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Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-03-24 · 119 added, 196 removed, 130 unchanged (71% of the section changed)

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Cautionary Notice Regarding Forward Looking Statements

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including those relating to our liquidity, our belief that we will not have sufficient cash and borrowing capacity to meet our working capital needs for the next 12 months without further financing, our expectations regarding acquisitions and new lines of business, gross profit, gross margins and capital expenditures.

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including those relating to our liquidity, our expectations regarding the sufficiency of our cash and borrowing capacity to meet our working capital needs for the next 12 months, our expectations regarding acquisitions and new lines of business, gross profit, gross margins and capital expenditures.

Additionally, words such as “expects,” “anticipates,” “intends,” “believes,” “will,” “would,” “plan,” “vision” and similar words are used to identify forward-looking statements.

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This discussion should be read in conjunction with the other sections of this Report, including “ Risk Factors, ” “ Description of Business ” and the Financial Statements attached hereto pursuant and the related exhibits.

The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Report.

The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition.

The discussion should be read along with our financial statements and notes thereto contained elsewhere in this annual report.

The discussion should be read along with our financial statements and notes thereto contained elsewhere in this Annual Report on Form 10-K.

The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties.

Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.

e-Commerce Operations:

Leveraging the e-Commerce experience of the Company’s management team and the Company’s existing e-Commerce platforms, the Company has embarked upon the rollout of a state-of-the-art e-Commerce platform to collaborate with businesses to optimize their ability to sell their goods online, domestically, and internationally, and enabling customers and partners to optimize their e-commerce presence and revenue, which we expect will become the focus of the Company’s business in the future.

Historically, the business of NextPlat has been the provision of a comprehensive array of Satellite Industry communication services, and related equipment sales.

The Company operates two main e-commerce websites as well as 25 third-party e-commerce storefronts such as Alibaba, Amazon and Walmart.

These e-Commerce venues form an effective global network serving thousands of consumers, enterprises, and governments.

NextPlat has announced its intention to broaden its e-commerce platform and is implementing comprehensive systems upgrades to support this initiative.

e-Commerce transaction volumes at the Company’s owned and operated websites in the UK and United States continued to grow throughout the year setting monthly performance records.

Healthcare Operations:

Through our wholly owned subsidiaries, we currently own and operate five pharmacies, which generate most of our pharmacy revenues, which is derived from dispensing medications to our patients.

We also provide patient health risk reviews and free same-day and next-day delivery.

In addition, our healthcare operations provide Third Party Administration (“TPA”), data management, COVID-19 related diagnostics and vaccinations, prescription pharmaceuticals, compounded medications, telepharmacy services, anti-retroviral medications, medication therapy management, the supply of prescription medications to long-term care facilities, medication adherence packaging, contracted pharmacy services for 340B covered entities under the 340B Drug Discount Pricing Program, and health practice risk management.

Our healthcare operations are focused on improving the lives of patients with complex chronic diseases through a patient and provider engagement and their partnerships with payors, pharmaceutical manufacturers, and distributors.

We offer a broad range of solutions to address the dispensing, delivery, dosing, and reimbursement of clinically intensive, high-cost drugs.

Our pharmacies also provide contracted pharmacy services for 340B covered entities under the 340B Drug Discount Pricing Program.

Under the terms of these agreements, our pharmacies act as a pass-through for reimbursements on prescription claims adjudicated on behalf of the 340B covered entities in exchange for a dispensing fee per prescription.

These fees vary by the covered entity and the level of services we provide.

Our healthcare operations are focused on complex chronic diseases that generally require multiyear or lifelong therapy, which drives recurring revenue and sustainable growth.

Our pharmacy services revenue growth is from expanding their services, new drugs coming to market, new indications for existing drugs, volume growth with current clients, and additions of new customers due to their focus on higher patient engagement, benefit of free delivery to the patient, and clinical expertise.

The pharmacies also expanded revenue growth through the signing of new contract pharmacy service and data management contracts with 340B covered entities.

Our healthcare operations also provide data management and TPA services for 340B covered entities, pharmacy analytics, and programs to manage HEDIS Quality Measures including Medication Adherence.

These offerings cater to the need for frontline providers to understand best practices, patient behaviors, care management processes, and the financial mechanisms behind these decisions.

ClearMetrX provides data access, and actionable insights that providers and support organizations can use to improve their practice and patient care.

ClearMetrX’s TPA services include management of wholesale accounts, patient eligibility with regard to the 340B drug program, development and review of 340B policies and procedures, and management of receivables.

Business Acquisition of Progressive Care, LLC (formerly Progressive Care Inc.)

On August 30, 2022, NextPlat entered into a Securities Purchase Agreement (the “SPA”) between NextPlat and Progressive Care Inc.

(“Progressive Care”), under which NextPlat, its Executive Chairman and Chief Executive Officer, Charles M.

Fernandez, board member, Rodney Barreto, and certain other investors invested an aggregate of $8.3 million into Progressive Care.

In connection with the SPA, NextPlat purchased 3,000 newly issued Units of Progressive Care valued at $6 million, with each Unit comprised of one share of Progressive Care’s Series B Convertible Preferred Stock, $0.001 par value, and one Investor Warrant to purchase a share of Series B Convertible Preferred Stock at an exercise price of $2,000 The Investor Warrants may also be exercised, in whole or in part, by means of a cashless exercise.

The Convertible Preferred Stock has a stated value of $2,000 per share and each Preferred Stock share has the equivalent voting rights of 500 common stock shares (after giving effect to the Reverse Stock Split described below).

Each share of Series B Convertible Preferred Stock is convertible at any time at the option of the holder into shares of Progressive Care Common Stock shares determined by dividing the stated value by the conversion price which is $4.00 (after giving effect to the Reverse Stock Split described below).

Also, pursuant to the SPA, Messrs.

Fernandez and Barreto were nominated for election to Progressive Care’s Board of Directors.

In addition, on August 30, 2022, NextPlat Corp, Messrs.

Fernandez and Barreto, and certain other investors (collectively, the “NextPlat Investors”) purchased from Iliad Research a Secured Convertible Promissory Note, dated March 6, 2019, made by Progressive Care to Iliad (the “Note”).

The accrued and unpaid principal and interest under the note at the time of the purchase was approximately $2.8 million.

Upon the completion the purchase of the Note, the NextPlat Investors and Progressive Care entered into a Modification Agreement pursuant to which the Note was amended and restated with modified terms, including a modified conversion price of $4.00 per share of common stock (after giving effect to the Reverse Stock Split described below), and a mandatory conversion upon the later to occur of (a) the completion of the Progressive Care’s reverse stock split, and (b) the listing of Progressive Care’s common stock on a national exchange, including the Nasdaq Capital Market, the Nasdaq Global Market, or the New York Stock Exchange (the “A&R Note”).

As consideration for their entry into the Debt Modification Agreement, Progressive Care issued 105,000 shares of its common stock to the NextPlat Investors, of which NextPlat, Messrs.

Fernandez and Barreto, received 45,653, 18,261, and 18,261 shares, respectively.

On September 13, 2022, the Progressive Care Board of Directors appointed Charles M.

Fernandez as Chairman of the Board of Directors and Rodney Barreto as the Vice Chairman of the Board of Directors.

On November 11, 2022, Progressive Care’s Board appointed Mr.

Fernandez to serve as the new Chief Executive Officer of Progressive Care.

On December 29, 2022, Progressive Care filed a Certificate of Amendment to Articles of Incorporation (the “Amendment to Articles”) with the Secretary of State of the State of Delaware.

Pursuant to the Amendment to Articles, each 200 shares of Progressive Care’s common stock outstanding was converted into one share of common stock (the “Reverse Stock Split”) and the number of shares of common stock that Progressive Care is authorized to issue was reduced to 100 million (the “Reduction in Authorized Stock”).

The Reverse Stock Split and the Reduction in Authorized Stock were approved by the Progressive Care Board of Directors and the shareholders.

On May 5, 2023, NextPlat entered into a Securities Purchase Agreement (the “SPA”) with Progressive Care, pursuant to which NextPlat purchased 455,000 newly issued units of securities from Progressive Care (the “Units”) at a price per Unit of $2.20 for an aggregate purchase price of $1 million (the “Unit Purchase”).

Each Unit consisted of one share of common stock, par value $0.0001 per share, of Progressive Care and one warrant to purchase a share of common stock (the “PIPE Warrants”).

The PIPE Warrants have a three-year term and are immediately exercisable.

Each PIPE Warrant is exercisable at $2.20 per share of common stock.

On May 9, 2023, the Companies closed the transactions contemplated in the SPA.

Progressive Care received cash proceeds of $880,000, net of placement agent commission of $70,000 and legal fees of $50,000.

Simultaneous with the closing of the Unit Purchase on May 9, 2023, Progressive Care entered into a Debt Conversion Agreement (the “DCA”) with the NextPlat Investors relating to the A&R Note.

Pursuant to the DCA, the NextPlat Investors agreed to convert the total approximately $2.9 million of outstanding principal and accrued and unpaid interest under the A&R Note to Progressive Care common stock at a conversion price of $2.20 per share (the “Debt Conversion”).

Of the total 1,312,379 shares of Progressive Care common stock issued pursuant to the Debt Conversion, NextPlat received 570,599 shares, Charles M.

Fernandez received 228,240 shares, and Rodney Barreto received 228,240 shares.

In addition, each of the NextPlat Investors also received a warrant to purchase one share of Progressive Care common stock for each share of Progressive Care common stock they received upon conversion of the A&R Note (the “Conversion Warrants”).

The Conversion Warrants have a three-year term and were immediately exercisable.

Each Conversion Warrant is exercisable at $2.20 per share of Common Stock.

In addition, Progressive Care issued 330,000 warrants to certain existing Progressive Care investors to induce them to approve the Unit Purchase (the “Inducement Warrants”).

Fernandez and Rodney Barreto received Inducement Warrants to purchase 190,000 and 30,000 shares of Common Stock, respectively.

The Inducement Warrants have a three-year term and were immediately exercisable.

Each Inducement Warrant is exercisable at $2.20 per share of Progressive Care common stock.

On July 1, 2023, NextPlat, along with Messrs.

Fernandez and Barreto, exercised certain common stock purchase warrants issued by Progressive Care (the “RXMD Warrants”) and were issued shares of Progressive Care common stock.

NextPlat exercised RXMD Warrants on a cashless basis and was issued 402,269 shares of Progressive Care common stock.

NextPlat also exercised RXMD Warrants on a cash basis and paid consideration in the amount of $506,000 and was issued 230,000 shares of Progressive Care common stock.

Fernandez exercised RXMD Warrants on a cashless basis and was issued 211,470 shares of Progressive Care common stock.

Barreto exercised RXMD Warrants on a cashless basis and was issued 130,571 shares of Progressive Care common stock.

At the time of exercise, all of the above RXMD Warrants were in-the-money.

After the exercise of the RXMD Warrants, NextPlat and Messrs.

Fernandez and Barreto collectively owned approximately 53% of Progressive Care’s voting common stock.

Also, on July 1, 2023, NextPlat and entered into a voting agreement with Messrs.

Fernandez and Barreto whereby at any annual or special shareholders meeting of Progressive Care’s stockholders, and whenever the holders of Progressive Care’s common stock act by written consent, Messrs.

Fernandez and Barreto agreed to vote all of the shares of Progressive Care common stock (including any new shares acquired after the date of the voting agreement or acquired through the conversion of securities convertible into Progressive Care common stock) that they own, directly or indirectly, in the same manner that NextPlat votes its shares of Progressive Care common stock.

The voting agreement is irrevocable and perpetual in term.

As a result of the common stock purchase warrant exercises and the entry into the voting agreement, NextPlat concluded that there was a change in control in Progressive Care.

As of July 1, 2023, NextPlat has the right to control more than 50 percent of the voting stock of Progressive Care through the concurrent common stock purchase warrant exercises and voting agreement noted above.

Beginning on July 1, 2023, the Company changed the accounting method for its investment in Progressive Care, which prior to July 1, 2023 had been accounted for as an equity method investment to consolidation under the voting interest model in FASB ASC Topic 805.

Therefore, Progressive Care became a consolidated subsidiary of the Company on July 1, 2023.

On April 12, 2024, NextPlat entered into a Merger Agreement and Plan of Reorganization (the “Merger Agreement”) with Progressive Care Inc, and Progressive Care LLC, a Nevada limited liability company and a direct, wholly owned subsidiary of NextPlat (“Merger Sub”).

Pursuant to the terms of the Merger Agreement, upon the approval of NextPlat’s and Progressive Care’s shareholders, Progressive Care would merge with and into Merger Sub (the “Merger”), with Merger Sub being the surviving entity of the Merger.

The result of which being that Progressive Care would become a wholly-owned subsidiary of NextPlat.

On September 13, 2024, the shareholders of each of NextPlat and Progressive Care approved the Merger Agreement and the transactions contemplated thereby.

On October 1, 2024, at 12:01 Eastern time, the Merger became effective and Progressive Care merged with and into Mergers Sub and thereby became a wholly owned subsidiary of NextPlat.

In connection with the Merger, each share of Progressive Care common stock that was issued and outstanding immediately prior to the effective time of the Merger was converted into 1.4865 shares of NextPlat common stock, and each warrant to purchase Progressive Care common stock that was outstanding and unexercised immediately prior to the effective time of the Merger automatically converted into a warrant to purchase shares of NextPlat common stock with each such warrant having and being subject to the same terms and conditions (including vesting and exercisability terms) as were applicable to such Progressive Care warrant immediately before the effective time.

Business Acquisition of Outfitter Satellite, Inc.

On March 25, 2024, the Company entered into a Stock Purchase Agreement with James T.

McKinley, pursuant to which the Company agreed to purchase all of the issued and outstanding shares of common stock of Outfitter Satellite, Inc.

(“Outfitter”).

The closing of the transaction occurred on April 1, 2024.

Outfitter provides consumers, commercial and government customers, with advanced satellite-based connectivity solutions from leading brands, including Iridium, Inmarsat and Globalstar.

Distribution of Our Products Through Alibaba

On July 13, 2021, we announced that our Global Telesat Communications (“GTC”) unit entered into an agreement with Alibaba.com, the B2B (Business-to-Business) e-commerce website owned and operated by Alibaba Group Holding Limited, also known as Alibaba Group (NYSE:

9988), a Chinese multinational technology company specializing in e-commerce, retail, internet, and technology.

GTC is a Gold-level Supplier on Alibaba.com, the world’s largest Business-to-Business (B2B) e-commerce website.

Under the agreement, GTC significantly expanded its 24/7/365 e-commerce presence with the launch of its latest global storefront on Alibaba.com on which it offers a range of satellite IoT and connectivity products.

These include our specialized satellite tracking products, some of which operate using the Company’s many ground station-based network processors and can be used to track and monitor the location of cars, trucks, trailers, boats, containers, animals, and other remote assets.

We currently list approximately 500 products on Alibaba.com.

The agreement will continue on a year-to-year basis.

Additionally, we have an agreement with Tmall.com, a subsidiary of Alibaba, which allows us to list and sell our range of OPKO healthcare products.

We will also sell our Florida Sunshine vitamins through Tmall.com.

Executive Overview

NextPlat Corp operates through two primary business segments:

e-Commerce Operations and Healthcare Operations.

Our strategy is focused on expanding global e-Commerce distribution of satellite communication products and services while continuing to grow our healthcare platform through pharmacy services and healthcare data analytics solutions.

Our e-Commerce Operations segment distributes satellite communications equipment, connectivity solutions, and related services through proprietary websites and third-party marketplaces.

These products enable voice, data, tracking, and emergency communications in remote environments where traditional terrestrial communications infrastructure may be unavailable or unreliable.

We generate revenue primarily from the sale of satellite communication devices and related equipment, as well as recurring revenue from satellite airtime and connectivity service plans.

Our Healthcare Operations segment operates through Progressive Care LLC and its pharmacy and healthcare technology subsidiaries.

This segment provides prescription pharmaceuticals, medication therapy management services, long-term care pharmacy support, and healthcare analytics solutions.

The segment also participates in the federal 340B Drug Pricing Program through contract pharmacy arrangements, which contributes meaningfully to pharmacy segment margins.

2025 Operating Environment

During 2025, we continued to expand our global e-commerce distribution capabilities and healthcare services platform.

Our operations were influenced by several factors, including evolving global supply chain conditions, inflationary pressures affecting product sourcing and logistics costs, and ongoing regulatory developments affecting healthcare reimbursement and pharmaceutical pricing.

In our e-Commerce segment, growth continues to be driven by increasing demand for satellite communications solutions among commercial enterprises, government organizations, and individual users operating in remote or infrastructure-limited environments.

The expansion of global e-Commerce marketplaces has allowed us to broaden our international customer base while increasing the availability of our products across multiple geographic markets.

In our healthcare segment, pharmacy operations continue to focus on improving medication adherence among patients with chronic conditions, expanding long-term care pharmacy services, and increasing utilization of healthcare analytics and data management solutions provided through our ClearMetrX platform.

Results of Operations

During 2025, we continued to execute on our strategy of expanding our global e-Commerce distribution platform while maintaining our healthcare services operations.

Our results for the year reflect modest growth in our e-Commerce segment and significant improvement in our overall net loss, despite lower revenues in our healthcare segment.

For the year ended December 31, 2025, we generated net revenues of approximately $54.3 million, compared with $66.1 million for year ended December 31, 2024, representing a decrease of approximately $11.8 million, or 18%, year over year.

The decline in revenue was primarily attributable to a reduction of approximately $12.6 million in Healthcare Operations, largely reflecting lower pharmacy 340B contract revenue and reduced pharmacy prescription revenues during the year.

These decreases were partially offset by continued growth in our e-Commerce Operations segment, where revenues increased by approximately $0.8 million, reflecting ongoing demand for satellite communications products and related connectivity services across our global e-commerce platforms.

Gross margins were approximately 20% for the year ended December 31, 2025, compared with 26% in 2024.

The decrease in gross margin primarily reflects lower 340B contract revenues within the healthcare segment as well as higher airtime service costs in the e-Commerce segment following the expiration of a service provider airtime contract at the end of 2024.

Despite the decline in overall net revenues and gross margins, our operating performance improved significantly during 2025.

Loss before other income decreased by approximately $14.0 million compared with the prior year, primarily due to the absence of significant non-recurring impairment charges that were recognized during 2024.

As a result, net loss declined substantially year-over-year, reflecting improved operating efficiency and the non-recurrence of these impairment-related charges.

Liquidity, Capital Resources, and Strategic Focus

Our operations require significant working capital to support inventory purchases, pharmaceutical procurement, and the continued development of our technology platforms.

While we have historically funded operations through a combination of available cash and equity issuances, we may require additional capital to support future growth initiatives, including potential acquisitions and expansion of our healthcare and e-commerce operations.

Management continues to evaluate strategic alternatives and operational initiatives intended to strengthen our liquidity position and support long-term growth.

Our strategy is focused on expanding our global e-Commerce distribution of satellite communications products and services while continuing to grow our healthcare platform through pharmacy services and healthcare analytics capabilities.

We intend to pursue growth through a combination of organic expansion and selective acquisitions that complement our existing operations and enhance our technology-enabled service offerings.

Critical Accounting Policies and Estimates

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Healthcare Operations:

We recognize product sales from prescriptions dispensed to patients (customers) at the time the drugs are physically delivered to a customer or when a customer picks up their prescription, which is the point in time when control transfers to the customer.

We recognize product revenue from prescriptions dispensed to patients (customers) at the time the drugs are physically delivered to a customer or when a customer picks up their prescription, which is the point in time when control transfers to the customer.

340B dispensing fees are a component of 340B contract revenue, which are recognized at the time the drugs are received by the patient, by either delivery or customer pick up.

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For third-party medical insurance and other claims, authorization is obtained to ensure payment from the customer’s insurance provider before the medication is dispensed to the customer.

Authorization is obtained for these sales electronically and a corresponding authorization number is issued by the customer’s insurance provider.

Pharmacy benefit manager (“PBM”) fees, including direct and indirect remuneration (“DIR”) fees, are assessed by payers and charged at the time of the settlement of a pharmacy claim.

DIR fees are fees charged by PBMs to pharmacies for network participation as well as periodic reimbursement reconciliations.

Through December 31, 2023, the Company accrued an estimate of PBM fees, including DIR fees, which are assessed or expected to be assessed by payers at some point after adjudication of a claim, as a reduction of prescription revenue at the time revenue is recognized.

Changes in the estimate of such fees are recorded as an adjustment to revenue when the change becomes known.

Effective January 1, 2024, all PBMs began charging DIR fees at the time of the settlement of a pharmacy claim.

Authorization is obtained electronically and a corresponding authorization number is issued by the customer’s insurance provider.

We record unearned revenue for prescriptions that are filled but not yet delivered at period-end.

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Customer returns are nominal.

Prescription revenues exceeded 80% of total revenue for all periods presented.

We recognize revenue from TPA services as we satisfy the services under the TPA contract with a 340B covered entity.

TPA services provided to covered entities include consulting services, accounting and reconciliation of contract pharmacy billings, and various compliance services.

Billings for most prescription orders are with third-party payers, including Medicare, Medicaid, and insurance carriers.

Customer returns are nominal.

Stock-Based Compensation

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The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation.

This update is intended to reduce cost and complexity and to improve financial reporting for share-based payments issues to non-employees (for example, service providers, external legal counsel, suppliers, etc.).

The ASU expanded the scope of ASC 718, Compensation - Stock Compensation, which previously only included share-based payments issued to employees, to also includes share-based payments issues to non-employees for goods and services.

Consequently, the accounting for share-based payment to non-employees and employees will be substantially aligned.

This standard became effective for the financial statements issued by public companies for the annual and interim periods beginning after December 15, 2018.

Management adopted this standard on January 1, 2019.

The Company estimated the fair value of stock options granted using the Black-Scholes option-pricing formula.

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Actual results may differ significantly from those estimates.

Significant estimates made by management include, but are not limited to, assumptions used to calculate stock-based compensation, fair value of net assets acquired in business combinations, common stock, warrants and options issued for services, net realizable value of accounts receivables and other receivables, the useful lives of property and equipment and intangible assets determining the potential impairment of long-lived assets and goodwill, the estimate of the fair value of the lease liability and related right of use assets, pharmacy benefit manager (“PBM”) fee estimates, inventory reserve estimates, and the estimates of the valuation allowance on deferred tax assets and corporate income taxes.

Significant estimates made by management include, but are not limited to, assumptions used to calculate stock-based compensation, fair value of net assets acquired in business combinations, common stock warrants and options issued for services, net realizable value of accounts receivables and other receivables, the useful lives of property and equipment and intangible assets, assumptions used in determining the potential impairment of long-lived assets, including intangible assets and goodwill, the estimate of the fair value of the lease liability and related right of use assets, inventory reserve estimates, and the estimates of the valuation allowance on deferred tax assets and corporate income taxes.

Effect of Exchange Rate on Results

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Results of Operations

The results of operations for the year ended December 31, 2024, include the full year results for Progressive Care compared to the results of operations for the prior year ended December 31, 2023, which include results of operations for Progressive Care for the period from the date of acquisition, July 1, 2023, to December 31, 2023.

Our revenues were as follows (in thousands):

Years Ended December 31,

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Loss before other income

Loss before income taxes and equity in net loss of affiliate

Loss before equity in net loss of affiliate

Gain on remeasurement of fair value of equity interest in affiliate prior to acquisition

Equity in net loss of affiliate

Net loss attributable to noncontrolling interest

Net loss attributable to NextPlat Corp

For the years ended December 31, 2024 and 2023, we recognized overall revenue from operations of approximately $65.5 million and $37.8 million, respectively, an overall increase of approximately $27.7 million for the year ended December 31, 2024, when compared to the year ended December 31, 2023.

The increase in revenue was primarily attributable to an increase of approximately $24.9 million from the Healthcare Operations reportable segment as a result of the Progressive Care acquisition on July 1, 2023, and approximately $2.8 million as it relates to the e-Commerce Operations reportable segment as a result of the acquisition of Outfitter.

Gross profit margins for the years ended December 31, 2024 and 2023 were approximately 24.8% and 30.0%, respectively.

The decrease in gross profit margin was primarily attributable to the Healthcare Operations reportable segment as it continues to experience pressures from medication price increases along with reimbursement rates not keeping pace with those increases.

Our loss before other income increased by approximately $0.4 million for the year ended December 31, 2024, when compared to the year ended December 31, 2023, as a result of the increase in operating expenses of approximately $5.3 million, offset by the increase in gross profit of approximately $4.9 million.

The increase in operating expenses included non-recurring expenses and losses that are not indicative of our regular operations, including impairment losses of approximately $13.7 million and $13.9 million for the years ended December 31, 2024 and 2023, respectively, and approximately $3.4 million of non-recurring professional fees and other expenses associated with litigation and our merger with Progressive Care in the current year.

Without those non-recurring items, loss before other income would have been approximately $6.6 million for the year ended December 31, 2024 compared to $9.3 million for the year ended December 31, 2023.

Our revenues were as follows (in thousands):

Other expense (income)

Loss before income taxes

Deemed dividend

Net loss attributable to non-controlling interest

Net loss attributable to common stockholders

For the years ended December 31, 2025 and 2024, we recognized overall net revenue from operations of approximately $54.3 million and $66.1 million, an overall decrease of approximately $11.8 million for the year ended December 31, 2025, when compared to the year ended December 31, 2024, respectively.

The decrease in revenue was primarily attributable to a decrease of approximately $12.6 million from Healthcare Operations, which was partially offset by an increase of approximately $0.8 million as from e-Commerce Operations.

Gross margins for the years ended December 31, 2025 and 2024 were approximately 20% and 26%, respectively.

The decrease in gross margin was attributable to the overall decline in gross profit in both operating segments.

The gross margin for Healthcare Operations decreased during 2025 to approximately 19% from 26% when compared to 2024 and was primarily attributable to the decrease in pharmacy 340B contract revenue.

The gross margin for e-Commerce Operations decreased during 2025 to approximately 23% from 25% when compared to 2024 due to a service provider airtime contract that expired on December 31, 2024, which introduced new airtime costs beginning January 1, 2025, and temporary rate reductions for some customers affected by ongoing service interruptions.

Our loss before other income decreased by approximately $14.0 million for the year ended December 31, 2025, when compared to the year ended December 31, 2024, primarily as a result of the decrease in non-recurring impairment losses of approximately $13.7 million for the year ended December 31, 2024.

Our net revenues were as follows (in thousands):

Years Ended December 31,

Sales of products, net:

e-Commerce revenue

Pharmacy prescription and other revenue, net of PBM fees

Revenues from services:

Pharmacy 340B contract revenue

Revenues, net

Revenues, net for the year ended December 31, 2024, consisted of e-Commerce sales of satellite phones, tracking devices, accessories, and airtime plans, pharmacy prescription revenue, and 340B contract revenues.

For the year ended December 31, 2024, overall revenues were approximately $65.5 million compared to $37.8 million for the year ended December 31, 2023, an increase of approximately $27.7 million or 73.4%.

Total e-Commerce revenues were approximately $13.8 million and $11.0 million for the years ended December 31, 2024 and 2023, respectively, an increase of approximately $2.8 million mainly due to the Outfitter acquisition on April 1, 2024.

Total pharmacy prescription and 340B contract revenues were approximately $51.7 million and $26.8 million for the years ended December 31, 2024 and 2023, respectively.

The increase is due to the full year results for Progressive Care included in the 2024 period versus six months results during the same period in 2023 due to the Progressive Care acquisition occurring on July 1, 2023.

The pharmacy filled approximately 514,000 prescriptions for the year ended December 31, 2024, compared to approximately 489,000 prescriptions for the year ended December 31, 2023 (prescription count for the year ended December 31, 2023 includes prescriptions filled prior to the acquisition of Progressive Care that occurred on July 1, 2023).

Our net revenues consist of e-Commerce sales of satellite phones, tracking devices, accessories, and airtime plans;

pharmacy prescription revenues;

and pharmacy 340B contract revenues.

For the year ended December 31, 2025, overall revenues were approximately $54.3 million compared to $66.1 million for the year ended December 31, 2024, a decrease of approximately $11.8 million or 17.8%.

Total e-Commerce revenues were approximately $14.6 million and $13.8 million for the years ended December 31, 2025 and 2024, respectively, an increase of approximately $0.8 million primarily due to an increase in airtime and hardware sales of approximately $0.4 million and a favorable foreign currency impact of approximately $0.4 million.

Total pharmacy prescription and other revenue, net of PBM fees, were approximately $35.7 million and $41.9 million for the years ended December 31, 2025 and 2024, respectively, a decrease of approximately $6.2 million.

The decrease was attributable to the decrease in the number of total prescriptions filled of approximately $11.3 million, which was offset by the increase in reimbursement rates per prescription filled of approximately $5.1 million.

During the year ended December 31, 2025, we filled approximately 374,000 prescriptions versus 473,000 in the prior year period.

The decline in prescription volume during the current year period was influenced in part by the continued changes in provider relationships and shifts in patient flow due to insurance network adjustments or provider decisions to align with different pharmacy partners.

Pharmacy 340B contract revenue was approximately $4.0 million and $10.4 million for the years ended December 31, 2025 and 2024, respectively, a decrease of approximately $6.4 million, due to certain relationships transitioning to other pharmacy partners, some covered entities opened in-house pharmacies, and another covered entity no longer participates in the 340B program.

Operating Expenses

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Depreciation and amortization

Intangible asset amortization

Loss on settlement of litigation

Total operating expenses

Total operating expenses for the year ended December 31, 2024, were approximately $39.9 million, an increase of approximately $5.3 million or 15.4%, from total operating expenses for the year ended December 31, 2023, of approximately $34.5 million.

Factors contributing to the increase are described below.

Selling, general and administrative expenses were approximately $7.9 million and $9.9 million for the years ended December 31, 2024 and 2023, respectively, a decrease of approximately $2.1 million or 20.7%.

The decrease for the year ended December 31, 2024, was mainly attributable to a decrease in stock-based compensation of approximately $3.8 million due to non-recurring grants fully vested, offset by an increase of approximately $1.5 million relating to operating expenses of the Healthcare Operations as a result of the Progressive Care acquisition on July 1, 2023 and approximately $0.4 million relating to the Outfitter acquisition on April 1, 2024.

Salaries, wages and payroll taxes were approximately $11.4 million and $6.6 million for the years ended December 31, 2024 and 2023, respectively, an increase of approximately $4.8 million or 72.2%.

The increase was mainly attributable to the Healthcare Operations as a result of the Progressive Care acquisition as of July 1, 2023, of approximately $5.0 million, and approximately $0.3 million as it relates to the Outfitter acquisition on April 1, 2024, offset by a decrease in e-Commerce Operations salaries and wages of approximately $0.5 million.

The Company performed a goodwill impairment test during the year ended December 31, 2024 and it was determined that the carrying amount of goodwill exceeded its fair value resulting in the Company recording a non-cash impairment charge of approximately $0.7 million, recorded in the Healthcare Operations reporting segment.

As of December 31, 2024, there was no remaining goodwill as it relates to the Healthcare Operations reporting segment.

Refer to Note 12.

Goodwill and Intangible Assets for additional details on the impairment charges, valuation methodologies, and inputs used in the fair value measurements.

The Company performed a long-lived assets impairment test as it relates to the Healthcare Operations reporting segment during the year ended December 31, 2024 and it was determined that the carrying amount of the asset group exceeded its fair value resulting in the Company recording a non-cash impairment charge to certain long-lived assets, primarily intangible assets, of approximately $12.8 million during the year ended December 31, 2024.

Refer to Note 12.

Goodwill and Intangible Assets for additional details on the impairment charges, valuation methodologies, inputs used in the fair value measurements, and the changes in intangible assets for the period.

The Company recorded approximately $0.1 million of impairment loss related to the write-down of a right-of-use asset as a result of taking the leased equipment out of service and not returning to service in the future.

This was recorded in the Healthcare Operations reporting segment for the year ended December 31, 2024.

Professional fees were approximately $4.4 million and $2.0 million for the years ended December 31, 2024 and 2023, respectively, an increase of approximately $2.4 million or 122.2%.

The increase was mainly attributable to the settlement of litigation and associated legal fees with the e-Commerce Operations of approximately $1.3 million, legal and consulting fees as it relates to the merger of Progressive Care of approximately $0.6 million, and other professional and accounting fees associated with the Healthcare Operations of approximately $0.5 million.

Management does not expect these increases in professional fees to be recurring expenses in the foreseeable future.

Depreciation and amortization expenses were approximately $2.5 million and $2.1 million for the years ended December 31, 2024 and 2023, respectively, an increase of approximately $0.4 million or 18.4%.

The increase was attributable to a full year of depreciation and amortization as it relates to the Healthcare Operations reportable segment of approximately $0.5 million compared to six months of depreciation and amortization in the prior year related to the Healthcare Operations reportable segment from the Progressive Care acquisition on July 1, 2023.

Total Other Income

Our total other income decreased by approximately $0.4 million for the year ended December 31, 2024 when compared to the same period in 2023, and was mainly due to an increase of interest received of approximately $0.1 million, a change in foreign currency rates of approximately $0.2 million, and gain on disposal of property and equipment of approximately $0.1 million, which was offset by the non-recurring write off of aged payables of approximately $0.3 million in the prior year.

Equity Method Investment

Prior to the Progressive Care acquisition in July 2023, our investment in Progressive Care was accounted for by the equity method of accounting, and we recorded a net loss in the equity of Progressive Care of approximately $1.4 million, and a gain on the remeasurement of fair value of equity method investment in Progressive Care of approximately $11.4 million.

Effective July 1, 2023, Progressive Care became a consolidated subsidiary of the Company, which resulted in a change in the accounting treatment from equity method to consolidation.

Total operating expenses for the year ended December 31, 2025 were approximately $19.9 million, a decrease of approximately $20.1 million or 50.3% from total operating expenses for the year ended December 31, 2024, of approximately $40.0 million.

Factors contributing to the decrease are described below.

Selling, general and administrative expenses remained relatively consistent at approximately $6.0 million and $6.2 million for the year ended December 31, 2025 and 2024, respectively.

The $0.2 million decrease was primarily due to a decrease in computer equipment purchases.

Salaries, wages and payroll taxes were approximately $10.7 million and $13.3 million for the years ended December 31, 2025 and 2024, respectively, a decrease of approximately $2.6 million or 19.5%.

The decrease was attributable to the decrease of stock-based compensation for non-recurring grants fully vested of approximately $1.1 million, a decrease in executive compensation of approximately $0.4 million, and a decrease of approximately $1.1 million resulting from a reduction in total headcount.

No impairment loss was recognized during the year ended December 31, 2025.

Impairment loss for the year ended December 31, 2024 of approximately $13.7 million was related to a goodwill impairment of approximately $0.7 million, long-lived assets, primarily intangible assets, impairment of approximately $12.8 million, and the write-down of a right-of-use asset as a result of taking the leased equipment out of service and not returning to service in the future of approximately $0.1 million.

Professional fees include expenses for legal fees, accounting services fees, consulting fees, and public company expenses.

Professional fees were approximately $2.3 million and $4.4 million for the years ended December 31, 2025 and 2024, respectively, a decrease of approximately $2.1 million or 48.6%.

The decrease was mainly attributable to the decrease in accounting services fees of approximately $0.2 million, a decrease in director fees of approximately $0.2 million, and a decrease in legal and consulting fees of approximately $1.7 million.

Depreciation and amortization was approximately $0.5 million and $0.8 million for the years ended December 31, 2025 and 2024, respectively.

Intangible asset amortization was approximately $0.1 million and $1.7 million for the years ended December 31, 2025 and 2024, respectively, a decrease of approximately $1.6 million or 94.0%.

The decrease was attributable to the decrease in the carrying amount of intangible assets when compared to the prior year period.

Intangible assets related to our Healthcare Operations were fully impaired throughout the year ending December 31, 2024.

Intangible assets, net as of December 31, 2025 were related to our e-Commerce Operations due to the Outfitter acquisition in April 2024.

Loss on settlement of litigation was approximately $0.3 million for the year ended December 31, 2025 - for further information regarding litigations see “Note 20.

Commitments and Contingencies” included in the Notes to Consolidated Financial Statements.

Total Other (Expense) Income

Our total other (expense) income changed by approximately $2.0 million for the year ended December 31, 2025 when compared to the same period in 2024.

The change was primarily due to a loss on sale or disposal of property and equipment recognized in the amount of approximately $0.2, compared to a gain on sale or disposal of property and equipment in the amount of approximately $0.1 million in the prior year period;

a decrease in interest earned of approximately $0.4 million due to the decrease in cash on hand;

a contingent loss on settlement of litigation of approximately $1.8 million;

an asset write-off of approximately $0.1 million in the prior year period;

and a favorable change in foreign currency rates of approximately $0.3 million.

We recorded net losses of approximately $10.5 million and $22.5 million for the years ended December 31, 2025 and 2024, respectively.

The change in the net loss was a result of the factors described above.

Comprehensive Loss

We recorded comprehensive losses for foreign currency translation adjustments of approximately $3,000 and $22,000 for the years ended December 31, 2024 and 2023, respectively.

The change was primarily attributable to exchange rate variances.

Liquidity and Capital Resources

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Our working capital was approximately $15.0 million at December 31, 2025.

As of the date of this report, the Company’s existing cash resources are sufficient to support planned operations for the next 12 months.

Our principal uses of cash include (i) purchases of pharmaceutical inventory and e-Commerce product inventory, (ii) operating expenses, including payroll, professional services, and public company expenses, (iii) technology development and platform investments, and (iv) potential acquisitions and strategic investments.

We continue to closely monitor our cash position and operating expenditures.

In response to recent trends and in alignment with our long-term strategic goals, we continue to implement a series of cost reduction measures aimed at improving operational efficiency and preserving liquidity.

These measures include optimizing our delivery process and renegotiating certain vendor agreements.

While we remain committed to investing in key growth initiatives, we are prioritizing financial discipline to ensure we maintain adequate liquidity to support ongoing operations and strategic objectives.

In addition, management is exploring various options with respect to strategic alternatives to diversify our business operations, including opportunities in additional services, joint ventures, and other collaborative structures.

As of the date of filing this Annual Report on Form 10-K, the Company’s existing cash resources are sufficient to support planned operations for the next 12 months.

As a result, management believes that the existing financial resources are sufficient to continue operating activities for at least one year past the issuance date of the financial statements.

Our long-term cash requirements (beyond the next 12 months from filing this Annual Report on Form 10-K) include lease obligations, note payable obligations, and potential capital investments in technology development and strategic acquisitions.

We anticipate funding these long-term requirements through cash generated from operations, available cash on hand, and, if necessary, proceeds from future equity or debt financings.

We do not have any material commitments for capital expenditures as of December 31, 2025.

The following table summarizes our cash flows (in thousands):

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Cash Flow from Operating Activities

Net cash flows used by operating activities totaled approximately $5.5 million and $3.6 million for the years ended December 31, 2024 and 2023, respectively, and changed by approximately $1.9 million period over period.

Net cash used in operating activities totaled approximately $6.1 million and $5.5 million for the years ended December 31, 2025 and 2024, respectively, and changed by approximately $0.7 million period-over-period.

The unfavorable change of approximately $0.7 million was primarily attributable to the following:

an increase in cash received from e-Commerce Operations of approximately $2.8 million due to year-over-year sales increase;

an increase in cash received from Healthcare Operations of approximately $40.9 million was mainly due to the full year results of Progressive Care included in 2024 versus six months results during 2023 as a result of the acquisition as of July 1, 2023;

an increase in cash received from interest income and other sources of approximately $0.4 million and primarily represents the full year of interest income on money market accounts in 2024 versus five months in 2023;

an increase in cash paid for inventory purchases and other costs of revenue of approximately $43.6 million, which was mainly due to the full year results of Progressive Care included in 2024 versus six months results during 2023 as a result of the acquisition as of July 1, 2023, Outfitter acquisition as of April 1, 2024, and an increase in inventory purchases for e-Commerce Operations as a result of increased sales;

an increase in cash paid for salaries and related expenses of approximately $4.8 million, offset by a decrease in cash paid for other recurring operational expenses of approximately $6.2 million, and mainly due to the full year results of Progressive Care included in 2024 versus six months results during 2023 as a result of the acquisition as of July 1, 2023, and Outfitter acquisition as of April 1, 2024;

an increase in cash paid for income taxes of approximately $0.1 million;

and an increase in cash paid for merger costs and other non-recurring expenses of approximately $3.4 million.

an increase in cash received from e-Commerce Operations of approximately $5.3 million due to year-over-year revenue increase;

a decrease in cash received from Healthcare Operations of approximately $17.6 million due to year-over-year revenue decrease;

a decrease in cash received from interest income and other sources of approximately $0.4 million;

a decrease in cash paid for inventory purchases and other costs of revenue of approximately $1.8 million;

a decrease in cash paid for salaries and related expenses of approximately $1.1 million due to the decrease in executive compensation and decreased headcount;

a decrease in cash paid for other recurring operating expenses of approximately $6.5 million due to the timing of payables and decreases in general legal and consulting fees;

a decrease in cash paid for other non-recurring expenses of approximately $2.6 million due to litigation matters and merger costs in the prior year period.

Cash Flow from Investing Activities

Net cash flows (used in) provided by investing activities were approximately ($1.0 million) and $5.2 million for the years ended December 31, 2024 and 2023, respectively.

The cash outflow in 2024 was attributable to the acquisition of Outfitter, compared to the cash inflow in 2023 due to the acquisition of Progressive Care.

Net cash provided by investing activities for the year ended December 31, 2025 was approximately $0.2 million, and was attributable to sales of vehicles for our Healthcare Operations delivery fleet.

Net cash used in investing activities for the year ended December 31, 2024 was approximately $1.0 million, primarily attributable to the acquisition of Outfitter.

Cash Flow Financing Activities

Cash provided by financing activities of approximately $0.1 for the year ended December 31, 2024 was primarily attributable to the exercise of warrants and capital contributions of non-controlling interest, offset by repayment of notes payable.

Cash provided by financing activities of approximately $5.9 million for the year ended December 31, 2023 was primarily attributable to the proceeds from a capital raise and exercise of warrants, offset by repayment of notes payable.

April 2023 Private Placement of Common Stock

On April 5, 2023, the Company entered into a securities purchase agreement with an accredited investor (the “Investor”) for the sale by the Company in a private placement of 3,428,571 shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”).

The offering price of the Common Stock was $1.75 per share, the closing price of the Common Stock on April 4, 2023.

On April 11, 2023, the Private Placement closed.

Upon the closing of the Private Placement, the Company received gross proceeds of approximately $6.0 million.

The Company sold the Common Stock to the Investor in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act and corresponding provisions of state securities or “blue sky” laws.

The Investor represented that it is acquiring the Common Stock for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof.

Accordingly, the Common Stock has not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

Acquisition of Progressive Care Inc.

See the section above entitled “ - Overview - Business acquisition of Progressive Care, Inc.

Net cash used in financing activities was approximately $0.2 million for the year ended December 31, 2025, primarily attributable to the repayment of notes payable and repurchases of common shares.

Net cash provided by financing activities was approximately $0.1 million for the year ended December 31, 2024, primarily attributable to the repayment of notes payable, offset by capital contributions received.

Share Repurchase Program

On December 16, 2024, our Board of Directors authorized a $2.0 million share repurchase program valid for one year.

We may repurchase shares from time to time under the program through various methods, including in open market transactions, block trades, privately negotiated transactions, and otherwise.

The timing, as well as the number and value of shares repurchased under the program, will depend on a variety of factors.

We are not obligated to purchase any shares under the repurchase program, and the program may be suspended, modified, or discontinued at any time without prior notice.

During the year ended December 31, 2025, we repurchased approximately $0.1 million of common stock and had approximately $1.9 million remaining under the share repurchase program as of that date.

The repurchased shares are held as treasury stock.

The authorized share repurchase program expired on December 16, 2025 and has not been extended as of the date of filing this Annual Report on Form 10-K.

Off-balance Sheet Arrangements

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

What changed 10-K

Item 7. Management’s Discussion and Analysis