MEDS 10-K & 10-Q changes, risk factors and insider trading
DataMeds AI, Inc. · Nasdaq · Wholesale-Drugs, Proprietaries & Druggists' Sundries · CIK 2030763 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our common stock is subject to a Nasdaq minimum bid price deficiency notice, and failure to regain compliance could result in the delisting of our common stock from The Nasdaq Capital Market.”
New heading “We are involved in litigation with former management relating to equity awards, and the outcome of this matter could adversely affect our financial condition.”
Largest changes
“Our common stock is subject to a Nasdaq minimum bid price deficiency notice, and failure to regain compliance could result in the delisting of our common stock from The Nasdaq Capital Market.”see in full comparison
“If our common stock were delisted, it may be traded on the OTC Markets or another over-the-counter trading platform, which could further reduce liquidity and investor confidence. There can be no assurance that we will regain compliance with the Bid Price Rule, that we will remain eligible for any additional compliance period, or that we will maintain compliance with any other Nasdaq continued listing requirements. The outcome of any appeal to a Nasdaq hearings panel, if necessary, is uncertain.”see in full comparison
“We are involved in litigation with former management relating to equity awards, and the outcome of this matter could adversely affect our financial condition.”see in full comparison
“Litigation is inherently uncertain, and we cannot predict the outcome or timing of this matter. If we are unsuccessful, we may be required to satisfy these obligations, which could have a material adverse effect on our financial condition, liquidity and results of operations. In addition, the litigation process may result in significant legal expenses and diversion of management’s attention.”see in full comparison
“To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days prior to June 8, 2026. If we do not regain compliance within the initial compliance period, we may be eligible for an additional 180-day compliance period, provided we meet all applicable continued listing requirements and notify Nasdaq of our intention to cure the deficiency, including through a reverse stock split if necessary. …”see in full comparison
“A delisting of our common stock from The Nasdaq Capital Market could have significant adverse consequences, including:”see in full comparison
Full comparison: every changed paragraph (19)
We
were incorporated in 2022 for the purpose of acquiring and integrating various companies in the health care industry. Our limited operating
history and rapidly evolving business make it difficult to evaluate our current business, future prospects and plan for growth. We will
continue to encounter significant risks and uncertainties frequently experienced by growing companies in rapidly changing and heavily
regulated industries, such as attracting new customers to our products and services; retaining customers and encouraging them to utilize
new products and services that we make available; competition from other companies; hiring, integrating, training and retaining skilled
personnel; developing new solutions; determining prices for our solutions; unforeseen expenses; challenges in forecasting accuracy; and
new or adverse regulatory developments affecting aspects of the healthcareaerospace and defense industry. Further, because we depend, in part,
on market acceptance
of our newer and future products and services, it is difficult to evaluate trends that may affect our business and
whether our expansion
will be profitable. If we have difficulty launching new products or services, then our reputation may be harmed
and our business, financial
condition and results of operations may be adversely affected. If our assumptions regarding these and other
similar risks and uncertainties
that relate to our business, which we use to plan our business, are incorrect or change as we gain more
experience operating as a combined
company, or if we do not address these challenges successfully, our operating and financial results
could differ materially from our
expectations and our business could suffer.
Wellgistics Health will derive a portion of Wellgistics Health’s sales from prescription drug sales reimbursed through prescription drug plans administered by PBM companies. PBM companies typically administer multiple prescription drug plans that expire at various times and provide for varying reimbursement rates, and often limit coverage to specific drug products on an approved list, known as a formulary, which might not include all of the approved drugs for a particular indication. Changes in pricing and other terms of Wellgistics Health’s contracts with PBM companies can significantly impact Wellgistics Health’s results of operations. There can be no assurance that Wellgistics Health will participate in any particular PBM company’s pharmacy provider network in any particular future time period or on terms reasonably acceptable to Wellgistics Health. If Wellgistics Health’s participation in the pharmacy provider network for a prescription drug plan administered by one or more of the large PBM companies is restricted or terminated, Wellgistics Health expects that Wellgistics Health’s sales would be adversely affected, at least in the short-term. If Wellgistics Health is unable to replace any such lost sales, either through an increase in other sales or through a resumption of participation in those plans, Wellgistics Health’s operating results could be materially and adversely affected. If Wellgistics Health exits a pharmacy provider network and later resumes participation, there can be no assurance that Wellgistics Health will achieve any particular level of business on any particular pace, or that all clients of the PBM company will choose to include us again in the pharmacy network for their plans, initially or at all. In addition, in such circumstances Wellgistics Health may incur increased marketing and other costs in connection with initiatives to regain former patients and attract new patients covered by such plans. .
Digital
pharmacies both national and regional have been increasingly entering the market over the course of the last decade with well-known players
such as Roman, Lemonaid Health, ForHims, TruePill, and Amazon’s acquisition of PillPack. At the regional level, Wellgistics Health
has seen the emergence of companies like Cule,Capsule, Alto, and many others outlined below looking to penetrate markets and gain access to
lives lives
by looking for additional points of differentiation. The competitive healthcare landscape along with macroeconomic pressures has
also also
seen increased chapter 11 filings for bankruptcy and or other means of dissolution including Medley, NowRx, AmazonCare, Haven (i.e.,
joint venture of Amazon, Berkshire Hathaway, and JPMorgan Chase) over recent years. Many of these companies leverage access to telehealth
services and backend partnerships with mail order pharmacies to provide consumers with cash-paying models for access to niche services.
The evolution of centralized digital patient support networks with network pharmacies has also recently been gaining steam.
The
portion of total consumer expenditures from various business sectors completing online shopping has drastically changed over the last
two decades. Wellgistics Health is seeing a complete paradigm shift, as consumer sentiment and behavior has moved towards mobile application
use. The COVID-19 pandemic was anthe accelerant, and Wellgistics Health expects this pace of increase exponentially. Consumers are now
able able
to have more have more and more services delivered to their homes or work and more recently Wellgistics Health is seeing this same
push push
with healthcare services. Moreover, prescription related deliveries have become the new normal versus waiting for pharmacy pick-up
which which
is often not as efficient or convenient for this everchanging mindset and expectation of the consumer.
Our common stock is subject to a Nasdaq minimum bid price deficiency notice, and failure to regain compliance could result in the delisting of our common stock from The Nasdaq Capital Market.
On December 10, 2025, we received a deficiency letter from the Nasdaq Listing Qualifications Staff notifying us that the closing bid price of our common stock had fallen below the minimum $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) for the 30 consecutive business day period between October 27, 2025 and December 9, 2025. We were granted an initial compliance period of 180 calendar days, or until June 8, 2026, to regain compliance with the Bid Price Rule.
To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days prior to June 8, 2026. If we do not regain compliance within the initial compliance period, we may be eligible for an additional 180-day compliance period, provided we meet all applicable continued listing requirements and notify Nasdaq of our intention to cure the deficiency, including through a reverse stock split if necessary. If we are unable to regain compliance during any applicable compliance period, our common stock will be subject to delisting from The Nasdaq Capital Market, at which point we may appeal the delisting determination to a Nasdaq hearings panel.
A delisting of our common stock from The Nasdaq Capital Market could have significant adverse consequences, including:
If our common stock were delisted, it may be traded on the OTC Markets or another over-the-counter trading platform, which could further reduce liquidity and investor confidence. There can be no assurance that we will regain compliance with the Bid Price Rule, that we will remain eligible for any additional compliance period, or that we will maintain compliance with any other Nasdaq continued listing requirements. The outcome of any appeal to a Nasdaq hearings panel, if necessary, is uncertain.
We are involved in litigation with former management relating to equity awards, and the outcome of this matter could adversely affect our financial condition.
We have initiated litigation against certain former members of management seeking, among other things, rescission and cancellation of certain equity awards and related arrangements. As of December 31, 2025, obligations associated with these arrangements are reflected as liabilities on our balance sheet in the aggregate amount of approximately $[17.5 million].
Litigation is inherently uncertain, and we cannot predict the outcome or timing of this matter. If we are unsuccessful, we may be required to satisfy these obligations, which could have a material adverse effect on our financial condition, liquidity and results of operations. In addition, the litigation process may result in significant legal expenses and diversion of management’s attention.
Although a favorable outcome could result in the reversal of all or a portion of these liabilities, no assurance can be given that we will prevail.
Our
directors and officers, including Brian Norton, Chief Executive Officer, and Vishnu Balu, Chief Financial Officer, have years of significant
experience in the pharmaceutical industry and other sectors related to our business.
Our success depends upon the continued service of
these directors and officers. The loss of any of these directors and officers might
significantly delay or prevent the achievement of
our business objectives and could materially harm our business, financial condition
and results of operations.
Wellgistics Health’s ability to successfully implement Wellgistics Health’s comprehensive strategy of leveraging product warehousing/distribution while simultaneously facilitating the hub technology platform to transfer prescriptions to Wellgistics Health’s network of independent partner pharmacies will be crucial to Wellgistics Health’s operations and financial condition. Wellgistics Health’s wholesale operations will enable pharmaceutical companies to have a single entity for contracting which assists with minimizing product returns and eliminates chargebacks. Now that the Wellgistics LLC Acquisition has closed, Wellgistics Health’s warehouse’s distribution capabilities assist manufacturers with preventing inventory loss in the form of having to sell short-dated products at a lower margin and or potentially destroy expired and unusable products. Wellgistics Health’s portfolio of products along with Wellgistics Health’s sales strategy will enable Wellgistics Health to move niche specialty products that have a distinct place in the market and help maximize returns.
For
certain payment methods, including credit and debit cards, Wellgistics Health will pay interchange and other fees, which could increase
over time and raise Wellgistics Health’s operating costs. Wellgistics Health will rely on third parties such as Stripe to provide
payment processing services, including the processing of credit cards, debit cards, and other forms of electronic payment. Wellgistics
Health will not store credit card information on file for Wellgistics Health’s mobile technology to remain in payment card industryPCI compliance, however,
Wellgistics Health’s other business entities may store this information on file for clients, partners, and vendors. If these companies
become unable to provide these services, or if their systems are compromised, it could disrupt Wellgistics Health’s business. The
payment methods that Wellgistics Health will offer also subject Wellgistics Health to potential fraud and theft by persons who seek to
obtain unauthorized access to or exploit any weaknesses that may exist in the payment systems. If Wellgistics Health fails to comply
with applicable rules or requirements, or if data is compromised due to a breach or misuse of data relating to Wellgistics Health’s
payment systems, Wellgistics Health may be liable for costs incurred by payment card issuing banks and other third parties or subject
to fines and higher transaction fees, or Wellgistics Health’s ability to accept or facilitate certain types of payments could be
impaired. In addition, Wellgistics Health’s reputation could suffer, and Wellgistics Health’s customers could lose confidence
in certain payment types, which could result in higher costs and/or reduced sales and materially and adversely affect Wellgistics Health’s
results of operations.
The
privacy and data security regulations under HIPAA,HIPPA, as amended, contain detailed requirements concerning (1) the use and disclosure of
individually identifiable patient health information (“PHI”); (2) computer and data security standards regarding the protection
of electronic PHI including storage,
utilization, access to and transmission; and (3) notification to individuals and the federal government
in the event of a breach of unsecured
PHI. HIPAA covered entities and business associates must implement certain administrative, physical,
and technical security standards
to protect the integrity, confidentiality and availability of certain electronic health information
received, maintained, or transmitted.
Violations of the HIPAA privacy and Security Rules may result in civil and criminal penalties.
In the event of a breach, a HIPAA covered
entity must promptly notify affected individuals of a breach. All breaches must also be reported
to the federal government. Where a breach
affects more than 500 individuals, additional reporting obligations apply. In addition to federal
enforcement, State attorneys general
may bring civil actions on behalf of state residents for violations of the HIPAA privacy and Security
Rules, obtain damages on behalf
of state residents, and enjoin further violations. Many states also have laws that protect the privacy
and security of confidential,
personal information, which may be similar to or even more stringent than HIPAA. Some of these state laws
may impose fines and penalties
on violators and may afford private rights of action to individuals who believe their personal information
has been misused. We expect
increased federal and state privacy and security enforcement efforts.
Political,
economic and regulatory influences are subjecting the healthcare industry to significant changes that could adversely affect Wellgistics
Health’s results of operations. In recent years, the healthcare industry has undergone significant changes in an effort to reduce
costs and government spending. These changes include an increased reliance on managed care; cuts in certain Medicare and Medicaid funding
in the U.S. and the funding of governmental payers in foreign jurisdictions; consolidation of competitors, suppliers and other market
participants; and the development of large, sophisticated purchasing groups. In addition, the InflationIRA Reduction Act of 2022 (the “IRA”)
took effect in 2023. The IRA includes,
among other things, policies that are designed to have a direct impact on drug prices and reduce
drug spending by the federal government.
For example, the IRA requires drug manufacturers to pay rebates to Medicare if they increase
prices faster than inflation for drugs used
by Medicare beneficiaries. The mechanics of the rebate calculation would mimic those of the
Medicaid rebate, but the expansion of inflation-based
rebates may further complicate pricing strategies, particularly as to the launch
of Wellgistics Health’s new products. The IRA
could have the effect of reducing the prices Wellgistics Health can charge and reimbursement
Wellgistics Health receives for Wellgistics
Health’s products, thereby reducing Wellgistics Health’s profitability.
The
trading market for Wellgistics Health’s securities iswill be influenced by the research and reports that industry or securities analysts
may publish about Wellgistics Health, its business, market or competitors. Securities and industry analysts do not currently, and may never
never, publish research
on Wellgistics Health. If no securities or industry analysts commence coverage of Wellgistics Health, Wellgistics
Health’s share
price and trading volume would likely be negatively impacted. If any of the analysts who may cover Wellgistics Health
change their recommendation
regarding Wellgistics Health commonCommon stockStock adversely, or provide more favorable relative recommendations about
Wellgistics Health’s
competitors, the price of shares of Wellgistics Health commonCommon stockStock would likely decline. If any analyst who
may cover Wellgistics Health
were to cease coverage of Wellgistics Health or fail to regularly publish reports on it, Wellgistics Health
could lose visibility in
the financial markets, which in turn could cause its share price or trading volume to decline.
Management's Discussion & Analysis (MD&A)
New heading “Nasdaq Minimum Bid Price Deficiency”
New heading “Sales and Marketing Expense”
New heading “Goodwill and Intangible Assets Impairment”
New heading “Integral Health Inc. (“Integral Health”)”
New heading “Merchant Cash Advances”
New heading “Note payable – owners of Wellgistics, LLC”
New heading “Note Payable – Third party”
New heading “Revolving line of credit – Wellgistics”
New heading “Seller Promissory Note - Wellgistics”
Removed heading “Research and Development Expense”
Largest changes
“Goodwill and Intangible Assets Impairment”see in full comparison
“Of the total impairment charge, $2,026,006 related to the write-down of goodwill, attributable to the Wellgistics distribution acquisition. The remaining $10,528,260 related to the impairment of identifiable intangible assets, consisting of $5,314,027 attributable to customer relationships, $4,565,048 attributable to trademarks, both arising from the Wellgistics distribution acquisition, and $649,185 attributable to capitalized software associated with the Wellgistics Tech & Hub operations.”see in full comparison
“If the Company is unable to regain compliance with the Bid Price Rule during any applicable compliance period, its common stock will be subject to delisting from The Nasdaq Capital Market. A delisting of the Company’s common stock could significantly reduce the liquidity of the Company’s shares, limit its ability to raise capital through equity offerings, and have a material adverse effect on the Company’s business, financial condition, and results of operations. …”see in full comparison
“On April 8, 2025, the Company issued a Promissory Note to Strategic EP, LLC in the principal amount of $250,000. The note bears interest at a rate of 10% per annum. Under the terms of the agreement, the outstanding principal and accrued interest are payable on the earlier of (i) April 8, 2026, or (ii) within five business days following the Company’s receipt of aggregate gross proceeds of at least $10 million from one or more equity or debt financings. …”see in full comparison
“Net cash used in operating activities for the year ended December 31, 2025, was $10,855,029, primarily reflecting the Company’s net loss of $101,274,530 , partially offset by non-cash charges totaling $80,514,712 and $10,132,667 of net cash provided by changes in operating assets and liabilities. …”see in full comparison
“The impairment charge reflects a decline in the estimated fair value of these assets, driven primarily by lower-than-expected future cash flows from the acquired businesses. As a result of this testing, the carrying values of the affected goodwill and intangible assets were written down to their respective fair values, reflecting current economic conditions and the financial performance of the acquired operations since the date of acquisition.”see in full comparison
Full comparison: every changed paragraph (83)
You
should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated
financial statements and related notes appearing elsewhere in this Annual Report.Report of Form 10-K. This discussion and analysis contains
forward-looking forward-looking
statements that involve risks, uncertainties and assumptions. See “Cautionary Note Regarding Forward-Looking Statements.”
We have no obligation to update any of these forward-looking statements. Our actual results may differ materially from those anticipated
in these forward-looking statements due to many factors, including, but not limited to, those set forth under the heading “Risk
Factors” in this AnnualForm Report.10-K. Factors that could cause or contribute to such differences include, but are not limited to, capital
expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below
and elsewhere in this AnnualForm Report.10-K. Unless the context otherwise requires, references in this section to “the Companycompany”,
“we,”
“us,” “our,” “Wellgistics Health” refer to Wellgistics Health, Inc. after giving
effect to the Wood
Sage Acquisition and the Wellgistics, LLC Acquisition.
Prior
to closing the Wood Sage Acquisition, Wellgistics Health did not generate revenues. Upon closing of the Wood Sage Acquisition and the
Wellgistics Acquisition, our revenues are derived from (i) pharmaceutical dispensing of products, (ii) care management services we deliver
to patients and offer to pharmaceutical manufacturing clients, and (iii) SaaS fees for use of our platform technology services, and (iv)
product procurement and distribution to independent pharmacies. We closed the Wood Sage Acquisition in June 2024 and closed the Wellgistics
Acquisition in August 2024. However, while Wellgistics Health, Wood Sage, and Wellgistics LLC previously were separate entities, each
of the three companies have shared common office space, comarketed solutions to the marketplace, and leveraged financial and back-office
support prior to June 2024.2024 Our
ability to source and distribute pharmaceutical products to our pharmacy and network of independent pharmacy partners throughout the
U.S. will adequately position us to negotiate greater discounts based on market share. Our digital pharmacy, including its hub and clinical
services technology platform, will be poised to add significant value in this key specialty-lite market by providing patients access
and convenience, while providing partners with ready-to-go market solutions with big data.
Our
ability to source and distribute pharmaceutical products to our pharmacy and network of independent pharmacy partners throughout the
U.S. will adequately position us to negotiate greater discounts based on market share. Our digital pharmacy, including its hub and clinical
services technology platform, will be poised to add significant value in this key specialty-lite market by providing patients access
and convenience, while providing partners with ready-to-go market solutions with big data.
Research
and Development Expense
Our
research and development expenses will consist primarily of internal and external expenses incurred in connection with our research activities
and development programs. These expenses will include, but are not limited to, software development, integrations with pharmacy management
systems, development supplies, testing materials, personnel costs (including salaries and benefits), depreciation expense, overhead allocation,
(consisting of various support and facility costs), stock-based compensation and consulting fees. Research and development costs will
be expensed as incurred.
Sales
and marketing expenses will consist of personnel and personnel-related expenses, including stock-based compensation for our business development
development team as well as trade events participation, public relations, white paper development, social media, pharmacy trade and patient materials,
materials, advertising, sales collateral, syndicated data fees, and other marketing expenses. We expect to increase our sales and marketing activities
activities to grow our customer base and increase market share. We also expect that our sales and marketing expenses will increase over
time as
we continue to hire additional personnel to scale the business.
General
and administrative expenses currently consist of business development, consulting, and information technology development and support
and third-party software expenses. On October 17, 2022, Wood Sage entered into the MSA, to cover the costs of ongoing software development
and all other operational-related costs to ensure that the development and operations would continue seamlessly without interruption
or delays.
InGeneral
the future, general and administrative expenses will consist primarily of personnel-related costs (including salaries, bonuses, benefits,
and stock-based compensation
expense) for personnel in executive, finance, accounting, corporate development and other administrative
functions. General and administrative
expenses will also include legal fees, professional fees paid for accounting, auditing, consulting,
tax, and investor relations services,
insurance costs, facility costs not otherwise included in research and development expenses. Following
Wellgistics Health’s registration
as a public company, also include public company expenses such as costs associated with compliance
with the rules and regulations of
the SEC and the stock exchange.
Nasdaq Minimum Bid Price Deficiency
On December 10, 2025, the Company received a deficiency letter from the Nasdaq Listing Qualifications Staff notifying the Company that the closing bid price of its common stock had fallen below the minimum $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) for the 30 consecutive business day period between October 27, 2025 and December 9, 2025. The Company was granted an initial compliance period of 180 calendar days, or until June 8, 2026, to regain compliance.
To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days prior to June 8, 2026. If the Company does not regain compliance within the initial compliance period, it may be eligible for an additional 180-day compliance period, provided it meets all applicable continued listing requirements and notifies Nasdaq of its intention to cure the deficiency, including through a reverse stock split if necessary.
If the Company is unable to regain compliance with the Bid Price Rule during any applicable compliance period, its common stock will be subject to delisting from The Nasdaq Capital Market. A delisting of the Company’s common stock could significantly reduce the liquidity of the Company’s shares, limit its ability to raise capital through equity offerings, and have a material adverse effect on the Company’s business, financial condition, and results of operations. The Company is currently evaluating its options to regain compliance; however, there can be no assurance that the Company will regain compliance with the Bid Price Rule or maintain compliance with any other Nasdaq continued listing requirements.
Net revenues for the year ended December 31, 2025, were $23,337,860 compared to $18,128,831 for the year ended December 31, 2024. The increase in revenues was primarily driven by the inclusion of Wellgistics Pharmacy and Wellgistics Tech & Hub operations following the Company’s acquisitions of Wood Sage LLC on June 16, 2024 and Wellgistics LLC on August 30, 2024. The year ended December 31, 2025 reflects a full twelve months of post-acquisition activity, whereas the prior-year period included only limited revenues generated following the August 30, 2024 closing of the Wellgistics acquisition..
Cost of revenues for the year ended December 31, 2025, totaled $29,764,279, compared to $16,361,517 for the year ended December 31, 2024. The increase was primarily attributable to the full-year inclusion of cost of sales from the acquired subsidiaries, compounded by liquidity constraints that restricted the Company’s ability to procure inventory efficiently. Additionally, the Company’s constrained liquidity position limited its ability to procure inventory at favorable terms, resulting in higher per-unit costs and contributing to cost of revenues exceeding net revenues for the period. Furthermore, the Company wrote off approximately $6.0 million in aged inventory.
Gross profit for the year ended December 31, 2025, was a gross loss of $(6,426,419), compared to gross profit of $1,767,314 for the year ended December 31, 2024. The shift to a gross loss was primarily the result of cost of revenues exceeding net revenues during the period. This was driven by liquidity constraints that restricted the Company’s ability to procure inventory efficiently, caused delays in product shipments, and prevented the Company from achieving the purchasing scale necessary to improve margins. Furthermore, the Company created a reserve for approximately $6.0 million in aged inventory. As a result, gross margin declined to (27.5)% for the year ended December 31, 2025, from 9.7% in the prior-year period.
These liquidity constraints and the resulting sales impact were most pronounced in the second half of 2025, when temporary cash flow shortages reduced the Company’s purchasing capacity and led to delayed product shipments. Management expects gross margin to improve as liquidity stabilizes and inventory purchasing normalizes in the upcoming years.
The following is a summary of the disaggregation of revenue for the year ended December 31, 2025 and 2024:
Net
sales were $18,128,831 for the year ended December 31, 2024, consisting of revenues derived from Wellgistics Pharmacy operations after
the closings of the Wood Sage Acquisition on June 16, 2024, and the Wellgistics Acquisition on August 30, 2024. Cost of revenues for
the same period was $16,361,517. The Company did not earn revenue for the year ended December 31, 2023.
General
and administrative expenses for the year ended December 31, 2025, were
$70,332,827, compared to $6,797,782 for the year ended December 31, 2024, compared to $2,880,603 for the year ended December
31, 2023.2024. The significant increase was primarily duedriven toby $54,048,525
of non-cash stock-based compensation recognized during the acquisitionperiod. The remainder of the increase reflects the full-year consolidation
of Wellgistics LLC in 2024. General and administrativeits expensessubsidiaries includefollowing the August 2024 acquisition, including personnel
costs, costs and professional fees includingsuch as
audit, taxtax, and legal.legal services.
Of the $54,794,525 in non-cash stock-based compensation, $24,300,000 related to the accelerated vesting of 9,000,000 restricted shares granted to the Chief Executive Officer pursuant to the Company’s Amended and Restated 2023 Equity Incentive Plan. The remaining $29,748,525 related to the issuance of common stock and restricted stock units to directors, employees, and consultants in exchange for services rendered during the year.
Additionally, general and administrative expenses for the year ended December 31, 2025 included a loss of $140,647 recognized in connection with the Company’s satisfaction of its guaranty obligation under a revolving credit note issued by Tollo Health, LLC. This item is non-recurring in nature and is reflected within general and administrative expenses in the accompanying consolidated statements of operations.
Sales and Marketing Expense
Sales and marketing expenses were $1,224,521 for the year ended December 31, 2025, compared to $0 for the year ended December 31, 2024. The increase reflects the Company’s expanded promotional activities and marketing initiatives following the acquisitions of Wood Sage and Wellgistics. For the year ended December 31, 2025, Sales and marketing expenses also included $746,000 of non-cash stock-based compensation related to the issuance of common stock to sales and marketing advisors in exchange for services rendered.
Depreciation and amortization for the year ended December 31, 2025, totaled $3,211,064, compared to $1,114,664 for the year ended December 31, 2024. The increase reflects the full twelve months of activity in the 2025 period, compared to only a partial post-acquisition period in 2024 following the closings of the Wood Sage LLC and Wellgistics LLC acquisitions. Of the total depreciation and amortization expense, $3,052,260 for the year ended December 31, 2025, and $1,047,048 for the year ended December 31, 2024, related to the amortization of intangible assets identified and recorded in connection with those acquisitions. The remaining $158,804 and $67,616 for the years ended December 31, 2025 and 2024, respectively, represented depreciation of fixed assets acquired as part of the Wellgistics LLC acquisition.
Goodwill and Intangible Assets Impairment
For the year ended December 31, 2025, the Company recognized a non-cash impairment charge of $12,554,266 related to goodwill and intangible assets arising from the acquisitions of Wood Sage LLC and Wellgistics LLC in 2024. As part of its annual impairment review, the Company tested the carrying value of goodwill and identifiable intangible assets, including customer relationships and trademarks, against their estimated fair values.
Of the total impairment charge, $2,026,006 related to the write-down of goodwill, attributable to the Wellgistics distribution acquisition. The remaining $10,528,260 related to the impairment of identifiable intangible assets, consisting of $5,314,027 attributable to customer relationships, $4,565,048 attributable to trademarks, both arising from the Wellgistics distribution acquisition, and $649,185 attributable to capitalized software associated with the Wellgistics Tech & Hub operations.
The impairment charge reflects a decline in the estimated fair value of these assets, driven primarily by lower-than-expected future cash flows from the acquired businesses. As a result of this testing, the carrying values of the affected goodwill and intangible assets were written down to their respective fair values, reflecting current economic conditions and the financial performance of the acquired operations since the date of acquisition.
As this is a non-cash charge, the impairment did not impact the Company’s liquidity or cash position; however, it had a material effect on the Company’s reported financial results for the year ended December 31, 2025.
Depreciation
and amortization was $1,114,664 for the year ended December 31, 2024, compared to $0 for the year ended December 31, 2023. This included
amortization of $1,047,048, which relates to intangible assets identified from acquisitions of Wood Sage and Wellgistics, LLC. Depreciation
expense of $67,616 relates to fixed assets acquired from the Wellgistics acquisition.
InterestOther
ExpenseExpense, net
Other expenses, net for the year ended December 31, 2025, totaled $7,525,433, compared to $711,094 for the year ended December 31, 2024. The significant increase was primarily attributable to higher interest expense incurred in connection with the Company’s expanded debt obligations and a loss on debt extinguishment arising from the amendment of the Wellgistics acquisition note and the refinancing of certain other debt facilities during the year.
Interest expense for the year ended December 31, 2025, was $4,579,556, compared to $831,467 for the year ended December 31, 2024. The increase reflects the Company’s higher outstanding debt balances during the period, including promissory notes, a revolving line of credit, Agile Capital debt, and merchant cash advance agreements entered into or assumed in connection with the Company’s acquisition and financing activities.
The Company also recognized a total loss on debt extinguishment of $2,987,922 for the year ended December 31, 2025, consisting of two components. Of this amount, $1,353,663 arose from the Eighth Amendment to the Membership Interest Purchase Agreement (“MIPA”) with Wellgistics LLC, executed on July 24, 2025. Under the amendment, the principal balance of the related promissory note was increased from $15,000,000 to $17,500,000. The original note, including $1,146,337 of accrued interest through July 24, 2025, was derecognized and replaced with a new promissory note recorded at the present value of its future cash flows. The difference between the carrying amount of the extinguished debt and the fair value of the new note was recognized as a loss on debt extinguishment in accordance with applicable accounting guidance. $653,582 related to losses recognized in connection with two debts conversion agreements entered into on October 30, 2025, pursuant to which outstanding indebtedness of Woodsage LLC was converted to shares of Company’s common stock at $0.70 per share, with losses arising as the fair value of shares issued exceeded the carrying amount of debt extinguished. The remaining $980,677 of the total loss on debt extinguishment related to the refinancing of Agile Capital debt and merchant cash advance agreements that occurred periodically throughout the year.
Interest
expense was $831,467 and $15,081 for the years ended December 31, 2024 and 2023, respectively. Interest expense in 2024 was incurred
on Wellgistics Health’s outstanding notes and merchant cash advance agreement.
Our
future cash needs are expected to include cash for operating activities, working capital, purchases of property and equipment, strategic
investments, development, and expansion of facilities. We will fund our operations primarily through operating cash flows, the issuance
of debt and the sale
of equity securities. We expect to generate positive cash flow from the operations in 2025 due to the annual revenue
generated from Wood
Sage and Wellgistics LLC. In order to proceed with our business plan, we may need to raise additional funds through
the issuance of debt,
equity or other commercial arrangements that may not be available to us when needed or on terms that we deem favorable.
To the extent
we raise additional capital through the sale of equity or convertible securities, our stockholders’ ownership interests
will be
diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common
common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or
or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring
declaring dividends. If we are unable to obtain sufficient financial resources, our business, financial condition and results of operations may
may be materially and adversely affected. We may be required to delay, limit, reduce or terminate parts of its strategic business plan or
or future commercialization efforts. There can be no assurance that we will be able to obtain financing on acceptable terms.
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.
On October 30, 2025, the Company entered into a Debt Conversion Agreement (the “Integra Health DCA”) with Integra Health Inc., Blue Cap Acquisitions LLC, and WoodSage. Pursuant to the agreement, the outstanding indebtedness of $1,300,000 under the Note was converted into 1,857,143 shares of the Company’s common stock at a stated conversion price of $0.70 per share. The fair value of the shares issued on the conversion date was $0.786 per share. As a result, the total fair value of the equity issued exceeded the carrying amount of the debt extinguished by approximately $159,714. Accordingly, the Company recognized a loss on debt extinguishment of $159,714 for the year ended December 31, 2025, which is included in other expense in the consolidated statements of operations. Upon conversion, the Note was fully satisfied and extinguished.
Merchant Cash Advances
On March 18, 2025, the Company entered into a merchant cash advance (“MCA”) agreement with Cedar Advance LLC pursuant to which it received gross funding of $1,900,000 in exchange for the sale of future receivables totaling $2,840,000. Of the $1,900,000 gross funding, $1,118,250 was applied directly to satisfy amounts outstanding under a prior MCA arrangement, and the remaining $781,750 was remitted to the Company for working capital purposes. The Company accounts for the arrangement as a debt obligation. The difference between the repayment amount and the net proceeds received was recorded as a debt discount and is amortized to interest expense over the estimated term of the agreement using the effective interest method.
On October 20, 2025, the Company refinanced the March 2025 MCA pursuant to a new agreement with Cedar Advance LLC. Under the October agreement, the stated purchase price was $2,898,000. Of this amount, $1,198,800 was applied directly to satisfy outstanding amounts under the prior MCA, and $701,200 was remitted to the Company. The total repayment obligation under the new arrangement resulted in a principal balance of $1,900,000, with fixed weekly payments of $56,800 over an estimated 51-week term.
The Company evaluated the March 2025 and October 2025 refinancing in accordance with ASC 470 and concluded that the transaction represented a debt extinguishment. Accordingly, the remaining unamortized debt discount associated with the these refinancing written off, and the Company recognized a loss on debt extinguishment of $402,153 for the year ended December 31, 2025.
For the years ended December 31, 2025 and 2024, the Company recognized amortization of debt discount of $1,252,211 and $217,017 related to its merchant cash advance arrangements, which is recorded as interest expense in the consolidated statements of operations.
As of December 31, 2025, the gross contractual repayment obligation under the merchant cash advance was $2,547,200. The related unamortized debt discount was $803,066, resulting in a net carrying amount of $1,744,134, which is classified as a current liability in the consolidated balance sheets. As of December 31, 2024, the gross contractual repayment obligation under the merchant cash advance was $1,833,930. The related unamortized debt discount was $519,430, resulting in a net carrying amount of $1,314,500, of which $1,259,415 was classified as a current liability and $55,085 was classified as a long-term liability in the consolidated balance sheets.
Loan Payable
During the year ended December 31, 2025, the Company entered into multiple financing arrangements with Agile Capital Funding LLC (“Agile”) and the Company accounts for these arrangements as debt obligations.
On May 14, 2025, the Company entered into an agreement with Agile pursuant to which it received net proceeds of $500,000 in exchange for total contractual repayments of $756,000. The agreement required fixed weekly payments over an estimated 24-week term. The Company recorded the obligation at the net proceeds received, with the excess of the total contractual repayment amount over the net proceeds recorded as a debt discount. The debt discount was amortized to interest expense over the estimated term of the agreement using the effective interest method.
On June 25, 2025, the Company entered into a separate agreement with Agile pursuant to which it received net proceeds of $250,000 in exchange for total contractual repayments of $367,200. The arrangement required fixed weekly payments over an estimated 28-week term. The Company recorded the obligation at the net proceeds received and recognized a corresponding debt discount, which was amortized to interest expense using the effective interest method.
On August 26, 2025, the Company entered into a refinancing arrangement with Agile pursuant to which it received net proceeds of approximately $500,074. Total contractual repayments under the August agreement were approximately $1,872,000, with fixed weekly payments over an estimated 33-week term. The August 2025 agreement was used to satisfy the outstanding balances of both the May 14, 2025 and June 25, 2025 arrangements. The Company evaluated the transaction under ASC 470-50 and concluded that the refinancing represented an extinguishment of the prior debt obligations. Accordingly, the Company derecognized the carrying amounts of the extinguished debt and recorded a loss on debt extinguishment related to the write-off of the remaining unamortized debt discount.
On October 29, 2025, the Company refinanced the August 2025 arrangement pursuant to a new agreement with Agile. Under the October agreement, the Company received net proceeds of $533,889, of which $50,000 represented issuance costs to be amortized over the term of the debt. Total contractual repayments under the October agreement are $2,880,000, with fixed weekly payments of $75,789 over an estimated 38-week term. A portion of the proceeds was applied directly to satisfy the outstanding balance of the August 2025 obligation. The Company accounted for the October transaction as a debt extinguishment in accordance with ASC 470-50 and recognized a loss related to the write-off of the remaining unamortized debt discount associated with the extinguished debt.
For the year ended December 31, 2025, the Company recognized total losses on debt extinguishment of $578,524 related to Agile refinancings.
For the year ended December 31, 2025, the Company recognized $765,681 of debt discount amortization, which is included in interest expense in the consolidated statements of operations.
As of December 31, 2025, the gross contractual repayment obligation under the Agile agreement was $2,366,766. The related unamortized debt discount was $765,710, resulting in a net carrying amount of $1,601,056, which is classified as a current liability in the consolidated balance sheets.
Note payable – owners of Wellgistics, LLC
In
September 2023, the Company entered into two short-term note agreements for aggregate proceeds of $350,000. One note for $100,000 bears
interest at 8% per annum and the Company will issue 35,000 shares of common stock upon a SPAC or merger. The other note for $250,000
is non-interest bearing and the Company will issue 5,000 shares of common stock upon a SPAC or merger. In May 2024, Scienture, a related
party, repaid the $250,000 note on behalf of the Company, and the note is no longer outstanding. In January 2024, the Company entered
into a short-term note agreement for proceeds of $250,000. The note bears interest at 2% per annum and matures on May 18, 2024. As of
the date of these consolidated financial statements, the note was fully repaid and is no longer outstanding.
On
January 20, 2023, Wood Sage, Wellgistics Pharmacy—operating under the name Community Specialty Pharmacy, LLC—and Scienture,
entered into a Membership Interest Purchase Agreement (the “CSP MIPA”), pursuant to which Scienture sold and Wood Sage acquired
Wellgistics Pharmacy. That same date, Wood Sage, DelivMeds—operating under the name Alliance Pharma Solutions, LLC—and Scienture
entered into a Membership Interest Purchase Agreement (the “APS MIPA”), pursuant to which Scienture sold and Wood Sage acquired
one hundred percent (100%) of the membership interest it owned in DelivMeds. On August 22, 2023, Wood Sage entered into a non-interest
bearing promissory note (“Note”) with Integral 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 CSP MIPA and APS MIPA. No later than 30 days after a change in control to Wood
Sage, the aggregate unpaid principal balance of the Note will be due and payable by Wood Sage. As of the date of these financial statements, the note is still outstanding
and the parties mutually agreed for an extension.
On
August 23, 2024, Wellgistics Health and the owners of Wellgistics LLC entered into the Fourth Amendment to the WellgisticsMembership MIPA.Interest Purchase
Agreement (“MIPA”). Pursuant to the amended
agreement, Wellgisticsthe HealthCompany agreed to pay Wellgistics LLCissued a promissory note in the aggregate principal amount
of $15,000,000$15,000,000, pluswhich bears simple
interest accruingat annuallya rate equal to the “Prime Rate” as published by theThe Wall Street Journal on January 1 of
the applicable
year, togetheryear. The principal and accrued interest were originally payable in three equal annual installments commencing on the
first anniversary of the effective date thatof the related registration statement
becomes effective. As of December 31, 2024, the calculated interest was $425,000. As of December 31, 2024, $5,000,000 was included as
a current liability on the consolidated balance sheet and the remaining $10,000,000 was classified as long-term.statement.
On July 24, 2025, the parties executed the Eighth Amendment to the MIPA, which increased the principal amount of the promissory note from $15.0 million to $17.5 million and modified the repayment schedule whereby $5,000,000 of principal shall be payable on the first and second anniversaries and $7,500,000 of principal shall be payable on the third anniversary, of the effective date of Promissory Note, The Company evaluated the amendment in accordance with ASC 470-50, Debt—Modifications and Extinguishments, and concluded that the changes constituted a debt extinguishment. As a result, the original note and related accrued interest of $1,146,337 were derecognized. The Company recognized a non-cash loss on debt extinguishment of $1,353,663 during the year ended December 31, 2025.
For the years ended December 31, 2025 and 2024, the Company recognized interest expenses of $1,373,390 and $425,000, respectively, related to the seller promissory note. As of December 31, 2025 and 2024, accrued interest on the note totaled $652,055 and $425,000, respectively, and is included in accrued expenses and other current liabilities on the accompanying consolidated balance sheet.
What changed in the latest 10-Q
Risk Factors
Except with respect to the Company’s on-going liquidity needs, there were no material changes in the risk factors we previously disclosed in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 20, 2026.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “DataMeds AI, Inc.”
New heading “Recent Developments”
New heading “Corporate Name and Trading Symbol Change”
New heading “Reverse Stock Split”
New heading “Nasdaq Listing Compliance”
New heading “May 2026 Financing”
New heading “Collaboration Agreement — Healthstar Technologies, LLC”
New heading “Proposed Transaction with EOS, Scilex, Datavault and HealthBridge Advisors”
New heading “Leadership Changes”
New heading “Settlement Agreement — Silverback Capital Corporation”
Removed heading “Wellgistics Health, Inc.”
Largest changes
“Collaboration Agreement — Healthstar Technologies, LLC”see in full comparison
“Proposed Transaction with EOS, Scilex, Datavault and HealthBridge Advisors”see in full comparison
This Quarterly Report contains statements that constitute forward-looking statements that are subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Some of the statements in this Quarterly Report constitute forward-looking statements because they relate to future events or the future performance or future financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our industry, our beliefs and our assumptions. These forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding thesee in full comparisonfuture.future, including our proposed transaction with EOS Technology Holdings, Inc., Scilex Holding Company, Datavault AI Inc., and HealthBridge Advisors, LLC, and our collaboration with Kare Rx Hub, LLC and Kare Pharmtech, LLC. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” or the negative of these terms or other similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
Full comparison: every changed paragraph (54)
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See “Cautionary Note Regarding Forward-Looking Statements” below. We have no obligation to update any of these forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements due to many factors, including, but not limited to, those set forth under the heading “Risk Factors” in this Quarterly Report. Factors that could cause or contribute to such differences include, but are not limited to, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this Quarterly Report.
This
Quarterly Report contains statements that constitute forward-looking statements that are subject to the safe-harbor provisions of the
Private Securities Litigation Reform Act of 1995. Statements that are not historical are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). Some of the statements in this Quarterly Report constitute forward-looking
statements because they relate to future events or the future performance or future financial condition. These forward-looking statements
are not historical facts, but rather are based on current expectations, estimates and projections about our company, our industry, our
beliefs and our assumptions. These forward-looking statements include, but are not limited to, statements regarding our or our management
team’s expectations, hopes, beliefs, intentions or strategies regarding the future.future, including our proposed transaction with EOS
Technology Holdings, Inc., Scilex Holding Company, Datavault AI Inc., and HealthBridge Advisors, LLC, and our collaboration with Kare
Rx Hub, LLC and Kare Pharmtech, LLC. In addition, any statements that refer to projections,
forecasts or other characterizations of future
events or circumstances, including any underlying assumptions, are forward-looking statements.
In some cases, you can identify forward-looking
statements by the following words: “anticipate,” “believe,” “continue,”
“could,” “estimate,”
“expect,” “intend,” “may,” “ongoing,” “plan,”
“potential,” “predict,”
“project,” “seek,” “should,” “target,”
or the negative of these terms or other similar
expressions may identify forward-looking statements, but the absence of these words does
not mean that a statement is not forward-looking.
IncorporatedDataMeds
AI, Inc. (formerly Wellgistics Health, Inc.) (“DataMeds,” the “Company,” “we,” “us” or
“our”) was incorporated in 2022,2022 we areas a holding company for operating companies centered around healthcare technology and pharmaceutical
services. We seek
to be a micro health ecosystem, with a portfolio of companies consisting of a technology platform, pharmacy, and wholesale
operations operations
that provide novel prescription hub and clinical services. We strive to shift the dynamic of pharmaceutical care to revolve
around the
patient for a range of therapeutic conditions by offering various integrated solutions through leveraging our business segments
to address
access, care coordination, dispensing, delivery, and clinical management of certain pharmaceutical products. On July 22, 2026,
the Company changed its name from Wellgistics Health, Inc. to DataMeds AI, Inc. and its trading symbol on The Nasdaq Capital Market from
“WGRX” to “MEDS,” as described further under “Recent Developments” below.
DataMeds AI, Inc.
Wellgistics
Health, Inc.
Recent Developments
Corporate Name and Trading Symbol Change
On July 20, 2026, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation to change its name from Wellgistics Health, Inc. to DataMeds AI, Inc., effective July 22, 2026. In connection with the name change, the Company’s common stock began trading on The Nasdaq Capital Market under the new ticker symbol “MEDS,” replacing its prior symbol “WGRX.”
Reverse Stock Split
On May 20, 2026, the Company filed a Certificate of Amendment to effect a 1-for-50 reverse stock split of its common stock, which became effective May 26, 2026. The reverse stock split was intended to assist the Company in regaining compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2).
Nasdaq Listing Compliance
The Company received deficiency notices from The Nasdaq Stock Market LLC on December 10, 2025 and April 13, 2026, relating to non-compliance with the minimum bid price and minimum stockholders’ equity requirements, respectively, under Nasdaq Listing Rules 5550(a)(2) and 5550(b)(1). See “Liquidity and Capital Resources” below and Note 2 to the condensed consolidated financial statements for further information.
May 2026 Financing
On May 27, 2026, the Company entered into a Note Purchase Agreement with a group of investors, pursuant to which the previously outstanding convertible promissory notes issued in January and April 2026 were extinguished and replaced with new convertible promissory notes in an aggregate principal amount of $20,323,732, comprised of rollover and new money proceeds. See Note 8 to the condensed consolidated financial statements for further information.
Collaboration Agreement — Healthstar Technologies, LLC
On April 13, 2026, the Company entered into a Collaboration Agreement with Kare Rx Hub, LLC and Kare Pharmtech, LLC, providing for the formation of Healthstar Technologies, LLC, in which the Company would hold a 51% membership interest, in exchange for consideration of $2,000,000 payable in shares of the Company’s common stock. As of the date of this Quarterly Report, closing under the Collaboration Agreement had not yet occurred. See Note 14 to the condensed consolidated financial statements for further information
Proposed Transaction with EOS, Scilex, Datavault and HealthBridge Advisors
On May 20, 2026, the Company entered into a Fully Binding Term Sheet with EOS Technology Holdings, Inc., Scilex Holding Company, Datavault AI, Inc., HealthBridge Advisors, LLC, and Fortitude Advisors, LLC, contemplating a proposed transaction involving certain intellectual property assets, an expansion of the Company’s existing license arrangement with Datavault, and the acquisition of a controlling interest in Tollo Health, LLC. On July 29, 2026, the Company entered into an Amended and Restated Letter of Intent with EOS, Scilex, Datavault, and HealthBridge Advisors, which superseded and replaced the original Term Sheet in its entirety. The proposed transaction remains subject to negotiation and execution of definitive agreements, stockholder and other approvals, and other customary closing conditions. See Note 10 to the condensed consolidated financial statements for further information.
Leadership Changes
On May 20, 2026, the Company’s Board of Directors appointed Gerald Commissiong as Interim Co-Chief Executive Officer of the Company, in connection with the Term Sheet described above.
Settlement Agreement — Silverback Capital Corporation
During the six months ended June 30, 2026, the Company issued shares of common stock to Silverback Capital Corporation pursuant to a Settlement Agreement and Stipulation, approved under Section 3(a)(10) of the Securities Act of 1933, to satisfy certain outstanding creditor obligations. The Company delivered a termination letter with respect to the Settlement Agreement on April 3, 2026, which the parties subsequently rescinded on May 18, 2026, reinstating the Settlement Agreement in its entirety. See Note 9 to the condensed consolidated financial statements for further information.
WellgisticsThe
HealthCompany is a holding company specifically formed to hold operating companies. We did not generate any revenue prior to the Wood Sage
Acquisition, Acquisition,
but now expect to generate all of our revenues through Wellgistics Pharmacy, and Wellgistics LLC. Although Wellgisticsthe HealthCompany may
add add
other sources of revenue through the acquisition of other operating companies in the future, Wellgisticsthe HealthCompany currently does not have
any such plans.
WellgisticsThe
HealthCompany will be subject to risk of specific inflationary pressures on product prices and its impact on consumer spending. For example,
increases in prescription drug costs could impact consumersconsumers’ ability to afford initial or on-going therapy. WellgisticsThe Health’sCompany’s
focus on the relatively expensive specialty lite business segment (i.e., $500 - $3,000 therapies) could be particularly impacted by increasing
costs. Additionally, consumer discretionary funds could be reduced, impacting the ability to pay for digital services and subscription
models that Wellgisticsthe HealthCompany offers. If inflation continues to increase, sourcing and procuring specialty lite products may prove to
be capital
intensive. WellgisticsThe HealthCompany may not be able to adjust prices sufficiently to offset the effect without negatively impacting
consumer demand
or Wellgisticsthe Health’sCompany’s gross margin. All of these inflationary risk factors could materially and adversely impact the Company’s
Wellgistics Health’s business operations, financial condition and results of operations.
General
and administrative expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation
expense) for personnel in executive, finance, accounting, corporate development and other administrative functions. General and administrative
expenses will also include legal fees, professional fees paid for accounting, auditing, consulting, tax, and investor relations services,
insurance costs, facility costs not otherwise included in research and development expenses. Following Wellgisticsthe Health’sCompany’s registration
as a public company, general and administrative expenses also include public company expenses such as costs associated with compliance
with the rules and regulations of
the SEC and the stock exchange.
For
the Three and Six Months Ended MarchJune 31,30, 2026 and 2025
Net
revenues for the three months ended MarchJune 31,30, 2026 were $1,559,563
$1,779,860, compared to $10,863,443$7,790,865 for the three months ended MarchJune 31,30, 2025, a
decrease of $6,011,005, or approximately 77.2%. For the six months ended June 30, 2026, net revenues were $3,339,423, compared to $18,654,308
for the six months ended June 30, 2025, a decrease of $9,303,880,$15,314,885, or approximately 85.6%.82.1%. The decrease in both periods was primarily
primarily driven by a significant decline in distribution revenues within the Wellgistics, LLC, reflecting the impact of liquidity constraints that
that limited the Company’s ability to procure and fulfill product orders during the period.orders. These decreases were partially offset
by growth in pharmacy
retail revenues, which increased to $1,134,416$1,590,367 for the three months ended MarchJune 31,30, 2026 from $114,676$77,756 for the three
months ended MarchJune
30, 31,2025, and to $2,724,783 for the six months ended June 30, 2026 from $192,432 for the six months ended June 30, 2025, reflecting continued
expansion of the Company’s pharmacy operations.
Cost
of net revenues for the three months ended MarchJune 31,30, 2026 was $1,389,342,$1,597,656, compared to $10,170,802$7,285,113 for the three months ended MarchJune 31,30, 2025,
a decrease of $8,781,460,$5,687,457, or approximately 86.3%.78.1%. For the six months ended June 30, 2026, cost of net revenues was $2,986,998, compared
to $17,455,915 for the six months ended June 30, 2025, a decrease of $14,468,917, or approximately 82.9%. The decrease in both periods
was primarily attributable to the lower volume of distribution activity
during the period,activity, consistent with the decline in net revenues.
Gross
profit for the three months ended MarchJune 31,30, 2026 was $170,221,$182,204, compared
to gross profit of $692,641$505,752 for the three months ended MarchJune 31,30, 2025, a decrease
of $522,420,$323,548, or approximately 75.4%.64.0%. Gross margin was
10.9% 10.2% for the three months ended MarchJune 31,30, 20262026, compared to 6.5% for the three
months ended June 30, 2025. For the six months ended June 30, 2026, gross profit was $352,425, compared to $1,198,393 for the six months
ended June 30, 2025, a decrease of $845,968, or approximately 70.6%, with gross margin of 10.6% compared to 6.4% for the threeprior monthsyear ended March 31, 2025. period.
The improvement in gross margin
percentage in both periods reflects the increased contribution of pharmacy retail revenues, which carry
higher margins than the distribution segment,
partially offset by the lower overall revenue base.
The
following is a summary of the disaggregation of revenue for the three and six months ended MarchJune 31,30, 2026 and 2025:
General and administrative expenses for the three months ended June 30, 2026 were $7,056,671, compared to $4,859,949 for the three months ended June 30, 2025, an increase of $2,196,722, or approximately 45.2%. The increase was primarily attributable to a $2,008,000 non-recurring compensation charge recorded in connection with the Compensation Committee’s approval, on May 12, 2026, of retroactive salary increases, a discretionary bonus, and a special bonus tied to the Company’s 2026 capital-raising activity for its Chief Executive Officer and President, together with higher stock-based compensation expense related to restricted stock vesting.
For the six months ended June 30, 2026, general and administrative expenses were $11,925,606, compared to $36,032,869 for the six months ended June 30, 2025, a decrease of $24,107,263, or approximately 66.9%. The decrease was primarily attributable to the non-recurring stock-based compensation expense of approximately $27.2 million recognized during the three months ended March 31, 2025 in connection with the immediate vesting of restricted shares granted in March 2025, partially offset by the $2,008,000 compensation charge and the other items described above recognized during the three months ended June 30, 2026.
General and administrative expenses for the three months ended March 31,
2026 were $4,868,935 compared to $31,172,920 for the three months ended March 31, 2025, a decrease of $26,303,985, or approximately 84.4%.
The decrease was primarily attributable to a significant reduction in non-cash stock-based compensation expense. For the three months
ended March 31, 2025, the Company recognized approximately $27.2 million in stock-based compensation expense, including $27 million related
to the immediate vesting of 9,363,617 restricted shares granted on March 14, 2025. No comparable non-recurring stock-based compensation
charges were incurred during the three months ended March 31, 2026. Excluding non-cash stock-based compensation, general and administrative
expenses increased period over period, reflecting higher professional fees, legal costs, and administrative costs associated with the
Company’s ongoing operations as a public company.
Sales
and marketing expenses for the three months
ended MarchJune 31,30, 2026 were $960,000$113,990, compared to $65,217$343,383 for the three months ended MarchJune 31,
30, 2025, ana increasedecrease of $894,783.$229,393. The increase decrease
was primarily attributable to increasedlower investmentmarketing and advertising spend during the current period, partially offset by $93,990 of expense
recognized in brandconnection awareness, customer acquisition
initiatives, and market development activities aswith the CompanyCompany’s continuesmarketing toservices expandagreement itswith commercialOutside presenceThe acrossBox itsCapital pharmacy and distribution
segments.Inc.
For the six months ended June 30, 2026, sales and marketing expenses were $1,073,990, compared to $408,600 for the six months ended June 30, 2025, an increase of $665,390. The increase was primarily attributable to increased investment in brand awareness, customer acquisition initiatives, and market development activities during the three months ended March 31, 2026, together with the expense recognized in connection with the Outside The Box Capital Inc. agreement described above.
Depreciation
and amortization expense for the three months ended MarchJune 31,30, 2026 was $356,824$356,597, compared to $802,872$802,796 for the three months ended MarchJune
31,30, 2025, a decrease of $446,048,$446,199, or approximately 55.6%. For the six months ended June 30, 2026, depreciation and amortization expense
was $713,421, compared to $1,605,668 for the six months ended June 30, 2025, a decrease of $892,247, or approximately 55.6%. The decrease
in both periods was primarily attributable to the impairment of goodwill and intangible
assets recognized during the year ended December
31, 2025.2025, which reduced the carrying value of assets subject to amortization in the current year periods.
Interest
expenseexpense, net, for the three months ended MarchJune 31,30, 2026 was $2,072,679$1,561,240, compared to $1,094,490$1,184,040 for the three months ended MarchJune 31,30, 2025,
an an
increase of $978,189,$377,200, or approximately 89.4%.31.9%. For the six months ended June 30, 2026, interest expense, net was $3,633,919, compared
to $2,278,530 for the six months ended June 30, 2025, an increase of $1,355,389, or approximately 59.5%. The increase in both periods
was primarily attributable to interest and amortization of debt discount on the convertible
promissory notes issued in Januaryduring 2026, amortizationinterest
on ofthe debtseller discountpromissory note, and interest on the merchantrevolving cashline advance,of credit prior to its repayment, partially offset by lower interest
expense following the repayment in full of the revolving line of credit in May 2026 and the write-off of the remaining unamortized
debt discount upon full repaymentextinguishment of the Agile Capital Funding
LLC arrangement during the period.three months ended March 31, 2026.
During the three and six months ended June 30, 2026, the Company recognized a loss on extinguishment of debt of $8,881,694, comprised of a loss of $503,505, in connection with the extinguishment of the Agile Capital Funding LLC arrangement, and a loss of $8,378,189 recognized during the three months ended June 30, 2026 in connection with the refinancing of the Company’s outstanding convertible promissory notes on May 27, 2026. There was no comparable amount for the three or six months ended June 30, 2025.
During the three months ended June 30, 2026, the Company recognized a loss on extinguishment of vendor obligations of $320,000, in connection with the settlement of obligations owed to Silverback Capital Corporation through the issuance of shares of common stock at a fair value in excess of the carrying amount of the obligations settled. For the six months ended June 30, 2026, the Company recognized a net loss on extinguishment of vendor obligations of $60,120, reflecting the $320,000 loss recognized during the three months ended June 30, 2026, partially offset by a gain on extinguishment of $259,880 recognized during the three months ended March 31, 2026 in connection with the settlement of vendor payables and notes payable through the issuance of shares of common stock at a fair value below the carrying amount of the obligations settled. There was no comparable amount for the three or six months ended June 30, 2025.
During the three and six months ended June 30, 2026, the Company recognized a loss on contract termination fee of $766,394, in connection with shares of common stock issued to Silverback Capital Corporation following the Company’s purported termination, in April 2026, of its previously disclosed Settlement Agreement with Silverback, which the parties subsequently rescinded in May 2026. There was no comparable amount for the three or six months ended June 30, 2025.
During
the three months ended March 31, 2026, the Company recognized a gain on extinguishment of vendor obligations of $259,880, resulting from
the settlement of certain accounts payable and notes payable balances through the issuance of shares of common stock to Silverback Capital
Corporation at a fair value below the carrying amount of the settled obligations.
Settlement
fees of $13,000 were recognized during the threesix months ended MarchJune 31,30, 2026 in connection with the Silverback Capital Corporation settlement
arrangement.arrangement, Thereall wereof nowhich comparablewas amountsrecognized forduring the three months ended March 31, 2026. There was no comparable amount for the three or
six months ended June 30, 2025.
Other
income for the three months ended MarchJune 31,30, 2026 was $98,740$511,157, compared to $11,955$11,952 for the three months ended MarchJune 31,30, 2025, an increase
of $86,785.$499,205. For the six months ended June 30, 2026, other income was $609,897, compared to $23,907 for the six months ended June
30, 2025, an increase of $585,990. The increase in both periods was primarily attributable to settlements reached with certain counterparties
in the ordinary course of business
during the three months ended March 31, 2026.business.
Net
loss for the three months ended MarchJune 31,30, 2026
was $7,742,597$18,363,225, compared to $32,430,903$6,672,464 for the three months ended MarchJune 31,30, 2025, an improvement
increase of $24,688,306, or approximately 76.1%.$11,690,761. The improvementincrease was primarily
driven by the reductionloss on extinguishment of debt of $8,378,189 recognized in non-cashconnection stock-basedwith compensationthe expenseMay 2026 refinancing, the loss on contract
termination fee of approximately$766,394, $27.0the million,loss partiallyon offsetextinguishment byof lowervendor gross profitobligations, and higher interestgeneral expenseand administrative expenses, partially
offset by the vendor credit recognized within sales and marketing expenses and higher other income during the period.
For the six months ended June 30, 2026, net loss was $26,105,822, compared to $39,103,367 for the six months ended June 30, 2025, a decrease of $12,997,545, or approximately 33.2%. The decrease was primarily driven by the non-recurring stock-based compensation expense of approximately $27.2 million recognized during the three months ended March 31, 2025 in connection with the immediate vesting of restricted shares granted in March 2025, partially offset by the loss on extinguishment of debt and loss on contract termination fee recognized during the three months ended June 30, 2026, and higher interest expense during the six months ended June 30, 2026.
As of MarchJune 31,30, 2026, the Company had cash and
cash cash
equivalents of $51,730$2,456,373 and a working capital deficit of $29,437,191.$33,781,185. The Company has incurred net losses of $7,742,597$18,363,225 and $32,430,903$26,105,822
for the three and six months ended MarchJune 31,30, 2026 and 2025,2026, respectively, and has an accumulated deficit of $118,774,287$137,137,512 as of MarchJune 31,30, 2026. These
These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated
financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that
might result from the outcome of this uncertainty. See Note 2 to the condensed consolidated financial statements for further information.
The
following table summarizes our cash flows from operating, investing, and financing activities for the threesix months ended MarchJune 31,30, 2026
and 2025 :
Net cash used in operating activities for the three months ended March
31, 2026 was $3,413,129, primarily reflecting the Company’s net loss of $7,742,597, partially offset by non-cash charges totaling
$3,034,024 and net cash provided by changes in operating assets and liabilities of $1,295,444. Non-cash charges consisted principally
of $1,485,618 in amortization of debt discount, $1,357,764 in stock-based compensation, $328,962 in amortization of intangible assets,
$93,698 in allowance for credit losses, and $27,862 in depreciation, partially offset by a gain on extinguishment of vendor obligations
of $259,880. Changes in operating assets and liabilities provided net cash of $1,295,444, driven primarily by an increase in accounts
payable of $1,472,242 and an increase in accrued expenses and other liabilities of $90,060, partially offset by a net decrease in amounts
due from and to related parties of $229,200.
Net
cash used in operating activities for the three
six months ended MarchJune 31,30, 20252026 was $1,347,449,$6,307,328, primarily due to theour net loss of $32,430,903,
$26,105,822, partially offset by non-cash expenses of
$15,614,148 $28,674,553,and principally$4,184,678 consistingin cash provided by changes in operating assets and liabilities. Non-cash expenses were primarily driven by
a loss on extinguishment of debt of $8,881,693, amortization of debt discount of $2,343,252, and stock-based compensation of $27,773,421,$2,562,514.
Cash and net cash
provided by changes in operating assets and liabilities ofwas $2,408,901,primarily driven primarily by an increase in accrued expenses and other liabilities
of $2,640,868, which included a $2,008,000 compensation accrual approved by our Compensation Committee on May 12, 2026, and an increase
in accounts payable of $1,876,683.$2,432,030.
Net cash used in operating activities for the six months ended June 30, 2025 was $3,426,447, primarily due to our net loss of $39,103,367, partially offset by non-cash expenses of $30,548,175 and $5,128,743 in cash provided by changes in operating assets and liabilities. Non-cash expenses were primarily driven by stock-based compensation of $28,708,643. Cash provided by changes in operating assets and liabilities was primarily driven by an increase in accounts payable of $3,141,895.
Net
cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 and 2025 was $205,098,$447,230 and $405,059, respectively, consisting
entirely of capitalized software
development costs related to the Company’s DelivMeds platform.
Net
cash used in investing activities for the three months ended March 31, 2025 was $273,133, consisting of payments made for capitalized
software development costs.
Net cash provided by financing activities for
the threesix months ended March
31,June 30, 2026 was $3,627,386.$9,168,360. CashThis inflows during the period consistedwas primarily driven by gross proceeds of $6,002,500 in net proceeds$14,200,000 from the issuance of securedconvertible
convertible promissory notes in January 2026. These inflows werenotes, partially offset by $1,157,500 in payment of debt issuance costs, $2,104,557 in repayments under our term loan with
Agile Capital Funding LLC, $1,643,923 in repayments of the Agile Capital Funding
LLC term loan, $143,525 in repayments under theour revolving line of credit, $90,281and $89,909 in repayments under theour merchant cash
advance agreement,
and $36,751 in repayments of promissory notes.agreement.
Net
cash provided by financing activities for the threesix months ended MarchJune 31,30, 2025 was $3,108,831,$3,223,112. This was primarily driven primarily by gross proceeds
of of
$4,000,000 from the issuance of common stock in connectionour withIPO, the$567,722 Company’sfrom initialcommon publicstock offering,issuances under our equity purchase agreement,
$615,000 from the issuance
of promissory notes, and $471,158$234,157 in net proceeds from a merchant cash advance agreement.advance. These inflows were partially offset by $1,598,196$1,208,498
in offering costscosts, andas well as repayments of notesa note payable and the revolving line of credit.
MEDS insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-22 | Ajjarapu Surendra K |
Option exercise | 100,000 | $0.01 | $1.0K |
| 2026-06-22 | Patel Prashant |
Option exercise | 100,000 | $0.01 | $1.0K |
| 2026-03-31 | Ajjarapu Surendra K |
Grant/award | 5,000,000 | $0.20 | $1.0M |
| 2026-03-31 | Patel Prashant |
Grant/award | 5,000,000 | $0.20 | $1.0M |
| 2026-03-31 | Patel Prashant |
Grant/award | 5,000,000 | $0.20 | $1.0M |
| 2026-03-31 | Ajjarapu Surendra K |
Grant/award | 5,000,000 | $0.20 | $1.0M |
Well-known investors holding MEDS (13F)
None of the 59 investors we track reported a position in their latest 13F.