balance 63,144,817 $ 6,315 $ 49,759,467 $ ( 48,860,527 ) $ 905,255 See the accompanying notes to the unaudited condensed consolidated financial statements 5 WELLGISTICS HEALTH, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 2025 2024 Six Months Ended June 30, 2025 2024 Cash flows from operating activities: Net loss $ ( 39,103,367 ) $ ( 657,447 ) Adjustments to reconcile net loss to net cash used in operating activities: Allowance for credit losses 200,454 - Amortization of debt discount 33,411 - Stock-based compensation 28,708,643 - Depreciation 79,538 - Amortization 1,526,129 12,794 Changes in operating assets and liabilities: Accounts receivable 362,911 ( 64 ) Inventories 487,465 16,102 Prepaid expenses ( 65,001 ) - Deposits - ( 35,855 ) Other assets 332 - Accounts payable 3,141,897 ( 203,953 ) Accrued expenses and other liabilities 1,145,749 276,994 Operating lease liabilities, net ( 5,720 ) 22,114 Due from / to related parties, net 61,112 930,508 Net cash (used in) provided by operating activities ( 3,426,447 ) 361,193 Cash flows from investing activities: Cash acquired in business combinations - 30,255 Investments in capitalized software ( 405,059 ) ( 47,800 ) Net cash used in investing activities ( 405,059 ) ( 17,545 ) Cash flows from financing activities: Proceeds from promissory note 615,000 - Repayment of seller promissory note ( 137,141 ) - Proceeds from term loan 703,366 - Proceeds from revolving line of credit 17,146,000 - Repayments of revolving line of credit ( 18,697,494 ) - Proceeds from merchant cash advance 234,157 - Proceeds from common stock issued pursuant to equity purchase agreement 567,722 - Proceeds from common stock issued pursuant to public offering 4,000,000 - Offering costs ( 1,208,498 ) ( 288,037 ) Founder’s initial contribution - 10,000 Net cash provided by (used in) financing activities 3,223,112 ( 278,037 ) Net change in cash and cash equivalents ( 608,394 ) 65,611 Cash and cash equivalents at beginning of period 1,028,336 1,364 Cash and cash equivalents at end of period $ 419,942 $ 66,975 Supplemental disclosure of cash flow information: Cash paid for income taxes $ - $ - Cash paid for interest $ 1,477,713 $ - Supplemental disclosure of non-cash investing and financing activities: Subscription receivable $ 581,695 $ - Issuance of commitment shares under equity purchase agreement $ 594,320 $ - Common stock issued in partial settlement of seller’s note $ 1,500,000 $ - Common stock issued pursuant to business combination $ - $ 400,000 Debt assigned to related party $ - $ 250,000 See the accompanying notes to the unaudited condensed consolidated financial statements 6 WELLGISTICS HEALTH, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company was initially organized in the name of Ayan Sponsors LLC on September 6, 2022. Subsequently the Company incorporated under the name Danam Health, Inc. (together with the subsidiaries below, the “Company”/ “us”/ “we”/ “our”) as a Delaware Corporation that was registered on November 15, 2022, The Company’s headquarters are in Tampa, Florida. In January 2023 and May 2023, the Company entered into separate definitive agreements with the owners of Wood Sage LLC (“ Wood Sage ”) and Wellgistics LLC, respectively, whereby the Company would acquire all of the respective outstanding membership interests of Wood Sage (the “ Wood Sage Acquisition ”)and Wellgistics, LLC (the “ Wellgistics Acquisition ”). In June 2024, the Company and Wood Sage entered into an amended and revised definitive agreement and closed on the Wood Sage Acquisition, thereby making Wood Sage a wholly owned subsidiary. In connection with the Wood Sage Acquisition, the Company acquired two of its operating subsidiaries, Alliance Pharma Solutions LLC d/b/a DelivMeds (n/k/a Wellgistics Tech & Hub, LLC) (“DelivMeds”)—a pharmaceutical technology hub—and Community Specialty Pharmacy, LLC (n/k/a Wellgistics Pharmacy, LLC) (“Wellgistics Pharmacy”)—a retail community specialty pharmacy. On August 30, 2024, the Company closed on the Wellgistics Acquisition, thereby making Wellgistics LLC—a company focused on wholesale operations including the distribution and fulfillment of certain pharmaceutical medications to a network of independent pharmacies meant to improve market access to and patient outcomes regarding the medications—a wholly owned subsidiary. As such, the Company currently exists as a holding company with Wood Sage as a directly held intermediate holding company subsidiary, Wellgistics Tech & Hub, LLC and Wellgistics Pharmacy, LLC as indirect operating subsidiaries, and Wellgistics, LLC as a direct operating subsidiary. On October 4, 2024, the Company changed its corporate name to “Wellgistics Health, Inc.” (referred as “Wellgistics Health/WGRX/”the Company”/ “we”/ “us”/ “our”“) by filing a duly authorized Certificate of Amendment to its Certificate of Incorporation. Initial Public Offering On February 20, 2025, the Company entered into an Underwriting Agreement (the “ Underwriting Agreement ”) with Craft Capital Management LLC as representatives of the several underwriters (the “ Underwriters ”), relating to the Company’s initial public offering (the “Offering” or “IPO”) of 888,889 shares of common stock, par value $ 0.0001 per share, at a public offering price of $ 4.50 per share, generating gross proceeds of approximately $ 4 million and net proceeds of approximately $ 3.1 million, after deducting underwriting discounts and commissions and other estimated offering expenses. The shares of common stock were offered and sold pursuant to the Company’s Registration Statement on Form S-1 (File No. 333-280945), originally filed with the U.S. Securities and Exchange Commission (the “Commission”) on July 22, 2024, and later amended (as amended, the “Registration Statement”). The Registration Statement was declared effective by the Commission on February 14, 2025. The closing of the Offering took place on February 24, 2025. A final prospectus describing the terms of the offering was filed with the Commission on February 21, 2025. The Company’s common stock commenced trading on the Nasdaq Capital Market LLC on February 21, 2025, under the symbol “WGRX”. The IPO generated net proceeds to the Company of approximately $ 3.1 million, after deducting underwriting discounts and commissions and other estimated offering expenses. The Company intends to use the net proceeds from the offering to increase its capitalization, provide financial flexibility, and enhance visibility into the marketplace as well as to create a public market for the common stock and for general corporate purposes, including establishing working capital, funding marketing initiatives, and facilitating capital expenditures. 7 Summary of Significant Accounting Policies A description of the Company’s significant accounting policies and other financial information is included in the Company’s audited consolidated financial statements filed on March 25, 2025, with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “ Form 10-K ”). These policies have been applied consistently in these unaudited condensed consolidated interim financial statements. Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of June 30, 2025 and for the three and six months then ended. The accompanying unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2024 included in the Form 10-K with the SEC on March 25, 2025. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses reported in those condensed consolidated financial statements. Descriptions of our significant accounting policies are discussed in the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. Segment Reporting In accordance with Accounting Standards Codification (“ASC”) 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. ASC 280 establishes standards for companies to report financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker (“CODM”), or group, in deciding how to allocate resources and assess performance. The CODM has been identified as the Chief Executive Officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has one operating and reportable segment. The key measures of segment profit or loss reviewed by our CODM are revenue and operating costs. These metrics are reviewed and monitored by the CODM to manage and forecast cash. The CODM also reviews operating costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget. See Note 12 for further detail. Concentration of Credit Risks and Major Customers Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and receivables. The Company places its cash and cash equivalents with financial institutions. Deposits are insured to Federal Deposit Insurance Corp limits. For the six months ended June 30, 2025, one customer accounted for approximately 15 % of total revenue. The Company’s reliance on this and other major customers presents a concentration risk. The loss of this customer or a significant reduction in their orders could have a material adverse effect on the Company’s financial performance. The Company continues to focus on efforts to diversify its customer base to mitigate such risks. 8 Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The financial and nonfinancial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The hierarchy is presented down into three levels based on the reliability of the inputs. Level 1 Quoted prices are available in active markets for identical assets or liabilities. Level 2 Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash flow models or valuations. The carrying amounts of cash, accounts receivable, note receivable, deposits, accounts payable, accrued liabilities and short-term debt approximate their fair value because of the short-term nature of these instruments. The carrying amount of long-term debt approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar maturities. Accounts Receivable and Allowance for Credit Losses Accounts receivable are recorded at the net invoiced amount, net of allowance for credit losses, and do not bear interest. Expected credit losses include losses expected based on known credit issues with specific customers as well as a general expected credit loss allowance based on relevant information, including historical loss rates, current conditions, and reasonable economic forecasts that affect collectability. The Company reserves for any accounts receivable balances that are determined to be uncollectible in the allowance for credit losses. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance. The Company uses a loss rate method to estimate its allowance for credit losses. The determination of the current expected credit loss rate begins with our review of historical loss experience as a percentage of accounts receivable. To determine the current allowance for credit losses, we combine the historical and expected credit loss rates and apply them to our period end accounts receivable. The Company provides for a 95 % - 100 % loss rate of the accounts receivable which are due over the period of 90 days. The Company recognized a provision for credit losses of $ 200,454 and $ 0 within general and administrative expenses for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025 and December 31, 2024, allowance for credit losses was $ 1,111,824 and $ 940,596 , respectively. Inventories, Net Inventories are stated at the lower of cost and net realizable value. Cost is determined on a first in first out (“ FIFO ”) basis. Cost of inventory is determined as the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. On a quarterly basis, we evaluate inventory for net realizable value using estimates based on historical experience, current or projected pricing trends, specific categories of inventory, age and expiration dates of on-hand inventory and manufacturer return policies. If actual conditions are less favorable than our assumptions, additional inventory write-downs may be required, and no reserve is maintained as obsolete or expired inventories are written off. We believe that the inventory valuation provides a reasonable approximation of the current value of inventory. 9 Capitalized Software The Company complies with the guidance of ASC 350-40, “ Intangibles—Goodwill and Other—Internal Use Software ”, in accounting for our internally developed system projects that it utilizes to provide our services to customers. These system projects generally relate to software of the Company that is not intended for sale or otherwise marketed. Internal and external costs incurred during the preliminary project stage are expensed as they are incurred. Once a project has reached the development stage, the Company capitalizes direct internal and external costs until the software is substantially complete and ready for our intended use. Costs for upgrades and enhancements are capitalized, whereas costs incurred for maintenance are expensed as incurred. These capitalized software costs are amortized on a project-by-project basis over the expected economic life of the underlying software on a straight-line basis, which is generally three to five years. Amortization commences when the software is available for our intended use . As of June 30, 2025 and December 31, 2024, the Company capitalized $ 2,023,076 and $ 1,618,017 , respectively, in software development pertaining to the Delivmeds platform via its DelivMeds subsidiary. To date, the Delivmeds platform is not yet been placed in service and therefore amortization has not commenced. Revenue Recognition The Company recognizes revenue from contracts with customers under ASC 606, Revenue from Contracts with Customers (“ASC 606”). To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract was determined to be within the scope of ASC 606, the Company assessed the goods or services promised within each contract and determined those that were performance obligations, and assessed whether each promised good or service was distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. The Company recognizes revenue at the point of sale. The majority of orders are placed via the Company’s website. Customers generally pay by credit card at the time they place their order. The Company does have larger customers to whom they have extended terms for payment. Generally, payments from these customers are due within 30 days of their order being shipped. However, a few customers have been given terms extending out to 45 days. Distribution Wellgistics, LLC provides distribution and third party logistics services to both pharmaceutical manufacturers and independent retail pharmacies. The Company recognizes revenue when goods are delivered to the customer. The gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, rebates, sales allowances and sales returns. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are considered when estimating the impact of these revenue deductions on gross sales for a reporting period. All revenue for the Company is recognized at the point-in-time when delivered to customer based on contractual obligations. Any amount collected from customers for goods not yet delivered is recorded as a contract liability. 10 Pharmacy The Company is in the retail pharmacy business, which fills prescriptions for medication written by a doctor and recognizes revenue at the time the patient confirms delivery of the prescription. Customer returns are not material. The following are the steps taken to recognize revenue. Step One: Identify the contract with the customer — The prescription is written by a doctor for a customer and delivered to the Company. The prescription identifies the performance obligations in the contract. The Company fills the prescription and delivers to the Customer the prescription, fulfilling the contract. The collection is probable because there is confirmation that the customer has insurance for the reimbursement to the Company prior to filling of the prescription. Step Two: Identify the performance obligations in the contract — Each prescription is distinct to the Customer. Step Three: Determine the transaction price — The consideration is not variable. The transaction price is determined to be the price of the prescription at the time of delivery which considers the expected reimbursements from third party payors (e.g., pharmacy benefit managers, insurance companies and government agencies). Step Four: Allocate the transaction price — The price of the prescription invoiced represents the expected amount of reimbursement from third party payors. There is no difference between contract price and “stand-alone selling price”. Step Five: Recognize revenue when or as the entity satisfies a performance obligation — Revenue is recognized upon the delivery of the prescription. Disaggregation of Revenue The following is a summary of the disaggregation of revenue for the three and six months ended June 30, 2025 and 2024: SCHEDULE OF DISAGGREGATION OF REVENUE 2025 2024 2025 2024 Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Product revenue - distribution services $ 7,548,600 $ - $ 18,216,887 $ - Pharmacy retail sales 77,756 44,540 192,432 44,540 Third party logistics services 164,509 - 244,989 - Net revenues $ 7,790,865 $ 44,540 $ 18,654,308 $ 44,540 All revenue for the six months ended June 30, 2025 and 2024 were within the United States. Contract Assets and Liabilities Contract assets would include costs and services incurred on contracts with open performance obligations. These amounts would be included in contract assets on the condensed consolidated balance sheets. Contract liabilities include payment received for incomplete performance obligations and are included in contract liabilities on the condensed consolidated balance sheets. At June 30, 2025 and December 31, 2024, the Company had unearned revenue of 245,765 included in accrued expenses and other current liabilities. Goodwill Goodwill is an asset representing the excess cost over the fair market value of net assets acquired in business combinations. Goodwill is not amortized but is tested annually for impairment or on an interim basis when indicators of potential impairment exist. Goodwill is tested for impairment at the reporting unit level. The Company’s reporting units discrete financial information is available and management regularly reviews the operating results. For purposes of impairment testing, goodwill is allocated to the applicable reporting units based on the reporting structure. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors assessed for each of the applicable reporting units include, but are not limited to, changes in macroeconomic conditions, industry and market considerations, cost factors, discount rates, competitive environments and financial performance of the reporting units. If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, a quantitative test is required. 11 The Company also has the option to proceed directly to the quantitative test. Under the quantitative impairment test, the estimated fair value of each reporting unit is compared to its carrying value, including goodwill. If the carrying value of the reporting unit including goodwill exceeds its fair value, an impairment charge equal to the excess would be recognized, up to a maximum amount of goodwill allocated to that reporting unit. During the three and six months ended June 30, 2025, the Company did not identify any events or changes in circumstances that would indicate potential impairment of goodwill. Accordingly, no goodwill impairment was recorded for the period. Impairment of Long-Lived Assets The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. There were no triggering events to test intangibles for impairment loss during the three and six months ended June 30, 2025 and 2024. Leases The Company accounts for its leases under ASC 842, Leases . Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred. In calculating the right of use asset and lease liability, the Company has elected to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term. Offering Costs The Company complies with the requirements of ASC 340-10-S99-1. Prior to the completion of an offering, offering costs are capitalized if they are directly related to an equity financing that is probable of successful completion until such financing is consummated . The deferred offering costs are charged to stockholders’ equity upon the completion of an offering or to expense if the offering is abandoned, terminated, or significantly delayed in the period of determination. Deferred offering costs includes professional fees incurred including legal, accounting, underwriting and advisory services in connection with the Company’s equity offering. As of June 30, 2025 and December 31, 2024, the Company had capitalized $ 0 and $ 875,385 , respectively, in deferred offering costs. During the six months ended June 30, 2025, a total of $ 875,385 in previously capitalized offering costs was charged to stockholders’ equity upon the completion of the IPO. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. The Company measures all stock-based awards granted to employees, directors and non-employee consultants based on the fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. For awards with service-based vesting conditions, the Company records the expense for using the straight-line method. For awards with performance-based vesting conditions, the Company records the expense if and when the Company concludes that it is probable that the performance condition will be achieved. The Company classifies stock-based compensation expenses in its statement of operations in the same manner in which the award recipient’s costs are classified. Net Loss per Share Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion would be anti-dilutive. As all potentially dilutive securities are anti-dilutive as of June 30, 2025, diluted net loss per share is the same as basic net loss per share for each period. For the three and six months ended June 30, 2025 and 2024, the following items have been excluded from the computation of diluted net loss per share because the effect of including these would have been anti-dilutive: SCHEDULE OF POTENTIALLY DILUTIVE ITEMS OUTSTANDING 2025 2024 June 30, 2025 2024 Unvested restricted common stock issued not outstanding 10,070,051 - Total potentially dilutive shares 10,070,051 - 12 Recent Accounting Pronouncements In December 2023, Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosure s (“ASU 2023-09”). ASU 2023-09 focuses on income tax disclosures around effective tax rates and cash income taxes paid and requires public business entities to disclose, on an annual basis, a rate reconciliation presented in both dollars and percentages. The guidance requires the rate reconciliation to include specific categories and provides further guidance on disaggregation of those categories based on a quantitative threshold equal to 5 % or more of the amount determined by multiplying pretax income (loss) from continuing operations by the applicable statutory rate. For entities reconciling to the US statutory rate of 21 %, this would generally require disclosing any reconciling items that impact the rate by 1.05 % or more. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024 (generally, calendar year 2025) and effective for all other business entities one year later. Entities should adopt this guidance on a prospective basis, though retrospective application is permitted. The adoption of ASU 2023-09 is expected to have a financial statement disclosure impact only and is not expected to have a material impact on the Company’s condensed consolidated financial statements. In March 2024, the FASB issued ASU 2024-03, which provides new accounting guidance for certain crypto assets. Under the ASU, entities are required to subsequently measure qualifying crypto assets at fair value, with changes in fair value recognized in net income each reporting period. The ASU also establishes specific disclosure requirements, including information about significant crypto asset holdings, contractual sale restrictions, and changes in such holdings. The guidance applies to crypto assets that meet all of the following criteria: ● Meet the definition of intangible assets as defined in the ASC Master Glossary. ● Do not provide enforceable rights to or claims on underlying goods, services, or other assets. ● Are created or reside on a distributed ledger based on blockchain or similar technology. ● Are secured through cryptography. ● Are fungible. ● Are not created or issued by the reporting entity or its related parties. The ASU is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2024-03 on its condensed consolidated financial statements. While the Company does not currently hold material amounts of crypto assets, it is assessing the implications of the guidance in the event of future crypto asset acquisitions or changes in investment strategy. Note 2. LIQUIDITY AND GOING CONCERN The Company had a net loss of $ 39,103,367 for the six months ended June 30, 2025 and an accumulated deficit of $ 48,860,527 as of June 30, 2025. Furthermore, the Company had net cash used in operating activities of $ 3,426,447 for the six months ended June 30, 2025. These factors raise a substantial doubt on whether the Company can continue as a going concern from the date these unaudited interim condensed consolidated financial statements are issued. The Company’s ability to continue as a going concern in the next twelve months following the date the condensed consolidated financial statements were available to be issued is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results. Management Plans On April 9, 2025, the Company entered into the Hudson Equity Purchase Agreement (“EPA”). Under the agreement, the Company may, at its discretion and subject to certain conditions, issue and sell shares of its common stock to Hudson over a 24-month commitment period, providing a potential source of additional capital to support the Company’s ongoing operations and growth initiatives. As of June 30, 2025, the Company had sold 1,155,030 shares of common stock under the Hudson EPA, resulting in net proceeds of $ 1,149,417 . The Company subsequently terminated the Hudson EPA effective August 13, 2025. There is no assurance, however, that the Company will be able to sell shares on favorable terms or that additional capital will be available from other sources when needed. If the Company is unable to obtain sufficient amount of additional capital, it may be required to reduce the scope of its planned development, which could harm its business, financial condition, and operating results. The accompanying condensed consolidated financial statements do not include any adjustments that might result from these uncertainties. As a result of the above, in connection with our assessment of going concern considerations in accordance with FASB ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that our liquidity condition raises substantial doubt about our ability to continue as a going concern through twelve months from the date these unaudited interim condensed consolidated financial statements are issued. These unaudited interim condensed consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern 13 Note 3. ACCOUNTS RECEIVABLE, NET Accounts receivable, net consist of the following: SCHEDULE OF ACCOUNTS RECEIVABLE, NET June 30, December 31, 2025 2024 Third Party $ 2,498,247 $ 3,394,112 Affiliates 775,027 271,298 Total Accounts Receivable 3,273,274 3,665,410 Less: Allowance for credit losses ( 1,111,824 ) ( 940,596 ) Total accounts receivable, net $ 2,161,450 $ 2,724,814 Note 4. INVENTORIES, NET Inventory consists of the following: SCHEDULE OF INVENTORY June 30, December 31, 2025 2024 First Defense Nasal Screen Corp (“FDNS”) $ 6,005,624 $ 6,717,373 Finished goods 3,271,255 3,034,836 Total inventory, at cost 9,276,879 9,752,209 Less: reserve for obsolescence ( 245,736 ) ( 233,601 ) Inventories, net $ 9,031,143 $ 9,518,608 Note 5. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment consist of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT, NET June 30, December 31, 2025 2024 Leasehold improvements $ 766,467 $ 766,467 Equipment 589,208 589,208 Furniture and fixtures 152,161 152,161 Property, plant and equipment, gross 1,507,836 1,507,836 Less: Accumulated depreciation ( 1,199,194 ) ( 1,119,656 ) Property, plant and equipment, net $ 308,642 $ 388,180 Depreciation expense for the three and six months ended June 30, 2025 and 2024 amounted to $ 39,731 , $ 0 , $ 79,538 and $ 0 , respectively. 14 Note 6. INTANGIBLE ASSETS Intangible assets consist of the following: SCHEDULE OF INTANGIBLE ASSETS June 30, December 31, 2025 2024 Software development costs - Delivmeds $ 2,023,076 $ 1,618,017 Customer relationships - Wood Sage acquisition 393,853 393,853 Customer relationships - Wellgistics acquisition 11,256,067 11,256,067 Trademark - Wellgistics acquisition 10,143,137 10,143,137 Intangible assets, gross 21,793,057 21,793,057 Accumulated amortization ( 2,573,177 ) ( 1,047,048 ) Intangible assets, net $ 19,219,880 $ 20,746,009 Intangible assets of $ 393,853 represent customer relationships identified and measured at fair value pursuant to the Wood Sage Acquisition in June 2024. The Company recorded amortization of $ 12,308 and $ 24,616 for the three and six months ended June 30, 2025, respectively, pertaining to these intangible assets. Intangible assets of $ 11,256,067 and $ 10,143,137 represent customer relationships and trademarks, respectively, identified and measured at fair value pursuant to the Wellgistics, LLC Acquisition in August 2024. The Company recorded amortization of $ 496,003 and $ 938,006 pertaining to customer relationships, and $ 281,754 and $ 563,508 pertaining to the trademark for the three and six months ended June 30, 2025, respectively. The following table represents the future amortization of intangibles assets: SCHEDULE OF FUTURE AMORTIZATION OF INTANGIBLES ASSETS Year Ended December 31, 2025 (remaining six months) $ 1,526,129 2026 3,052,258 2027 3,052,258 2028 3,052,258 2029 3,052,258 Thereafter 5,484,719 Intangible assets $ 19,219,880 15 Note 7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other liabilities consist of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES June 30, December 31, 2025 2024 Accrued personnel costs $ 3,426,314 $ 3,112,470 Accrued professional fees 139,557 347,829 Accrued expenses 227,973 - Credit card obligation 222,485 110,201 Unearned revenue 245,765 245,765 Accrued interest 1,204,072 504,152 Accrued expenses and other liabilities $ 5,466,166 $ 4,320,417 Note 8. DEBT Outstanding debt consists of the following: SCHEDULE OF OUTSTANDING DEBT June 30, December 31, 2025 2024 Merchant cash advance, net of debt discount $ 1,548,657 $ 1,259,415 Loan payable 703,366 - Note payable - sellers of Wellgistics 5,000,000 5,000,000 Note payable, net of debt discount 648,411 - Note payable – Integral Health 1,300,000 - Revolving line of credit 3,979,766 5,531,260 Seller promissory note - 137,141 Current portion of debt obligations 13,180,200 11,927,816 Merchant cash advance $ - $ 55,085 Third party investor 100,000 100,000 Note payable - Integral Health - 1,300,000 Note payable - sellers of Wellgistics 10,000,000 10,000,000 Long-term debt 10,100,000 11,455,085 Total debt $ 23,280,200 $ 23,382,901 As of June 30, 2025 and December 31, 2024, unamortized debt discount was $ 880,601 and $ 519,430 , respectively. Integral Health Inc. (“Integral Health”) On August 22, 2023, Wood Sage entered into a non-interest bearing promissory note (“Note”) with Integral Health, a then related party with common ownership and board members, pursuant to which Integral made a certain loan to Wood Sage in the amount of $ 1,300,000 to satisfy the purchase price under the agreements by which Wood Sage acquired Wellgistics Pharmacy and DelivMeds. No later than 30 days after a change in control to Wood Sage, the aggregate unpaid principal balance of the Note became due and payable by Wood Sage, which occurred upon the consummation of the Company’s acquisition of Wood Sage. As of the date of issuance of these condensed consolidated financial statements, the note is still outstanding and the parties mutually agreed for an extension. Merchant Cash Advance On March 18, 2025, the Company entered into a merchant cash advance agreement with a third-party lender. Pursuant to the agreement, the Company received gross funding of $ 1,900,000 in exchange for the sale of future receivables totaling $ 2,840,000 . Of the $ 1,900,000 in funding, $ 1,118,250 was directly applied by the lender to settle existing obligations under a prior agreement with the same lender, effectively refinancing the earlier balance. The remaining $ 781,750 was disbursed to the Company for working capital and operational needs. 16 The MCA Agreement resets the Purchased Amount (as defined), repayment terms, and structure under a new contract. The Company is obligated to remit weekly payments of $ 56,800 until the full Purchased Amount of $ 2,840,000 is repaid. The Company accounts for the merchant cash advance as a debt obligation. The Company recorded a liability equal to the full Purchased Amount of $ 2,840,000 , with a corresponding debt discount of $ 940,000 representing the difference between the repayment obligation and the net proceeds received. The debt discount will be amortized to interest expense over the term of the arrangement. As of June 30, 2025, the carrying amount of the loan, net of the remaining unamortized discount of $ 552,943 , was $ 1,548,657 . Loan Payable On May 14, 2025, the Company entered into a Business Loan and Security Agreement with Agile Capital Funding, LLC for a principal amount of $ 756,000 . The Company received $ 500,000 in cash proceeds and recorded a debt discount of $ 256,000 . The loan does not bear a stated interest rate; instead, the debt discount represents the implied borrowing cost. The loan matures in December 2025, and is repayable in weekly installments of $ 27,000 . The loan is secured by certain assets of the Company not otherwise secured in its other financing arrangements and was used for general working capital purposes. The Company is amortizing the debt discount using the effective interest method over the 28 week term. Amortization of debt discount recorded to interest expense was $ 45,542 for the three and six months ended June 30, 2025. As of June 30, 2025, the carrying amount of the loan, net of the remaining unamortized discount of $ 210,458 , was $ 464,542 . Cash Advance On June 25, 2025, the Company entered into an Agreement for the Purchase and Sale of Future Receipts with Agile Capital Funding, LLC for a total purchased amount of $ 367,200 . The Company received $ 255,000 in cash proceeds and recorded a debt discount of $ 112,200 . The agreement assigns 15% of proceeds of future sales to the buyer, with weekly repayment installments of $ 13,114 over 28 weeks based on estimated average monthly sales projections. Proceeds were used for general working capital purposes. The Company is amortizing the debt discount using the effective interest method over the 28 week term. As of June 30, 2025, the carrying amount of the arrangement, net of the remaining unamortized discount of $ 112,200 , was $ 238,824 . Note payable – owners of Wellgistics, LLC On August 23, 2024, the Company and the sellers of Wellgistics LLC entered into the Fourth Amendment to the Wellgistics MIPA. Pursuant to the amended agreement, Wellgistics Health agreed to pay Wellgistics LLC a promissory note in the aggregate principal amount of $ 15,000,000 plus simple interest accruing annually equal to the “Prime Rate” as published by the Wall Street Journal on January 1 of the applicable year, together payable in three equal annual installments commencing on the first anniversary of the date that IPO registration statement becomes effective. For 2025, the interest rate was 7.5 %. For the three and six months ended June 30, 2025, the Company recorded interest expense of $ 318,750 and $ 637,500 , respectively, pertaining to the note. As of June 30, 2025 and December 31, 2024, accrued interest on the note totaled $ 1,062,500 and $ 425,000 respectively, and is included in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheets. As of June 30, 2025, $ 5,000,000 was included as a current liability on the consolidated balance sheet and the remaining $ 10,000,000 was classified as non-current. Note Payable – Third Party On January 2, 2025, the Company entered into an unsecured promissory note agreement for a principal amount of $ 448,411 . The promissory note bears interest at a rate of 10 % per annum, with both principal and accrued interest due in full on May 15, 2025. In the event of default, interest accrues at a default rate of 12 % per annum. In connection with this note, the Company received net proceeds of $ 415,000 , with the remaining $ 33,411 recognized as a debt discount. For the three months ended June 30, 2025, the Company recorded interest expense of $ 11,210 and amortization of debt discount of $ 11,304 related to this note. For the six months ended June 30, 2025, the Company recorded total interest expense of $ 22,021 and amortization of debt discount of $ 33,411 . As of June 30, 2025, accrued interest payable on this note was $ 22,021 , and the outstanding principal of $ 448,411 is classified under current liabilities. As of the issuance date of these condensed consolidated financial statements, the parties are currently working on an extension. On February 2, 2025, the Company entered into an unsecured promissory note agreement for a principal amount of $ 100,000 . The promissory note bears interest at a rate of 10 % per annum, with both principal and accrued interest due in full on August 15, 2025. In the event of default, interest accrues at a default rate of 12 % per annum. For the three months ended June 30, 2025, the Company recorded interest expense of $ 2,500 related to this note. For the six months ended June 30, 2025, the Company recorded total interest expense of $ 4,062 . As of June 30, 2025, accrued interest payable on this note was $ 4,062 , and the outstanding principal of $ 100,000 is classified under current liabilities. 17 On February 2, 2025, the Company entered into another unsecured promissory note agreement in the principal amount of $ 100,000 . The promissory note bears interest at a rate of 10 % per annum, with both principal and accrued interest due in full on August 15, 2025. In the event of default, interest accrues at a default rate of 12 % per annum. For the six months ended June 30, 2025, the Company recorded interest expense of $ 4,062 related to this promissory note. As of June 30, 2025, the outstanding principal of $ 100,000 is classified under current liabilities. As of the issuance date of these condensed consolidated financial statements, the parties are currently working on an extension. Note Payable – Related Party On April 7, 2025, the Company issued an unsecured promissory note (the “April 2025 Note”) to Sansur Associates, LLC, a related party entity beneficially owned by Surendra Ajjarapu, the Chairman of the Company’s Board of Directors, in the principal amount of $ 500,000 . The April 2025 Note bears interest at a rate of 10 % per annum and matures on October 7, 2025 . The Company may prepay any portion of the outstanding principal and accrued interest at any time without penalty. In the event of a default, the note provides for acceleration of the outstanding balance and an increase in the interest rate to 12 % per annum. As of June 30, 2025, the principal amount had not been funded and no interest expense had accrued. The April 2025 Note was subsequently canceled in August 2025. Revolving line of credit In November 2024, the Company entered into a new credit agreement for a line of credit of $ 10,000,000 . The new line of credit has interest annual rate equal to the Term Standard Overnight Financing Rate (“SOFR”) plus 11.5%, calculated and prorated daily on the daily balance (an aggregate rate of 16.84% per annum). The line of credit is collateralized by accounts receivable and inventory balances. Interest related to the line of credit amounted to $ 332,439 and $ 614,199 for the three and six months ended June 30, 2025, respectively. The outstanding balance on the line of credit as of June 30, 2025 and December 31, 2024 was $ 3,979,766 and $ 5,531,260 , respectively, which is included as a current liability on the condensed consolidated balance sheet. Seller Promissory Note - Wellgistics In May 2022, the Company entered into a promissory note agreement in the amount of $ 1.2 million. The promissory note was part of the consideration to the seller in connection with its acquisition of American Pharmaceutical Ingredients, LLC (a subsidiary of Wellgistics LLC). The promissory note bore interest at a rate of 2 % per annum and scheduled to mature on April 1, 2025. The Company assumed this debt as part of the Wellgistics Acquisition. As of June 30, 2025, the promissory note had been fully repaid, and the outstanding balance was $ 0 , compared to $ 137,141 as of December 31, 2024. Interest expense related to the promissory note was immaterial for the six months ended June 30, 2025. The following table is a summary of annual principal payments of the Company’s outstanding debt: SCHEDULE OF ANNUAL PRINCIPAL PAYMENTS December 31, 2025 $ 14,060,801 2026 5,100,000 2027 5,000,000 Principal Payment $ 24,160,801 18 Note 9. STOCKHOLDERS’ EQUITY Initial Public Offering On February 24, 2025, the Company closed its IPO of 888,889 shares of common stock at a public offering price of $ 4.50 per share. The IPO generated gross proceeds of $ 4.0 million and net proceeds of approximately $ 3.1 million after deducting underwriting discounts, commissions, and other offering expenses. Advisor and Consulting Agreements On February 25, 2025, the Company entered into a consulting agreement with Hudson to provide business advisory services, growth strategy guidance, and networking support for a 30-day period. As consideration for these services, the Company agreed to pay Hudson a cash fee of $ 250,000 and to issue 52,000 shares of restricted common stock. The Company recognized stock-based compensation expense of $ 0 and $ 143,520 during the three and six months ended June 30, 2025, respectively, in connection with the equity issuance. This expense was recorded within general and administrative expenses in the condensed consolidated statements of operations. The fair value of the restricted stock was determined based on the market price of the Company’s common stock on the grant date. On March 17, 2025, the Company entered into consulting agreement with Draper, Inc. (“ Draper ”), pursuant to which Draper agreed to provide investor relations and business development services. As consideration for services under the initial three-month term of the agreement, the Company issued 100,000 shares of restricted common stock to Draper. The consulting agreement automatically renews on a month-to-month basis unless terminated by either party with at least seven days’ notice prior to the end of the current term. The Company will be obligated to issue an additional 100,000 restricted shares of common stock for each renewal period. The Company subsequently terminated this consulting agreement on June 16, 2025. Based on the market price of the Company’s common stock on the grant date, the total fair value of the shares issued to Draper was determined to be $ 400,000 . For the three and six months ended June 30, 2025, the Company recognized stock-based compensation expense of $ 65,217 and $ 400,000 , respectively, in connection with this agreement. This expense was recorded within sales and marketing expenses in the condensed consolidated statements of operations. Directors and Former Employees As previously disclosed on the Company’s Current Report on Form 8-K filed with the SEC on April 11, 2025, the Company’s board of directors appointed Michael L. Peterson to fill the vacancy created as a result of the resignation of Sajid Sayed. In consideration for his board services and to further align his interests with those of the Company and its stockholders, the Company’s board of directors determined, after his appointment, to issue 200,000 restricted shares of the Company’s common stock that vest in equal amounts over a three-year period beginning on the first anniversary date of the grant. Vesting of Mr. Peterson’s shares of common stock accelerates if or when he leaves the Company. In June 2025, the Company also granted former chief executive officer Timothy Canning 750,000 restricted shares of the Company’s common stock in fulfillment of the sign-on bonus to which he had been entitled pursuant to the terms of his employment agreement with the Company. The shares vest on the six-month anniversary of the grant date. As previously disclosed on the Company’s Current Report on Form 8-K filed with the SEC on March 6, 2025, Mr. Canning tendered his resignation to the Company effective February 28, 2025. Equity Purchase Agreement On April 9, 2025, the Company entered into the Hudson EPA pursuant to which Hudson committed to purchase, upon the Company’s request, up to $ 50 million of the Company’s common stock over a 24-month period, subject to certain conditions. Under the terms of the agreement, the Company may, from time to time and at its sole discretion, issue “put notices” requiring Hudson to purchase shares at a price based on a formula tied to the market price of the Company’s common stock, as defined in the Hudson EPA. As of June 30, 2025, the Company had issued a total of 1,155,030 shares of common stock pursuant to put notices under the agreement, resulting in net proceeds of $ 1,149,417 . As of June 30, 2025, the Company had a subscription receivable of $ 581,595 pertaining to shares issued under the Hudson EPA for which proceeds were received in July 2025. In connection with entering into the Hudson EPA, the Company also issued 152,000 commitment shares to Hudson, which were valued at a fair value of $ 594,320 based on the closing price of the Company’s common stock on the agreement date. The amount was recorded as stock-based compensation and was included within general and administrative expenses in the condensed consolidated statements of operations. Wellgistics MIPA On April 14, 2025, the Company and sellers of Wellgistics LLC further amended the Wellgistics MIPA. Pursuant to the amendment, the portion of the closing cash payment payable to one of the sellers, Strategix Global LLC, was reduced by $ 1,500,000 , and in lieu of such payment, Strategix was issued 333,333 shares of the Company’s common stock. These shares will be subject to a 12-month lock-up period consistent with the terms applicable to management and large shareholders at the time of the Company’s IPO. 19 2023 Equity Incentive Plan The Company adopted the 2023 Equity Incentive Plan (the “Plan”), which provides the issuance of up to 43,506,064 shares of the Company’s common stock (the “Initial Limit”). Beginning on January 1, 2025, and on each January 1 thereafter, the number of shares reserved for issuance under the Plan will automatically increase by an amount equal to three percent (3%) of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31, or such lesser amount as may be determined by the Plan’s administrator (the “Annual Increase”). Shares issued under the Plan may be newly issued shares or reacquired shares. The Plan permits the grant of various types of stock-based awards, including incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares available for issuance as incentive stock options may not exceed the Initial Limit, as adjusted for any Annual Increases, subject to adjustment as provided under the terms of the Plan. Shares subject to awards that expire, are canceled, or otherwise terminate without having been exercised or settled in full will again become available for future grant under the Plan. However, shares repurchased by the Company on the open market will not be added back to the share reserve. Awards that may be settled solely in cash do not count against the share reserve. The Plan also includes a limitation on annual compensation to non-employee directors. The aggregate value of all equity awards granted to any non-employee director under the Plan, together with any cash compensation paid for service as a non-employee director, may not exceed (i) $ 1,000,000 in the first calendar year of service and (ii) $ 750,000 in any subsequent calendar year. The fair value of such awards is determined based on grant date fair value in accordance with ASC Topic 718, excluding the impact of estimated forfeitures related to service-based vesting conditions. Restricted Common Stock On February 28, 2025, in connection with the appointment of Brian Norton as Chief Executive Officer of the Company, Mr. Norton was granted and issued 9,000,000 shares of restricted common stock under the Company’s Amended and Restated 2023 Equity Incentive Plan (the “Plan”). These shares of restricted common stock vest in three equal annual installments over a three-year period, contingent upon the achievement of specified gross revenue and gross profit targets established by the Company’s Compensation Committee. As of June 30, 2025, none of the performance targets had been determined to be probable of achievement. Accordingly, no stock-based compensation expense was recognized in connection with this grant during the six months ended June 30, 2025. The Company will begin recognizing stock-based compensation expense on a prospective basis in the period in which the performance conditions are deemed probable of achievement. The shares were valued based on the market price of the Company’s common stock on the grant date. On March 14, 2025, the Company granted a total of 10,764,108 shares of restricted stock under the Plan to directors, employees, and consultants. The shares granted had varying vesting terms, ranging from immediate vesting to vesting over a five-year period. As of June 30, 2025, 9,560,057 of these shares had vested and are included in the total outstanding common stock reported in the consolidated statement of stockholders’ equity. As of June 30, 2025, a total of 134,000 shares were forfeited and cancelled and the remaining 10,070,051 shares were unvested as of June 30, 2025. A summary of information related to restricted common stocks for the six months ended June 30, 2025 is as follows: SCHEDULE OF RESTRICTED COMMON STOCKS Restricted Common Stock Weighted Average Grant Date Fair Value Unvested shares as of December 31, 2024 - - Granted 19,764,108 $ 2.90 Vested ( 9,560,057 ) $ 2.90 Forfeited and cancelled ( 134,000 ) $ 2.90 Unvested shares as of June 30, 2025 10,070,051 $ 2.90 For the three and six months ended June 30, 2025, the Company recognized $ 935,222 and $ 28,708,643 , respectively, in stock-based compensation expense in accordance with ASC 718, Compensation – Stock Compensation, based on the grant-date fair value of the restricted stock. For the three and six months ended June 30, 2025, stock-based compensation expense included in sales and marketing expense was $ 65,217 and $ 400,000 , respectively. For the three and six months ended June 30, 2025, stock-based compensation expense included in general and administrative expense was $ 870,005 and $ 28,308,643 , respectively. As of June 30, 2025, total unrecognized compensation expense related to the 10,070,051 non-vested restricted stock awards was $ 2,811,224 , which is expected to be recognized over a weighted-average period of 2.54 years. Total unrecognized compensation related to unvested performance-based shares was $ 26,100,000 as of June 30, 2025. 20 Note 10. LEASE OBLIGATIONS Rent is classified by function on the condensed consolidated statements of operations as general and administrative. The following is the summary of operating lease assets and liabilities: SCHEDULE OF OPERATING LEASE ASSETS AND LIABILITIES June 30, 2025 Operating Leases Right-of-use assets $ 1,280,459 Lease liabilities, current portion 546,255 Long-term lease liabilities 816,218 Total lease liabilities $ 1,362,473 Weighted Average Remaining Lease Term 2.43 Weighted Average Discount Rate 7.36 % The following is the summary of future minimum payments: SCHEDULE OF SUMMARY OF FUTURE MINIMUM PAYMENTS December 31, 2025 (remaining 6 months) $ 307,086 2026 621,530 2027 458,656 2028 84,977 Total lease payments 1,472,249 Less: Imputed interest ( 109,776 ) Total $ 1,362,473 Note 11. RELATED PARTY TRANSACTIONS The Company had transactions with Scienture Holdings, Inc. (f/k/a/ TrXade Health, Inc / TRG / TrXade Health / Scienture) and group which included Integra Pharma Solutions, LLC (“ IPS ”), in which board members of the Company were also members of Scienture’s management and board at the time the transactions occurred. Tollo Health, LLC acquired IPS from Scienture in April 2025. At that time Tollo Health, LLC was owned in part by Integral Health, Inc., in which certain board members of the Company also had a beneficial ownership interest. Integral Health acquired IPS from Tollo Health, LLC in June 2025. The common management between the entities at the time the transactions occurred classifies Scienture, IPS, and Integral as related parties. 21 Wellgistics, LLC was previously partly owned by a private equity company, Nomad Capital LLC, which has ownership interest in a few portfolio companies and Wellgistics, LLC had transactions with some of the affiliated companies of Nomad Capital. Operating expenses with affiliated companies, which include software expenses and marketing expenses, are recorded within general and administrative expenses. Cingo Solutions provides IT, cyber security and compliance services; and RxERP provides serialized ERP for pharma as a software-as-a-service (“ SaaS ”) to the Company. Wellgistics, LLC is charged a managerial service and software fee by Cingo and RxERP, respectively, which is recorded within general and administrative expenses. The Company had transactions with Scietech, LLC where a significant investor is the spouse of one of the directors of the Company, which qualifies as a related party. The following is a summary of due from and to related parties, as well as accounts receivable and accounts payable, as of June 30, 2025 and December 31, 2024: SCHEDULE OF SUMMARY OF DUE FROM AND TO RELATED PARTIES June 30, December 31, 2025 2024 Due from Integral Health/IPS * $ 1,214,911 $ - Due from TRG - 146,000 Due from Tollo** 34,977 - Due from IPS - 305,000 Due from Scienture Holdings - 570,000 Due from related parties $ 1,249,888 $ 1,021,000 Due to Integral Health/IPS * $ 5,234,770 $ - Due to TRG - 9,351 Due to IPS - 3,764,000 Due to Scienture Holdings - 1,171,419 Due to related parties $ 5,234,770 $ 4,944,770 * Integral Health acquired IPS in June 2025 and the parties are currently working on an agreement to settle the net balance owed by the Company for equity consideration. This is inclusive of the accounts receivable held by the Company to IPS as noted below. ** Tollo had common ownership with the Company’s significant stockholders and board members through June 2025. June 30, December 31, 2025 2024 Accounts receivable – IPS (Integral Health) $ 775,027 $ 271,298 Accounts receivable $ 775,027 $ 271,298 Accounts payable - Scietech $ 25,500 $ 25,500 Accounts payable $ 25,500 $ 25,500 The Company had the following transactions with related parties during the three and six months ended June 30, 2025 and 2024: SCHEDULE OF RELATED PARTY TRANSACTION 2025 2024 2025 2024 Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Sales to IPS $ - $ - $ 503,730 $ - Sales $ - $ - $ 503,730 $ - IT expenses paid to Cingo Solutions (common management) $ 38,440 $ - $ 199,440 $ - SaaS expenses paid to RxERP (common management) $ 150,000 - $ 150,000 - IT expenses paid $ 150,000 - $ 150,000 - Management services fees paid to Nomad Capital $ - $ - $ 160,000 $ - Management services fees paid $ - $ - $ 160,000 $ - Note 12. SEGMENT AND GEOGRAPHIC INFORMATION The Company operates as one operating segment. The Company’s CODM is its chief executive officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated gross margin, operating income and net income to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the rate at which the Company seeks to grow operating income and the allocation of budget between cost of revenues, sales and marketing, general and administrative expenses or technology and development. The following table presents selected financial information with respect to the Company’s single operating segment for the three and six months ended June 30, 2025 and 2024: SCHEDULE OF SEGMENT AND GEOGRAPHIC INFORMATION Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Net revenues $ 7,790,865 $ 44,540 $ 18,654,308 $ 44,540 Cost of net revenues 7,285,113 47,148 17,455,915 47,148 Gross profit (loss) 505,752 ( 2,608 ) 1,198,393 ( 2,608 ) Operating expenses: General and administrative 4,859,949 570,408 36,032,869 650,172 Sales and marketing 343,383 - 408,600 - Depreciation and amortization 802,796 - 1,605,668 - Total operating expenses 6,006,128 570,408 38,047,137 650,172 Loss from operations ( 5,500,376 ) ( 573,016 ) ( 36,848,744 ) ( 652,780 ) Other (expense), net ( 1,172,088 ) ( 1,309 ) ( 2,254,623 ) ( 4,667 ) Net loss $ ( 6,672,464 ) $ ( 574,325 ) $ ( 39,103,367 ) $ ( 657,447 ) All revenues were within the U.S. region. See Note 1, Organization and Summary of Significant Accounting Policies - Revenue Recognition for additional information about disaggregated revenue. 22 The Company’s long-lived tangible assets, as well as the Company’s operating lease right-of-use assets recognized on the condensed consolidated balance sheets were located as follows: June 30, December 31, 2025 2024 (unaudited) United States Property, plant and equipment, net $ 308,642 $ 388,180 Operating lease, right-of-use-assets $ 1,280,459 $ 1,528,128 Note 13. COMMITMENTS AND CONTINGENCIES From time to time, the Company is involved in legal proceedings arising from the normal course of business activities. The Company, in conjunction with its legal counsel, assesses the need to record a liability for litigation or loss contingencies. A liability is recorded when and if it is determined that such a liability for litigation or loss contingencies is both probable and estimable. Although the results of legal proceedings and claims cannot be predicted with certainty, the Company is not currently a party to any legal proceedings, which would, individually or in the aggregate, have a material adverse effect on its results of operations, cash flows, or financial position. On August 21, 2024, Blythe Global Advisors, LLC filed a demand for arbitration against the Company and Suren Ajjarapu for breach of contract, breach of the implied covenant of good faith and fair dealing, and breach of personal guaranty. Blythe claims to have performed accounting services for the Company in the amount of $ 377,947.36 for which it has not been paid and that Ajjarapu personally guaranteed payment of Blythe’s invoices. The Company has answered the arbitration demand and is vigorously defending the matter. Relatedly, in early 2025, Wellgistics, LLC, Wood Sage, LLC, Alliance Pharma Solutions, LLC, and Community Specialty Pharmacy, LLC, all subsidiaries of the Company, sued Blythe Global Advisors, LLC in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida, asserting state statutory claims of improper UCC-1 filings, tortious interference with business relationships, slander of title, and state RICO violations. The Company claims that Blythe improperly filed a UCC-1 against the assets of these subsidiaries, when it only had a right file such a lien against the Company and that the filing impeded Wellgistics, LLC’s ability to secure a necessary credit line, causing substantial damages. Blythe filed a motion to dismiss that remains pending. The Company is vigorously prosecuting its claims. Note 14. SUBSEQUENT EVENTS Eighth Amendment to MIPA dated July 24, 2025 On July 24, 2025, the Company and the other parties to the Wellgistics MIPA further amended the Wellgistics MIPA to convert a cash payment of $ 8,139,259 owed by the Company to the former owners of Wellgistics, LLC, into approximately 7,606,785 shares of the Company’s common stock at the prevailing 3-day average weighted market price of $ 1.07 per share (the “Converted Shares”). The Company issued the Converted Shares effective July 24, 2025. The Eighth Amendment also increased the principal amount of the promissory notes issuable to the Wellgistics sellers from $ 15 million to $ 17.5 million, payable over three years with final maturity in July 2028. Hudson EPA As of July 25, 2025, the Company had exercised its put right to the aggregate 3,426,254 shares issuable to the investor currently registered for resale on its active Form S-1 Registration Statement (SEC File No. 333-286981). On August 13, 2025, the Company delivered written notice to the Investor of its election to terminate the Hudson EPA. Note Payable issued by Tollo Health, LLC, Tollo Health Inc. and Gerald Commissiong Tollo Health, LLC, Tollo Health Inc. and Gerald Commissiong (“ Borrowers ”), issued a Revolving Credit Note to Testing123, LLC dated March 12, 2025, in the original principal amount of up to $ 750,000 (the “Note”), pursuant to a Revolving Line of Credit Agreement. The obligations of the Borrowers under the Note were secured pursuant to the terms of the Pledge and Security Agreement of even date therewith and guaranteed by the Company pursuant to that certain Corporate Guaranty of even date therewith (the “ Guaranty ” and collectively with the Note, the Agreement, the Security Agreement, and the other documents executed in connection therewith, the “ Transaction Documents ”). Pursuant to the Transaction Documents, the initial advance under the Agreement in the amount of $ 444,600 was made on March 12, 2025. The term of the loan for this draw is two (2) months from the funding date, with a contractual maturity date of May 12, 2025. Interest accrues at the rate of five percent ( 5 %) per month, compounding monthly, and in the event of default, the applicable interest rate increases to ten percent ( 10 %) per month, also compounding monthly. Failure to pay any amount due on or before its maturity constitutes an event of default. The Borrowers defaulted on payment thereby migrating the liability to the Company as guarantor. On July 25, 2025, the Company paid the total amount owing under the obligation as Guarantors for the Borrowers in the amount of $ 640,647 in principal and interest directly to Testing123, LLC. One Big Beautiful Bill Act On July 4, 2025, President Donald J. Trump signed into law H.R. 1, the “One Big Beautiful Bill Act” (“The Act”). The Act includes many significant provisions, such as permanent extension of certain provisions of the Tax Cuts and Jobs Act, modifications to international tax provisions, and restoration of expensing for domestic research and development, among others. Certain provisions which impact the Company are effective starting in 2025, while others are not effective until 2026. The Company is currently evaluating the impact that The Act will have on its consolidated financial statements. 23