MEDS 10-Q
DataMeds AI, Inc. (MEDS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended
Or
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission
file number:
(Exact Name of Registrant As Specified In Its Charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| (Address of Principal Executive Offices) | (ZIP Code) |
(Registrant’s telephone number, including area code)
| N/A |
| (Former name, former address and former fiscal year, if changed since last report) |
Securities to be registered under Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
The
(The NASDAQ Capital Market) |
Indicate
by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
If
an emerging growth company, indicate by check mark if the Company has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate
by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 19, 2025, there were 102,289,619 and shares of the Company’s common stock, par value $, issued and outstanding.
TABLE OF CONTENTS
In this Quarterly Report on Form 10-Q (this “Quarterly Report”), all references to “Wellgistics Health, Inc.,” “Wellgistics Health,” “we,” “us,” “our” or the “Company” mean Wellgistics Health, Inc., and its wholly-owned subsidiaries, except where it is made clear that the term means only Wellgistics Health, Inc. The Company’s common stock, par value $0.0001 per share, is referred to as “common stock.”
| 2 |
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
WELLGISTICS HEALTH, INC.
CONSOLDIATED BALANCE SHEETS
(Unaudited)
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, related party | ||||||||
| Accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses | ||||||||
| Due from related parties | ||||||||
| Deferred offering costs | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Capitalized software | ||||||||
| Operating lease, right-of-use-assets | ||||||||
| Goodwill | ||||||||
| Other intangible assets, net | ||||||||
| Note receivable | ||||||||
| Other assets | ||||||||
| Deposits | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable, related party | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Other short-term advances | ||||||||
| Due to related parties | ||||||||
| Due to seller | ||||||||
| Current portion of debt obligations, net of debt discount | ||||||||
| Operating lease liabilities- current portion | ||||||||
| Total current liabilities | ||||||||
| Notes payable | ||||||||
| Note payable, related party | ||||||||
| Loan payable | ||||||||
| Operating lease liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and contingencies (Note 13) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and and shares outstanding as of September 30, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See the accompanying notes to the unaudited condensed consolidated financial statements
| 3 |
WELLGISTICS HEALTH, INC.
CONSOLDIATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Cost of net revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income/(expense): | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on debt extinguishment | ( | ) | ( | ) | ||||||||||||
| Other income | ||||||||||||||||
| Total other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share - basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average common shares outstanding - basic and diluted | ||||||||||||||||
See the accompanying notes to the unaudited condensed consolidated financial statements
| 4 |
WELLGISTICS HEALTH, INC.
CONSOLDIATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity (Deficit) | ||||||||||||||||
| Balance at December 31, 2023 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at March 31, 2024 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||
| Founder’s initial contribution | - | |||||||||||||||||||
| Shares issued to employees | ( | ) | ||||||||||||||||||
| Shares issued pursuant to business combination | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Shares issued pursuant to business combination | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued pursuant to IPO | ||||||||||||||||||||
| Common stock issued pursuant to consulting agreements | ||||||||||||||||||||
| Vested restricted stock granted to consultants | ||||||||||||||||||||
| Vested restricted stock granted to directors | ||||||||||||||||||||
| Vested restricted stock granted to employees | ||||||||||||||||||||
| Offering costs | - | ( | ) | ( | ) | |||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued pursuant to equity purchase agreement | ||||||||||||||||||||
| Issuance of commitment shares under equity purchase agreement | ||||||||||||||||||||
| Common stock issued in partial settlement of seller’s note | ||||||||||||||||||||
| Vested restricted stock granted to employees | ||||||||||||||||||||
| Offering costs | - | ( | ) | ( | ) | |||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued pursuant to equity purchase agreement | ||||||||||||||||||||
| Common stock issued pursuant to public offering | ||||||||||||||||||||
| Common stock issued in partial settlement of due to seller | ||||||||||||||||||||
| Common stock issued for services | ||||||||||||||||||||
| Common stock cancelled | ( | ) | ( | ) | ||||||||||||||||
| Vesting of restricted stock - Acceleration | ||||||||||||||||||||
| Vested restricted stock granted to employees | ||||||||||||||||||||
| Vested restricted stock granted to consultants | - | |||||||||||||||||||
| Offering costs | - | ( | ) | ( | ) | |||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
See the accompanying notes to the unaudited condensed consolidated financial statements
| 5 |
WELLGISTICS HEALTH, INC.
CONSOLDIATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Allowances for credit losses | ||||||||
| Loss on debt extinguishment | ||||||||
| Amortization of debt discount | ||||||||
| Stock-based compensation | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses | ||||||||
| Deposits | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other liabilities | ||||||||
| Operating lease liabilities, net | ||||||||
| Due from / to related parties, net | ||||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Cash acquired in business combinations | ||||||||
| Purchase price consideration of business combination | ( | ) | ||||||
| Investments in capitalized software | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from promissory note | ||||||||
| Repayment of seller promissory note | ( | ) | ||||||
| Proceeds from term loan | ||||||||
| Proceeds from revolving line of credit | ||||||||
| Repayment of revolving line of credit | ( | ) | ( | ) | ||||
| Repayment of merchant cash advance | ( | ) | ||||||
| Proceeds from common stock issued pursuant to equity purchase agreement | ||||||||
| Proceeds from common stock issued pursuant to IPO | ||||||||
| Proceeds from common stock issued pursuant to public offering | ||||||||
| Offering costs | ( | ) | ||||||
| Founder’s initial contribution | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net change in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Issuance of commitment shares under equity purchase agreement | $ | $ | ||||||
| Derecognition of promissory note and accrued interest pursuant to debt extinguishment | $ | $ | ||||||
| Common stock issued in partial settlement of seller’s note | $ | $ | ||||||
| Shares issued pursuant to business combination | $ | $ | ||||||
| Promissory note issued pursuant to business combination | $ | $ | ||||||
| Debt assigned to related party | $ | $ | ||||||
See the accompanying notes to the unaudited condensed consolidated financial statements
| 6 |
WELLGISTICS HEALTH, INC.
NOTES TO THE CONSOLDIATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was initially organized in the name of Ayan Sponsors LLC on September 6, 2022, and subsequently incorporated in the name Danam Health, Inc. (the “Company”/ “us”/ “we”/ “our”) as a Delaware Corporation that was registered on November 15, 2022, The Company’s headquarters are in Tampa, Florida.
In January 2023 and May 2023, the Company entered into separate definitive agreements with the owners of Wood Sage LLC (“Wood Sage”) and Wellgistics LLC, respectively, whereby the Company would acquire all of the respective outstanding membership interests of Wood Sage and Wellgistics LLC. In June 2024, the Company and Wood Sage entered into an amended and revised definitive agreement and closed on the Wood Sage Acquisition, thereby making Wood Sage a wholly owned subsidiary. In connection with the Wood Sage Acquisition, the Company acquired two of its operating subsidiaries, Alliance Pharma Solutions LLC d/b/a DelivMeds (n/k/a Wellgistics Tech & Hub, LLC) (“DelivMeds”)—a pharmaceutical technology hub—and Community Specialty Pharmacy, LLC (n/k/a Wellgistics Pharmacy, LLC) (“Wellgistics Pharmacy”)—a retail community specialty pharmacy.
On August 30, 2024, the Company closed on the Wellgistics Acquisition, thereby making Wellgistics LLC—a company focused on wholesale operations including the distribution and fulfillment of certain pharmaceutical medications to a network of independent pharmacies meant to improve market access to and patient outcomes regarding the medications—a wholly owned subsidiary.
As such, the Company currently exists as a holding company with Wood Sage as a directly held intermediate holding company subsidiary, Wellgistics Tech & Hub, LLC and Wellgistics Pharmacy, LLC as indirect operating subsidiaries, and Wellgistics, LLC as a direct operating subsidiary.
On October 4, 2024, the Company changed its corporate name to “Wellgistics Health, Inc.” (referred as “Wellgistics Health/WGRX/”the Company”/ “we”/ “us”/ “our”“) by filing a duly authorized Certificate of Amendment to its Certificate of Incorporation.
Initial Public Offering
On
February 20, 2025, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Craft
Capital Management LLC as representatives of the several underwriters (the “Underwriters”), relating to the
Company’s initial public offering (the “Offering” or “IPO”) of shares of common stock, par value
$ per share, at a public offering price of $ per share, generating gross proceeds of approximately $
The shares of common stock were offered and sold pursuant to the Company’s Registration Statement on Form S-1 (File No. 333-280945), originally filed with the U.S. Securities and Exchange Commission (the “Commission”) on July 22, 2024, and later amended (as amended, the “Registration Statement”). The Registration Statement was declared effective by the Commission on February 14, 2025. The closing of the Offering took place on February 24, 2025. A final prospectus describing the terms of the offering was filed with the Commission on February 21, 2025.
The
Company’s common stock commenced trading on the Nasdaq Capital Market LLC on February 21, 2025, under the symbol “WGRX”.
The IPO generated net proceeds to the Company of approximately $
| 7 |
Summary of Significant Accounting Policies
A description of the Company’s significant accounting policies and other financial information is included in the Company’s audited consolidated financial statements filed on March 25, 2025, with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Form 10-K”). These policies have been applied consistently in these unaudited condensed consolidated interim financial statements.
Unaudited Interim Financial Information
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of September 30, 2025 and for the three and nine months then ended.
The accompanying unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2024 included in the Form 10-K filed with the SEC on March 25, 2025.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses reported in those condensed consolidated financial statements. Descriptions of our significant accounting policies are discussed in the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.
Segment Reporting
In accordance with Accounting Standards Codification (“ASC”) 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. ASC 280 establishes standards for companies to report financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker (“CODM”), or group, in deciding how to allocate resources and assess performance.
The CODM has been identified as the Chief Executive Officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has one operating and reportable segment.
The key measures of segment profit or loss reviewed by our CODM are revenue and operating costs. These metrics are reviewed and monitored by the CODM to manage and forecast cash. The CODM also reviews operating costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget.
See Note 12 for further details.
Concentration of Credit Risks, Major Customers and Vendors
Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and receivables. The Company places its cash and cash equivalents with financial institutions. Deposits are insured to Federal Deposit Insurance Corp limits.
For
the nine months ended September 30, 2025, one customer accounted for approximately
| 8 |
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The financial and nonfinancial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The hierarchy is presented down into three levels based on the reliability of the inputs.
| Level 1 | Quoted prices are available in active markets for identical assets or liabilities. | |
| Level 2 | Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
| Level 3 | Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash flow models or valuations. |
The carrying amounts of cash, accounts receivable, note receivable, deposits, accounts payable, accrued liabilities and short-term debt approximate their fair value because of the short-term nature of these instruments. The carrying amount of long-term debt approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar maturities.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recorded at the net invoiced amount, net of allowance for credit losses, and do not bear interest. Expected credit losses include losses expected based on known credit issues with specific customers as well as a general expected credit loss allowance based on relevant information, including historical loss rates, current conditions, and reasonable economic forecasts that affect collectability. The Company reserves for any accounts receivable balances that are determined to be uncollectible in the allowance for credit losses. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance.
The Company uses a loss rate method to estimate its allowance for credit losses. The determination of the current expected credit loss rate begins with our review of historical loss experience as a percentage of accounts receivable. To determine the current allowance for credit losses, we combine the historical and expected credit loss rates and apply them to our period end accounts receivable.
The
Company provides for a
As
of September 30, 2025, and December 31, 2024, allowance for credit losses was $
Inventories, Net
Inventories are stated at the lower of cost and net realizable value. Cost is determined on a first in first out (“FIFO”) basis. Cost of inventory is determined as the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. On a quarterly basis, we evaluate inventory for net realizable value using estimates based on historical experience, current or projected pricing trends, specific categories of inventory, age and expiration dates of on-hand inventory and manufacturer return policies. If actual conditions are less favorable than our assumptions, additional inventory write-downs may be required, and no reserve is maintained as obsolete or expired inventories are written off. We believe that the inventory valuation provides a reasonable approximation of the current value of inventory.
| 9 |
Capitalized Software
The Company complies with the guidance of ASC 350-40, “Intangibles—Goodwill and Other—Internal Use Software”, in accounting for our internally developed system projects that it utilizes to provide our services to customers. These system projects generally relate to software of the Company that is not intended for sale or otherwise marketed. Internal and external costs incurred during the preliminary project stage are expensed as they are incurred. Once a project has reached the development stage, the Company capitalizes direct internal and external costs until the software is substantially complete and ready for our intended use. Costs for upgrades and enhancements are capitalized, whereas costs incurred for maintenance are expensed as incurred. These capitalized software costs are amortized on a project-by-project basis over the expected economic life of the underlying software on a straight-line basis, which is generally three to five years. Amortization commences when the software is available for our intended use.
As
of September 30, 2025 and December 31, 2024, the Company capitalized $
To date, the Delivmeds platform is not yet been placed in service and therefore amortization has not commenced.
Revenue Recognition
The Company recognizes revenue from contracts with customers under ASC 606, Revenue from Contracts with Customers (“ASC 606”).
To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract was determined to be within the scope of ASC 606, the Company assessed the goods or services promised within each contract and determined those that were performance obligations, and assessed whether each promised good or service was distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. The Company recognizes revenue at the point of sale. The majority of orders are placed via the Company’s website. Customers generally pay by credit card at the time they place their order. The Company does have larger customers to whom they have extended terms for payment. Generally, payments from these customers are due within 30 days of their order being shipped. However, a few customers have been given terms extending out to 45 days.
Distribution
Wellgistics, LLC provides distribution and third party logistics services to both pharmaceutical manufacturers and independent retail pharmacies. The Company recognizes revenue when goods are delivered to the customer. The gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, rebates, sales allowances and sales returns. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are considered when estimating the impact of these revenue deductions on gross sales for a reporting period. All revenue for the Company is recognized at the point-in-time when delivered to customer based on contractual obligations. Any amount collected from customers for goods not yet delivered is recorded as a contract liability.
| 10 |
Pharmacy
The Company is in the retail pharmacy business. and fills prescriptions for drugs written by a doctor and recognizes revenue at the time the patient confirms delivery of the prescription. Customer returns are not material. The following are the steps taken to recognize revenue.
Step One: Identify the contract with the customer — The prescription is written by a doctor for a customer and delivered to the Company. The prescription identifies the performance obligations in the contract. The Company fills the prescription and delivers to the Customer the prescription, fulfilling the contract. The collection is probable because there is confirmation that the customer has insurance for the reimbursement to the Company prior to filling of the prescription.
Step Two: Identify the performance obligations in the contract — Each prescription is distinct to the Customer.
Step Three: Determine the transaction price — The consideration is not variable. The transaction price is determined to be the price of the prescription at the time of delivery which considers the expected reimbursements from third party payors (e.g., pharmacy benefit managers, insurance companies and government agencies).
Step Four: Allocate the transaction price — The price of the prescription invoiced represents the expected amount of reimbursement from third party payors. There is no difference between contract price and “stand-alone selling price”.
Step Five: Recognize revenue when or as the entity satisfies a performance obligation — Revenue is recognized upon the delivery of the prescription.
Disaggregation of Revenue
The following is a summary of the disaggregation of revenue for the three and nine months ended September 30, 2025 and 2024:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Product revenue - distribution services | $ | $ | $ | $ | ||||||||||||
| Pharmacy retail sales | ||||||||||||||||
| Third party logistics services | ||||||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
All revenue for the three and nine months ended September 30, 2025 and 2024 were within the United States.
Contract Assets and Liabilities
Contract assets would include costs and services incurred on contracts with open performance obligations. These amounts would be included in contract assets on the condensed consolidated balance sheets. Contract liabilities include payment received for incomplete performance obligations and are included in contract liabilities on the condensed consolidated balance sheets.
At
September 30, 2025 and December 31, 2024, the Company had unearned revenue of $
Goodwill
Goodwill is an asset representing the excess cost over the fair market value of net assets acquired in business combinations. In accordance with Intangibles - Goodwill and Other (Topic 350), goodwill is not amortized but is tested annually for impairment or on an interim basis when indicators of potential impairment exist. Goodwill is tested for impairment at the reporting unit level. The Company’s reporting units discrete financial information is available and management regularly reviews the operating results. For purposes of impairment testing, goodwill is allocated to the applicable reporting units based on the reporting structure.
The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors assessed for each of the applicable reporting units include, but are not limited to, changes in macroeconomic conditions, industry and market considerations, cost factors, discount rates, competitive environments and financial performance of the reporting units. If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, a quantitative test is required.
| 11 |
The Company also has the option to proceed directly to the quantitative test. Under the quantitative impairment test, the estimated fair value of each reporting unit is compared to its carrying value, including goodwill. If the carrying value of the reporting unit including goodwill exceeds its fair value, an impairment charge equal to the excess would be recognized, up to a maximum amount of goodwill allocated to that reporting unit.
During
the three and nine months ended September 30, 2025, the Company did not identify any events or changes in circumstances that would indicate
potential impairment of goodwill. Accordingly,
Impairment of Long-Lived Assets
The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets.
There were no triggering events to test intangibles for impairment loss during the three and nine months ended September 30, 2025 and 2024.
Leases
The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred.
In calculating the right of use asset and lease liability, the Company has elected not to combine lease and non-lease components. The non-lease components are accounted for separately and recognized as expenses when incurred. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.
Offering Costs
The Company complies with the requirements of ASC 340-10-S99-1. Prior to the completion of an offering, offering costs are capitalized if they are directly related to an equity financing that is probable of successful completion until such financing is consummated. The deferred offering costs are charged to stockholders’ equity upon the completion of an offering or to expense if the offering is abandoned, terminated, or significantly delayed in the period of determination. Deferred offering costs includes professional fees incurred including legal, accounting, underwriting and advisory services in connection with the Company’s equity offering.
As
of September 30, 2025 and December 31, 2024, the Company had capitalized $ and $
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. The Company measures all stock-based awards granted to employees, directors and non-employee consultants based on the fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. For awards with service-based vesting conditions, the Company records the expense for using the straight-line method. For awards with performance-based vesting conditions, the Company records the expense if and when the Company concludes that it is probable that the performance condition will be achieved.
The Company classifies stock-based compensation expenses in its statement of operations in the same manner in which the award recipient’s costs are classified.
Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion would be anti-dilutive. As all potentially dilutive securities are anti-dilutive as of September 30, 2025, diluted net loss per share is the same as basic net loss per share for each period. For the three and nine months ended September 30, 2025 and 2024, following items have been excluded from the computation of diluted net loss per share because the effect of including these would have been anti-dilutive:
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Unvested restricted common stock issued not outstanding | ||||||||
| Total potentially dilutive shares | ||||||||
| 12 |
Recent Accounting Pronouncements
In December 2023, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The ASU focuses on income tax disclosures around effective tax rates and cash income taxes paid. ASU 2023-09 requires public business entities to disclose, on an annual basis, a rate reconciliation presented in both dollars and percentages. The guidance requires the rate reconciliation to include specific categories and provides further guidance on disaggregation of those categories based on a quantitative threshold equal to 5% or more of the amount determined by multiplying pretax income (loss) from continuing operations by the applicable statutory rate. For entities reconciling to the US statutory rate of 21%, this would generally require disclosing any reconciling items that impact the rate by 1.05% or more. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024 (generally, calendar year 2025) and effective for all other business entities one year later. Entities should adopt this guidance on a prospective basis, though retrospective application is permitted. The adoption of ASU 2023-09 is expected to have a financial statement disclosure impact only and is not expected to have a material impact on the Company’s condensed consolidated financial statements.
In March 2024, the FASB issued ASU 2024-03, which provides new accounting guidance for certain crypto assets. Under the ASU, entities are required to subsequently measure qualifying crypto assets at fair value, with changes in fair value recognized in net income each reporting period. The ASU also establishes specific disclosure requirements, including information about significant crypto asset holdings, contractual sale restrictions, and changes in such holdings.
The guidance applies to crypto assets that meet all of the following criteria:
| ● | Meet the definition of intangible assets as defined in the ASC Master Glossary. | |
| ● | Do not provide enforceable rights to or claims on underlying goods, services, or other assets. | |
| ● | Are created or reside on a distributed ledger based on blockchain or similar technology. | |
| ● | Are secured through cryptography. | |
| ● | Are fungible. | |
| ● | Are not created or issued by the reporting entity or its related parties. |
The ASU is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted.
The Company is currently evaluating the impact of ASU 2024-03 on its condensed consolidated financial statements. While the Company does not currently hold material amounts of crypto assets, it is assessing the implications of the guidance in the event of future crypto asset acquisitions or changes in investment strategy.
Note 2. LIQUIDITY AND GOING CONCERN
The
Company has a net loss of $
The Company’s ability to continue as a going concern in the next twelve months following the date the financial statements were available to be issued is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results.
Management Plans
On
April 9, 2025, the Company entered into the Hudson Equity Purchase Agreement (“EPA”). Under the agreement, the Company may,
at its discretion and subject to certain conditions, issue and sell shares of its common stock to Hudson over a 24-month commitment period,
providing a potential source of additional capital to support the Company’s ongoing operations and growth initiatives. As of September
30, 2025, the Company had sold shares of common stock under the Hudson EPA, resulting in net proceeds of $
On
September 29, 2025, the Company filed a prospectus supplement with the U.S. Securities and Exchange Commission (“SEC”) pursuant
to Rule 424(b)(5) in connection with a public offering of shares of common stock and warrants to purchase up to shares
of common stock (the “Warrants”). The Warrants are exercisable immediately upon issuance at an exercise price of $
Management believes that the net proceeds from this offering, together with existing cash resources and anticipated revenue, will enhance the Company’s liquidity position. However, there is no assurance that the Company will be able to sell shares on favorable terms or that additional capital will be available from other sources when needed. If the Company is unable to obtain sufficient amount of additional capital, it may be required to reduce the scope of its planned development, which could harm its business, financial condition, and operating results. The accompanying condensed consolidated financial statements do not include any adjustments that might result from these uncertainties.
As a result of the above, in connection with our assessment of going concern considerations in accordance with FASB ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that our liquidity condition raises substantial doubt about our ability to continue as a going concern through twelve months from the date these unaudited interim condensed consolidated financial statements are issued. These unaudited interim condensed consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern
| 13 |
Note 3. ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consist of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Billed – Third Party | $ | $ | ||||||
| Billed – Affiliates | ||||||||
| Total Accounts Receivable | ||||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Total accounts receivable, net | $ | $ | ||||||
Note 4. INVENTORIES, NET
Inventory consists of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| First Defense Nasal Screen Corp (“FDNS”) | $ | $ | ||||||
| Finished goods | ||||||||
| Total inventory, at cost | ||||||||
| Less: reserve for obsolescence | ( | ) | ( | ) | ||||
| Inventories, net | $ | $ | ||||||
Note 5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consist of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Leasehold improvements | $ | $ | ||||||
| Equipment | ||||||||
| Furniture and fixtures | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
Depreciation
expense was $
| 14 |
Note 6. INTANGIBLE ASSETS
Intangible assets consist of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Software development costs - Delivmeds | $ | $ | ||||||
| Customer relationships - WoodSage acquisition | ||||||||
| Customer relationships - Wellgistics acquisition | ||||||||
| Trademark - Wellgistics acquisition | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Other intangible assets, net | $ | $ | ||||||
Intangible
assets of $
Intangible
assets of $
The following table represents the future amortization of intangible assets:
| Year Ended December 31, | ||||
| 2025(remaining three months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| $ | ||||
| 15 |
Note 7. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accrued personnel costs | $ | $ | ||||||
| Accrued professional fees | ||||||||
| Credit card obligation | ||||||||
| Unearned revenue | ||||||||
| Accrued interest | ||||||||
| Other accrued expenses | ||||||||
| $ | $ | |||||||
Note 8. DEBT
Outstanding debt consists of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Merchant cash advance | $ | $ | ||||||
| Loan payable | ||||||||
| Note payable - owners of Wellgistics | ||||||||
| Note payable - Integral Health | ||||||||
| Note payable - third party, net of debt discount | ||||||||
| Revolving line of credit | ||||||||
| Seller promissory note | ||||||||
| Current portion of debt obligations | ||||||||
| Merchant cash advance | $ | $ | ||||||
| Third party investor | ||||||||
| Note payable - Integral Health | ||||||||
| Note payable - owners of Wellgistics | ||||||||
| Long-term debt | ||||||||
| Total debt | $ | $ | ||||||
As
of September 30, 2025 and December 31, 2024, unamortized debt discount was $
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 $
On
October 30, 2025, the Company entered into a Debt Conversion Agreement (the “Integra Health DCA”), by and among the Company,
Integra Health Inc., a Florida corporation (“Integra Health”), and WoodSage. The Integra Health DCA addressed the conversion
of indebtedness in the amount of $
Merchant Cash Advance
On
March 18, 2025, the Company entered into a merchant cash advance agreement with a third-party lender. Pursuant to the agreement, the
Company received gross funding of $
| 16 |
The
MCA Agreement resets the Purchased Amount, repayment terms, and structure under a new contract. The Company is obligated to remit weekly
payments of $
The
Company accounts for the merchant cash advance as a debt obligation. On restructuring, the Company recorded a liability equal to the
full Purchased Amount of $
Loan Payable
On
August 26, 2025, the Company entered into a Business Loan and Security Agreement with Agile Capital Funding, LLC (as Collateral Agent)
and Agile Lending, LLC (as Lead Lender) for a secured term loan of $
At
inception, the Company received net proceeds of $
Note payable – sellers of Wellgistics, LLC
On
August 23, 2024, Wellgistics Health and Wellgistics LLC entered into the Fourth Amendment to the Wellgistics MIPA. Pursuant to the amended
agreement, Wellgistics Health agreed to pay Wellgistics LLC a promissory note in the aggregate principal amount of $
On
July 24, 2025, the parties executed the Eighth Amendment to the MIPA, which increased the principal amount of the promissory note from
$
For
the three and nine months ended September 30, 2025, the Company recorded total interest expenses of $
Note Payable – Third party
On
January 2, 2025, the Company entered into an unsecured promissory note agreement for a principal amount of $
On
February 2, 2025, the Company entered into an unsecured promissory note agreement for a principal amount of $
| 17 |
On
February 2, 2025, the Company entered into another unsecured promissory note agreement a principal amount of $
As
of September 30, 2024, the $
Revolving line of credit – Wellgistics
In
November 2024, Wellgistics, LLC entered into a new credit agreement with for a line of credit of $
Seller Promissory Note - Wellgistics
In
May 2022, Wellgistics, LLC entered into a promissory note agreement in the amount of $
The
Company assumed this debt as part of the acquisition of Wellgistics. As of September 30, 2025, the promissory note had been fully repaid,
and the outstanding balance was $
The following table is a summary of annual principal payments of the Company’s outstanding debt:
| December 31, | ||||
| 2025 (remaining three months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| $ | ||||
| 18 |
Note 9. STOCKHOLDERS’ EQUITY
Initial Public Offering
On
February 24, 2025, the Company closed its IPO of shares of common stock at a public offering price of $ per share. The IPO
generated gross proceeds of $
September 2025 Offering
On
September 29, 2025, the Company filed a prospectus supplement with the U.S. Securities and Exchange Commission (“SEC”) pursuant
to Rule 424(b)(5) under the Securities Act of 1933, as amended, in connection with a registered public offering of its securities. Pursuant
to the offering, the Company issued an aggregate of shares of its common stock, together with warrants to purchase up to
shares of common stock (the “Warrants”). The combined public offering price was $ per share of common stock and accompanying
Warrant. The Warrants are exercisable immediately upon issuance at an exercise price of $
Advisor and Consulting Agreements
On
February 25, 2025, the Company entered into a consulting agreement with Hudson to provide business advisory services, growth strategy
guidance, and networking support for a 30-day period. As consideration for these services, the Company agreed to pay Hudson a cash fee
of $
On
March 17, 2025, the Company entered into consulting agreement with Draper, Inc. (“Draper”), pursuant to which Draper
agreed to provide investor relations and business development services. As consideration for services under the initial three-month term
of the agreement, the Company issued shares of restricted common stock to Draper. The consulting agreement automatically renews
on a month-to-month basis unless terminated by either party with at least seven days’ notice prior to the end of the current term.
The Company will be obligated to issue an additional restricted shares of common stock for each renewal period. The Company subsequently
terminated this consulting agreement on June 16, 2025. Based on the market price of the Company’s common stock on the grant date,
the total fair value of the shares issued to Draper was determined to be $
On August 4, 2025, the Company issued shares of its common stock to a third party as consideration for advisory services rendered to the Company. The fair value of the shares, determined based on the market closing price of the Company’s common stock on the grant date, was $. The total fair value of $ was recognized as stock-based compensation expense for the three and nine months ended September 30, 2025, and recorded within general and administrative expenses in the accompanying condensed consolidated statements of operations.
On August 26, 2025, the Company issued an aggregate of shares of its common stock to a third party as consideration for marketing services rendered to the Company. The fair value of the shares was determined based on the closing market price of $ per share on the grant date, resulting in a total fair value of $. The entire amount was recognized as stock-based compensation expense during the three and nine months ended September 30, 2025, and included within sales and marketing expenses in the accompanying condensed consolidated statements of operations.
| 19 |
Directors and Former Employees
As
previously disclosed on the Company’s Current Report on Form 8-K filed with the SEC on April 11, 2025, the Company’s board
of directors appointed Michael L. Peterson to fill the vacancy created as a result of the resignation of Sajid Sayed. In consideration
for his board services and to further align his interests with those of the Company and its stockholders, On July 2, 2025, after his
appointment, the Company’s board of directors determined to issue restricted shares of the Company’s common stock.
The fair value of the award, determined based on the market closing price of the Company’s common stock on the grant date, was
$
In
June 2025, the Company also granted former chief executive officer Timothy Canning restricted shares of the Company’s common
stock in fulfillment of the sign-on bonus to which he had been entitled pursuant to the terms of his employment agreement with the Company.
The shares vest on the six-month anniversary of the grant date. As previously disclosed on the Company’s Current Report on Form
8-K filed with the SEC on March 6, 2025, Mr. Canning tendered his resignation to the Company effective February 28, 2025. The fair value
of the award, determined based on the market closing price of the Company’s common stock on the grant date, was $
Equity Purchase Agreement
On
April 9, 2025, the Company entered into the Hudson EPA pursuant to which Hudson committed to purchase, upon the Company’s request,
up to $
In connection with entering into the Hudson EPA, the Company also issued commitment shares to Hudson, which were valued at a fair value of $ based on the closing price of the Company’s common stock on the agreement date. For the three and nine months ended September 30, 2025, $ and $, respectively, was recorded as stock-based compensation and was included within general and administrative expenses in the condensed consolidated statements of operations.
As
of September 30, 2025, the Company had issued a total of shares of common stock pursuant to put notices under the agreement,
resulting in net proceeds of $
Wellgistics MIPA
On
April 14, 2025, the Company and sellers of Wellgistics LLC further amended the Wellgistics MIPA. Pursuant to the amendment, the portion
of the closing cash payment payable to one of the sellers, Strategix Global LLC, was reduced by $
On
July 24, 2025, the Company entered into the Eighth Amendment to the Membership Interest Purchase Agreement (“MIPA”) with
the sellers of Wellgistics LLC, including Strategix Global LLC, Nomad Capital LLC, and Jouska Holdings LLC. Pursuant to the terms of
the Eighth Amendment, the Company agreed to satisfy a portion of the remaining closing cash consideration payable to the sellers through
the issuance of shares of the Company’s common stock (the “Conversion Shares”). The Conversion Shares were
issued at a conversion price of $
| 20 |
2023 Equity Incentive Plan
The Company adopted the 2023 Equity Incentive Plan (the “Plan”), which provides the issuance of up to shares of the Company’s common stock (the “Initial Limit”). Beginning on January 1, 2025, and on each January 1 thereafter, the number of shares reserved for issuance under the Plan will automatically increase by an amount equal to three percent (3%) of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31, or such lesser amount as may be determined by the Plan’s administrator (the “Annual Increase”). Shares issued under the Plan may be newly issued shares or reacquired shares.
The Plan permits the grant of various types of stock-based awards, including incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares available for issuance as incentive stock options may not exceed the Initial Limit, as adjusted for any Annual Increases, subject to adjustment as provided under the terms of the Plan.
Shares subject to awards that expire, are canceled, or otherwise terminate without having been exercised or settled in full will again become available for future grant under the Plan. However, shares repurchased by the Company on the open market will not be added back to the share reserve. Awards that may be settled solely in cash do not count against the share reserve.
The Plan also includes a limitation on annual compensation to non-employee directors. The aggregate value of all equity awards granted to any non-employee director under the Plan, together with any cash compensation paid for service as a non-employee director, may not exceed (i) $ in the first calendar year of service and (ii) $ in any subsequent calendar year. The fair value of such awards is determined based on grant date fair value in accordance with ASC Topic 718, excluding the impact of estimated forfeitures related to service-based vesting conditions.
Restricted Common Stock
On February 28, 2025, in connection with the appointment of Brian Norton as Chief Executive Officer of the Company, Mr. Norton was granted and issued shares of restricted common stock under the Company’s Amended and Restated 2023 Equity Incentive Plan (the “Plan”). The shares were originally scheduled to vest in three equal annual installments over a three-year period, contingent upon the achievement of specified gross-revenue and gross-profit performance targets established by the Company’s Compensation Committee. On July 24, 2025, the Compensation Committee approved, and the Board of Directors ratified on September 4, 2025, the acceleration of vesting of these restricted shares, resulting in immediate vesting of all shares as of the approval date. In accordance with ASC 718, Compensation—Stock Compensation, the Company recognized the full $ million of stock-based compensation expense related to this award during the three and nine months ended September 30, 2025, which is reflected in general and administrative expenses. The fair value of the shares was determined based on the market price of the Company’s common stock on the grant date, February 28, 2025, and no incremental fair value arose as a result of the acceleration. Following this vesting event, there is no remaining unrecognized compensation cost related to Mr. Norton’s restricted stock award.
On March 14, 2025, the Company granted an aggregate of shares of restricted common stock under the Plan to certain directors, employees, and consultants. On June 26, 2025, the Company granted an additional shares of restricted stock to former Chief Executive Officer Timothy Canning, and on July 2, 2025, the Company granted shares of restricted stock to director Michael L. Peterson. The shares granted had varying vesting terms, ranging from immediate vesting to vesting over a five-year period. As of September 30, 2025, of these shares had vested and are included in the total outstanding common stock reported in the consolidated statement of stockholders’ equity. As of September 30, 2025, a total of shares were forfeited and cancelled and the remaining shares were unvested as of September 30, 2025.
A summary of information related to restricted common stocks for the nine months ended September 30, 2025 is as follows:
| Restricted Common Stock | Grant Date Fair Value | |||||||
| Unvested shares as of December 31, 2024 | ||||||||
| Granted | $ | |||||||
| Vested | ) | $ | ||||||
| Forfeited and cancelled | ) | $ | ||||||
| Unvested shares as of September 30, 2025 | $ | |||||||
For the three and nine months ended September 30, 2025, the Company recognized $ and $, respectively, in stock-based compensation expense in accordance with ASC 718, Compensation – Stock Compensation, based on the grant-date fair value of the restricted stock.
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Sales and marketing expenses | $ | $ | $ | $ | ||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total expenses | $ | $ | $ | $ | ||||||||||||
As of September 30, 2025, total unrecognized compensation expense related to the non-vested restricted stock awards was $, which is expected to be recognized over a weighted-average period of years.
| 21 |
Note 10. LEASE OBLIGATIONS
Rent is classified by function on the consolidated statements of operations as general and administrative.
The following is the summary of operating lease assets and liabilities:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Operating Leases | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Lease liabilities, current portion | ||||||||
| Long-term lease liabilities | ||||||||
| Total lease liabilities | $ | $ | ||||||
| Weighted Average Remaining Lease Term | ||||||||
| Weighted Average Discount Rate | % | % | ||||||
The following is the summary of future minimum payments:
| December 31, | ||||
| 2025 (remaining 3 months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: Imputed interest | ( | ) | ||
| Total | $ | |||
Note 11. RELATED PARTY TRANSACTIONS
The Company had transactions with Scienture Holdings, Inc. and group (f/k/a/ TrXade Health, Inc / TRG / TrXade Health / Scienture) and group which included Integra Pharma Solutions, LLC (“IPS”), in which the board members of the Company were also members of Scienture’s management and board at the time the transactions occurred. Tollo Health, LLC acquired IPS from Scienture in April 2025. At that time Tollo Health, LLC was owned in part by Integral Health, Inc., in which certain board members of the Company also had a beneficial ownership interest. Integral Health acquired IPS from Tollo Health, LLC in June 2025. The common management between the entities at the time the transactions occurred classifies Scienture, IPS, and Integral as related parties.
During
the first quarter of 2025, the Company purchased $
In
August 2025, Integral Health, including its subsidiary IPS, were acquired by third parties. Therefore, at September 30, 2025, Integral
Health and Tollo was no longer considered a related party. As of September 30, 2025, the amounts owed to Integral Health were $
On
October 30, 2025, the Company entered into a Debt Conversion Agreement (the “Integra Pharma DCA”), by and among, the Company,
Integra Pharma Solutions, LLC, a Florida limited liability company (“Integra Pharma”), and WoodSage. The Integra Pharma DCA
addressed the conversion of indebtedness in the amount of $
Wellgistics, LLC was previously partly owned by a private equity company, Nomad Capital LLC, which has ownership interest in a few portfolio companies and Wellgistics, LLC had transactions with some of the affiliated companies of Nomad Capital. Operating expenses with affiliated companies, which include software expenses and marketing expenses, are recorded within general and administrative expenses. Cingo Solutions provides IT, cyber security and compliance services; and RxERP provides serialized ERP for pharma as a software-as-a-service (“SaaS”) to the Company. Wellgistics, LLC is charged a managerial service and software fee by Cingo and RxERP, respectively, which is recorded within general and administrative expenses.
The Company had transactions with Scietech, LLC where a significant investor is the spouse of one of the directors of the Company, which qualifies as a related party.
The following is a summary of due from and to related parties, as well as accounts receivable and accounts payable, as of September 30, 2025 and December 31, 2024:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Due from TRG | $ | $ | ||||||
| Due from IPS | ||||||||
| Due from Scienture Holdings | ||||||||
| Due from related parties | $ | $ | ||||||
| Due to former Chief Executive Officer | $ | |||||||
| Due to TRG | ||||||||
| Due to IPS | ||||||||
| Due to Scienture Holdings | ||||||||
| Due to related parties | $ | $ | ||||||
| 22 |
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accounts receivable - IPS* | $ | $ | ||||||
| Accounts payable - Scietech | $ | $ | ||||||
| * |
The Company had the following transactions with related parties during the three and nine months ended September 30, 2025 and 2024:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Sales to Integra Pharma Solutions, LLC | $ | $ | $ | $ | ||||||||||||
| IT expenses paid to Cingo Solutions (common management) | $ | $ | $ | $ | ||||||||||||
| IT expenses paid to RxERP (common management) | $ | $ | $ | $ | ||||||||||||
| Management services fees paid to Nomad Capital | $ | $ | $ | $ | ||||||||||||
Note 12. SEGMENT AND GEOGRAPHIC INFORMATION
The
Company operates as
The following table presents selected financial information with respect to the Company’s single operating segment for the three and nine months ended September 30, 2025 and 2024:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Cost of net revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income/(expense): | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on debt extinguishment | ( | ) | ( | ) | ||||||||||||
| Other income | ||||||||||||||||
| Other (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
All revenues were within the U.S. region. See Note 1, Organization and Summary of Significant Accounting Policies - Revenue Recognition for additional information about disaggregated revenue.
The Company’s long-lived tangible assets, as well as the Company’s operating lease right-of-use assets recognized on the condensed consolidated balance sheets were located as follows:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| United States | ||||||||
| Property, plant and equipment, net | $ | $ | ||||||
| Operating lease, right-of-use assets | $ | $ | ||||||
Note 13. COMMITMENTS AND CONTINGENCIES
From time to time, the Company is involved in legal proceedings arising from the normal course of business activities. The Company, in conjunction with its legal counsel, assesses the need to record a liability for litigation or loss contingencies. A liability is recorded when and if it is determined that such a liability for litigation or loss contingencies is both probable and estimable.
Although the results of legal proceedings and claims cannot be predicted with certainty, the Company is not currently a party to any legal proceedings, which would, individually or in the aggregate, have a material adverse effect on its results of operations, cash flows, or financial position.
Legal Matters
On
August 21, 2024, Blythe Global Advisors, LLC filed a demand for arbitration against the Company and Suren Ajjarapu for breach of contract,
breach of the implied covenant of good faith and fair dealing, and breach of personal guaranty. Blythe claims to have performed accounting
services for the Company in the amount of $
Relatedly, in early 2025, Wellgistics, LLC, Wood Sage, LLC, Alliance Pharma Solutions, LLC, and Community Specialty Pharmacy, LLC, all subsidiaries of the Company, sued Blythe Global Advisors, LLC in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida, asserting state statutory claims of improper UCC-1 filings, tortious interference with business relationships, slander of title, and state RICO violations. The Company claims that Blythe improperly filed a UCC-1 against the assets of these subsidiaries, when it only had a right file such a lien against the Company and that the filing impeded Wellgistics, LLC’s ability to secure a necessary credit line, causing substantial damages. Blythe filed a motion to dismiss that remains pending. The Company is vigorously prosecuting its claims.
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Guarantee Obligation
On
March 12, 2025, Tollo Health, LLC, Tollo Health Inc., and Gerald Commissiong (collectively, the “Borrowers”) entered into
a Revolving Credit Agreement and issued a Revolving Credit Note to Testing123, LLC (the “Lender”) in the original principal
amount of up to $
Pursuant
to the Transaction Documents, the initial advance of $
The
Borrowers defaulted on their payment obligations, thereby triggering the Company’s liability as guarantor. On July 25, 2025, the
Company satisfied its obligations under the Guaranty and paid $
Note 14. SUBSEQUENT EVENTS
Removal of Directors
Effective as of October 1, 2025, stockholders of the Company holding a majority of the Company’s common stock, par value $ per share, acted by consent in lieu of a stockholder meeting under Section 228 of the General Corporation Law of the State of Delaware (the “DGCL”) to remove Rebecca Shanahan and Michael Peterson from the board of directors, effective immediately. At the time of their respective removals, Ms. Shanahan served on the Ethics Committee and Mr. Peterson served as the chair of the Audit Committee.
Director Resignations
On October 2, 2025, Donald Anderson advised the Company that he was resigning from his position as a member of the board of directors effective immediately. Mr. Anderson indicated that his decision to resign was a result of his inability commit the time and focus needed to serve on the board of directors going forward. Mr. Anderson did not advise the Company of any dispute or disagreement with the Company, the Company’s management or the Company’s board of directors on any matter relating to the Company’s operations, policies, or practices. At the time of his resignation, Mr. Anderson served on the Nominating Committee.
Election of Directors
Effective as of October 2, 2025, the remaining member of the board of directors acted by consent in lieu of a meeting of the board of directors under Section 141(f) of the DGCL to elect Donald Fell, Prashant Patel, Steven D. Lee, and Howard Doss (together, the “Newly Elected Directors”) to the board of directors to serve as directors. The board of directors has since appointed Mr. Fell to serve on the Nominating Committee and Compensation Committee of the board of directors, Mr. Lee to serve on the Ethics Committee of the board of directors, and Mr. Doss to serve as the chairman on the Audit Committee of the board of directors. Mr. Fell, Mr. Lee, and Mr. Doss will be “independent” directors as defined under applicable rules of NASDAQ and the SEC.
Officer Resignations
On October 6, 2025, Brian Norton advised the Company that he was resigning from his position as Chief Executive Officer of the Corporation effective Monday, October 6, 2025, at 5:00 p.m. EST.
On October 6, 2025, Tony Madsen advised the Company that he was resigning from his position as Chief Operating Officer of the Corporation effective Monday, October 6, 2025, at 8:00 p.m. EST.
On October 6, 2025, Mark DiSiena advised the Company that he was resigning from his position as Chief Financial Officer of the Corporation effective Monday, October 6, 2025, at 5:00 p.m. EST.
Appointment of Officer
On October 7, 2025, Eric Sherb was appointed as the interim Chief Financial Officer of the Company by the board of directors.
Changes in Registrant’s Certifying Accountant
On November 11, 2025, following the resignation of UHY LLP, the Audit Committee of the Board of Directors approved the engagement of Suri & Co. (“Suri”) as the Company’s new independent registered public accounting firm for the fiscal year ending December 31, 2025, effective immediately.
Exercise of Warrants
In
October 2025, approximately
Integra Health Inc. Debt Conversion Agreement
On
October 30, 2025, the Company entered into a Debt Conversion Agreement (the “Integra Health DCA”), by and among the Company,
Integra Health Inc., a Florida corporation (“Integra Health”), and WoodSage LLC, a Florida limited liability company and
a wholly-owned subsidiary of the Company (“WoodSage”). The Integra Health DCA addressed the conversion of indebtedness in
the amount of $
Integra Pharma Solutions, LLC Debt Conversion Agreement
On
October 30, 2025, the Company entered into a Debt Conversion Agreement (the “Integra Pharma DCA”), by and among, the Company,
Integra Pharma Solutions, LLC, a Florida limited liability company (“Integra Pharma”), and WoodSage. The Integra Pharma DCA
addressed the conversion of indebtedness in the amount of $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our 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.
Cautionary Statement Regarding Forward-Looking Information
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. 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.
Forward-looking statements in this Quarterly Report may include, for example, statements about:
| ● | A shift in pharmacy mix toward lower margin plans, margin compression on branded medications, or the increased offering of specialty products, direct and indirect remuneration fees, mail order pharmacy steering, and programs; | |
| ● | Wellgistics Health deriving a portion of its sales from prescription drug sales reimbursed by pharmacy benefit management companies; | |
| ● | Wellgistics Health being adversely affected by a decrease in the introduction of new brand name and generic prescription drugs as well as increases in the cost to procure prescription drugs; | |
| ● | changes in economic conditions that adversely affect consumer/client buying practices and market adoption of our mobile application and the accompanying revenues to premium access/services; | |
| ● | Wellgistics Health’s relationships with its primary wholesaler for pharmacy operations and Wellgistics Health’s manufacturer relationships of its wholesale and hub technology platform subsidiaries; | |
| ● | changes in the healthcare industry and regulatory environments; | |
| ● | the effects of competition on Wellgistics Health’s future business; | |
| ● | Wellgistics Health’s ability to execute its business plans and strategy; and | |
| ● | other risks and uncertainties described in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 25, 2025, and those risks described in the section entitled “Risk Factors” of this Quarterly Report. |
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There can be no assurance that future developments affecting us will be those that we have anticipated. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statements in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved.
These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
We have based the forward-looking statements included in this Quarterly Report on information available to us on the date of this Quarterly Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this Quarterly Report, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file in the future with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Overview
Incorporated in 2022, we are 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 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.
Currently, we own one direct operating company, Wellgistics, LLC, and two indirect operating companies, Wellgistics Tech & Hub, LLC dba DelivMeds (f/k/a Alliance Pharma Solutions, LLC) (“Wellgistics Tech & Hub”) and Wellgistics Pharmacy, LLC (f/k/a Community Specialty Pharmacy, LLC) (“Wellgistics Pharmacy”), through an intermediary—Wood Sage, LLC.
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Wellgistics, LLC
Founded in 2013, Wellgistics, LLC serves as the wholesale arm of our healthcare ecosystem as a 50-state FDA licensed and NABP-accredited pharmaceutical wholesaler distributor, bridging the gap between small- to mid-size pharmaceutical manufacturers and independent retail pharmacies. Serving over 5,000 registered pharmacies nationwide, Wellgistics, LLC provides significant value by offering competitive pricing, unique products, and exceptional service, while also promoting manufacturers’ products to a diverse range of pharmacies. Wellgistics, LLC’s primary focus is on supporting independent retail pharmacies in search of better products, prices, and services, thereby ensuring their growth and sustainability in the competitive pharmaceutical sector.
Wellgistics, LLC provides distribution and third party logistics services to both pharmaceutical manufacturers and independent retail pharmacies. With over 60 manufacturing relationships, Wellgistics, LLC identifies niche therapeutic products and work with its manufacturing clients to increase market access and visibility of its client relationships with product awareness and support campaigns. Specifically, Wellgistics, LLC helps promote product distribution through its network of pharmacy buyers by providing sales and marketing support. These services include providing product education, identifying opportunities for therapeutic substitution when clinically relevant, and cost savings opportunities for pharmacies and their patients. Wellgistics, LLC’s portfolio of products is comprised of 65% topical generics with a primary focus on the dermatology market, 20% oral generic formulations primarily in the non-narcotic pain category, 10% oral and topical brand formulations, and 5% in the over-the-counter market space. Its investments in cold chain infrastructure will position this division to compete in the specialty-lite therapy category while also expanding our ability to house additional branded products.
We acquired Wellgistics, LLC in August 2024.
Wellgistics Tech & Hub, LLC dba DelivMeds (f/k/a Alliance Pharma Solutions, LLC)
Founded in 2017 under the name Alliance Pharma Solutions, LLC and doing business as DelivMeds, Wellgistics Tech & Hub serves as the middleware technology arm of our healthcare ecosystem by facilitating prescription transfer and clinical concierge services to a network of independent pharmacies. After conducting an extensive market research survey focusing on competition, Wellgistics Tech & Hub identified several key differentiators from other healthcare technology solutions, including various integrations of the hub with pharmacy management software systems and pharmacy point of sale systems, among others. This suggests that Wellgistics Tech & Hub could serve as an end-to-end patient-centric solution automating the prescription journey. Powered by Wellgistics Pharmacy as the backend pharmacy, Wellgistics Tech & Hub is the frontend technology serving as the middleware between all key stakeholders referenced in what we refer to as the 5P-Model: patients, providers, pharmacies, payors or pharmacy Benefit Managers, and pharmaceutical manufacturing companies.
Through Wellgistics Tech & Hub, we aim to preserve patient autonomy, improve price transparency, and aid in making a meaningful impact on patient outcomes by eliminating barriers to therapy while simultaneously boosting adherence. We work with channel partners such as pharmaceutical manufacturers, provider groups and accountable care organizations, telehealth companies, and employer groups to offer full suite of patient-centered pharmacy services. Wellgistics Tech & Hub’s business-to-business strategy approach enables prescriptions to be sent directly to Wellgistics Pharmacy and subsequently transferred to an eligible in-network independent pharmacy. Each channel partner is equipped with de-identified data to improve its respective business operation and or improve its renumeration from the value-based services the clinical concierge arm provides.
We acquired Wellgistics Tech & Hub through our acquisition of Wood Sage in June 2024.
Wellgistics Pharmacy, LLC (f/k/a Community Specialty Pharmacy, LLC)
Founded in 2011, Wellgistics Pharmacy serves as the backbone dispensing pharmacy of our healthcare ecosystem. First operating as a retail community specialty pharmacy, Wellgistics Pharmacy provides general and specialty pharmacy services dedicated to servicing the needs of patients, as well as clinical expertise, technology-driven innovation tools, and administrative efficiencies that support physicians, payers, and pharmaceutical manufacturers. Initially focusing on providing HIV/AIDS products, Wellgistics Pharmacy has expanded its business operations to perform 340B services by partnering with local clinics and provider groups. It has pursued pharmacy state licenses to convert its business into a mail order pharmacy. Currently, Wellgistics Pharmacy is licensed in 32 states and the District of Columbia, with superb license coverage along the east coast. While Wellgistics Pharmacy voluntarily forfeited its specialty accreditations, Wellgistics Pharmacy maintains specialty internal standard operating procedures and performs all of the functions of a specialty pharmacy.
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Wellgistics Pharmacy purchases pharmaceuticals including specialty medications from manufacturers and wholesale distributors, fills prescriptions, labels, packages and delivers these pharmaceuticals to patients’ homes or physicians’ offices through contract couriers or carriers. It maintains a call center and customer support within its pharmacy located in Tampa, Florida. Wellgistics Pharmacy has several 340B relationships, acting as the dispensing pharmacy for these healthcare facilities that help drive revenue and prescription volume. Wellgistics Pharmacy’s relationship with Wellgistics, LLC and other wholesalers enables it to offer a competitive cash-based formulary for the uninsured and underinsured patient populations. Given its low-cost business model, Wellgistics Pharmacy believes there is an opportunity to gain market share with small- to medium-size employer groups in a partnership model with other consumer driven healthcare companies to the extent that more patients elect to pay out of pocket for prescriptions.
We acquired Wellgistics Pharmacy through our acquisition of Wood Sage in June 2024.
Wellgistics Health, Inc.
As a micro health ecosystem, our portfolio of companies consists of a pharmacy, wholesale operations, and a technology division with a novel platform for hub and clinical services. We are focused on improving the lives of patients while delivering unique solutions for pharmacies, providers, pharmaceutical manufacturers, and payors. Our patient-centric approach combined with innovative healthcare applications positions us to shift the dynamic of care to revolve around the patient for a wide range of therapeutic conditions. We offer a full spectrum of integrated solutions by leveraging the synergies of our business segments to address access, care coordination, dispensing, delivery, and clinical management of pharmaceutical products ranging from “specialty-lite” to general maintenance conditions.
Prior to acquiring Wood Sage, LLC, we did not generate revenue. As discussed above, we acquired Wellgistics Tech & Hub and Wellgistics Pharmacy through our acquisition of Wood Sage, LLC in June 2024, and acquired Wellgistics, LLC in August 2024. Currently, our revenues are derived from (i) pharmaceutical dispensing of products, (ii) care management services we deliver to patients and offer to pharmaceutical manufacturing clients, (iii) SaaS fees for use of our platform technology services, and (iv) product procurement and distribution to independent pharmacies.
We expect that 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 management believes that our digital pharmacy, including its hub and clinical services technology platform, is poised to add significant value in the key specialty-lite market by providing patients access and convenience, while providing partners with ready-to-go market solutions with big data.
Data released from the Centers for Medicare & Medicaid Services illustrates that the National Health Expenditure Data for 2022 grew to $4.5 trillion and accounted for 17.3% of gross domestic product (“GDP”), with an expected increase in the health spending share of GDP to 19.7% by 2032. A deeper dive of this report reveals that total retail prescription drug spending from 2021 to 2022 increased by 8.4% to $405.9 billion. IQVIA’S 2024 report on medicine spending trends found that overall spending in the U.S. market for medicines reached $435 billion in 2023. It is well documented in the literature that the specialty drug market accounts for less than 10% of total drugs in the market but is responsible for greater than 50% of the prescription drug spend per annum. After evaluating reasons for increased healthcare expenditure, poor medication adherence continues to be a challenge that causes unnecessary strain on the healthcare system, including, but not limited to, increased hospital admissions and readmissions rates from medication non-compliance and adverse events. Many of these factors are preventable by empowering patient autonomy in their healthcare journey, identifying cost savings opportunities, and providing access to clinical resources and support.
We believe that our business model primely positions us to address the prescription spend in the “specialty lite” therapy area while improving patient health outcomes by equipping patients with our innovative digital health tools. We seek to expand the service coverage area of our pharmacy operations while strengthening its clinical expertise in several key therapeutic categories, including services such as care coordination and patient financial assistance. Furthermore, we expect that our partner relationships will enable us to offer a competitive cash formulary as an alternative option when high insurance deductibles make it economically feasible. We anticipate expanding our wholesale operations as we continue to partner and establish new manufacturer relationships. With many of these new relationships, we intend to provide sales and clinical education support to the pharmacies purchasing these products. We have strategically identified opportunities to wholesale products that are normally not carried by the three largest wholesalers in the United States, and will seek to carve out exclusivity or semi- exclusive relationships based on a time period to ensure we are maximizing our revenues. We expect that new partnerships with group purchasing organizations will be effective, as we increase the business divisions’ visibility with all or many of the member pharmacies. Our technology division will be connected to our pharmacy network enabling us to operate as a digital pharmacy and hub. Our pharmacy network leverages independent, locally-owned pharmacies that are rooted in their communities to create a powerful network of over 19,000 pharmacies across the United States capable of delivering prescriptions in hours. This channel services approximately 1.3 billion prescriptions annually and represents a $47 billion market at wholesale cost.
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We seek to provide an end-to-end solution for digitizing the prescription journey through our Wellgistics Tech & Hub mobile application, which should help to preserve patient autonomy, improve prescription price transparency, and provide additional concierge services in an effort to boost medication adherence and improve patient outcomes. We intend to aggregate the data collected from our solution to provide comprehensive reports that are tied to medication adherence and outcomes to make a meaningful impact for all stakeholders involved. We expect to monetize this valuable data with manufacturers, payors and providers.
Key Components of Results of Operations
We are an early-stage company, and our historical results may not be indicative of our future results for reasons that may be difficult to anticipate. Accordingly, the drivers of our future financial results, as well as the components of such results, may not be comparable to our historical or future results of operations.
Revenues
Wellgistics Health is a holding company specifically formed to hold operating companies. We did not generate any revenue prior to the Wood Sage Acquisition, but now expect to generate all of our revenues through Wellgistics Pharmacy, and Wellgistics LLC. Although Wellgistics Health may add other sources of revenue through the acquisition of other operating companies in the future, Wellgistics Health currently does not have any such plans.
Wellgistics Health will be subject to risk of specific inflationary pressures on product prices and its impact on consumer spending. For example, increases in prescription drug costs could impact consumers ability to afford initial or on-going therapy. Wellgistics Health’s focus on the relatively expensive specialty lite business segment (i.e., $500 - $3,000 therapies) could be particularly impacted by increasing costs. Additionally, consumer discretionary funds could be reduced, impacting the ability to pay for digital services and subscription models that Wellgistics Health offers. If inflation continues to increase, sourcing and procuring specialty lite products may prove to be capital intensive. Wellgistics Health may not be able to adjust prices sufficiently to offset the effect without negatively impacting consumer demand or Wellgistics Health’s gross margin. All of these inflationary risk factors could materially and adversely impact Wellgistics Health’s business operations, financial condition and results of operations.
Wellgistics Pharmacy recognizes product revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, when we transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Wellgistics Pharmacy fills prescriptions for prescription and over-the-counter drugs written by a provider and recognizes revenue at the time the patient confirms the prescription order for payment of co-pays.
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Expenses
Sales and Marketing Expense
Sales and marketing expenses consist of personnel and personnel-related expenses, including stock-based compensation for our business development team as well as trade events participation, public relations, white paper development, social media, pharmacy trade and patient materials, advertising, sales collateral, syndicated data fees, and other marketing expenses. We expect to increase our sales and marketing 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 Expense
General and administrative expenses currently consist of business development, consulting, and information technology development and support and third-party software expenses.
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 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.
Income Tax (Benefit) Expense
Our income tax provision will consist of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We will maintain a valuation allowance against the full value of our U.S. and state net deferred tax assets because we believe the recoverability of the tax assets is more likely than not.
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Results of Operations
For the Three Months Ended September 30, 2025 and 2024
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net revenues | $ | 3,012,904 | $ | 5,673,868 | ||||
| Cost of revenues | 2,781,892 | 5,152,624 | ||||||
| Gross profit | 231,012 | 521,244 | ||||||
| General and administrative | 30,172,800 | 1,798,641 | ||||||
| Sales and marketing | 803,747 | - | ||||||
| Depreciation and amortization | 802,794 | 467,423 | ||||||
| Total operating expenses | 31,779,341 | 2,266,064 | ||||||
| Loss from operations | (31,548,329 | ) | (1,744,820 | ) | ||||
| Total other income (expense) | (2,769,875 | ) | (122,207 | ) | ||||
| Net loss | $ | (34,318,204 | ) | $ | (1,867,027 | ) | ||
Revenues and Cost of Revenues
Net revenues were $3,012,904 for the three months ended September 30, 2025, compared to $5,673,868 for the same period in 2024, representing a decrease of approximately 47%. The revenue during the current quarter was primarily derived from operations of Wellgistics Pharmacy, which was acquired in August 2024. The decline in revenues was primarily due to the Company’s cash constraints for the majority of the third quarter, which inhibited the Company’s ability to purchase new inventory and delayed shipments in the distribution business.
Cost of revenues for the three months ended September 30, 2025, totaled $2,781,892, compared to $5,152,624 for the same period in 2024. The decrease in cost of revenues is due to the lower sales volume during the period.
Gross Profit for the three months ended September 30, 2025, was $231,012, compared to $521,244 for the same period in 2024, representing a decrease of approximately 56%. The significant decline in gross profit was primarily attributable to lower revenues resulting from reduced sales volumes and the Company’s constrained liquidity position, which limited its ability to procure inventory.
The following is a summary of the disaggregation of revenue for the three months ended September 30, 2025 and 2024:
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Product revenue - distribution services | $ | 2,637,790 | $ | 5,484,247 | ||||
| Pharmacy retail sales | 172,100 | 144,166 | ||||||
| Third party logistics services | 203,014 | 45,455 | ||||||
| Net revenues | $ | 3,012,904 | $ | 5,673,868 | ||||
General and Administrative Expense
General and administrative expenses were $30,172,800 for the three months ended September 30, 2025, compared to $1,798,641 for the three months ended September, 2024. The increase was primarily due to the acquisition of Wellgistics LLC in August 2024 and full-scale operations of the consolidated company in 2025. General and administrative expenses include personnel costs, and professional fees including audit, tax and legal. For the three months ended September 30, 2025, general and administrative expenses also included $25,370,523 of non-cash stock-based compensation consist of $24,300,000 related to the accelerated vesting of 9,000,000 restricted shares granted to the Chief Executive Officer under the Company’s Amended and Restated 2023 Equity Incentive Plan and $1,070,523 related to the issuance of common stock and restricted stock units to directors, employees, and consultants in exchange for services rendered. The Company also recorded a loss of $640,647 related to the satisfaction of its guaranty of a revolving credit note issued by Tollo Health.
Sales and Marketing Expense
Sales and marketing expenses were $803,747 for the three months ended September 30, 2025, compared to $0 for the same period in 2024. The increase reflects the Company’s expanded promotional activities and marketing initiatives following the acquisitions of Wood Sage and Wellgistics. For the three months ended September 30, 2025, Sales and marketing expenses also included $346,000 of non-cash stock-based compensation related to the issuance of common stock to sales and marketing advisors in exchange for services rendered.
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Depreciation and Amortization
Depreciation and amortization was $802,794 for the three months ended September 30, 2025, compared to $467,423 for the three months ended September 30, 2024. This included amortization of $763,065 pertaining to intangible assets identified from acquisitions of Wood Sage and Wellgistics, LLC. Depreciation expense of $39,729 relates to fixed assets acquired from the Wellgistics acquisition.
Other Expense, net
Other expense, net for the three months ended September 30, 2025 included total expense of $2,769,875, compared to $122,207 for the same period in 2024. The significant increase was primarily due to interest expense associated with financing activities, a loss on debt extinguishment related to the Wellgistics acquisition, and a one-time loss on guarantee.
Interest expense was $1,425,307 and $137,614 for the three months ended September 30, 2025 and 2024, respectively. Interest expense in 2025 was incurred on Wellgistics Health’s outstanding loans, promissory notes, revolving line of credit, and merchant cash advance agreements.
The Company recognized a loss of $1,353,663 for the three months ended September 30, 2025, in connection with the Eighth Amendment to the Membership Interest Purchase Agreement (“MIPA”) with Wellgistics LLC, executed on July 24, 2025. Under the amendment, the Company increased the principal balance of the related promissory note from $15 million to $17.5 million. The original $15 million promissory note, including $1,146,337 of accrued interest through July 24, 2025, was derecognized and replaced with a new note recorded at the present value of its future cash flows. The resulting difference between the carrying amount of the old debt and the fair value of the new note was recognized as a loss on debt extinguishment for the period.
For the Nine Months Ended September 30, 2025 and 2024
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net revenues | $ | 21,667,212 | $ | 5,718,408 | ||||
| Cost of revenues | 20,237,807 | 5,199,772 | ||||||
| Gross profit | 1,429,405 | 518,636 | ||||||
| General and administrative | 66,205,669 | 2,448,813 | ||||||
| Sales and marketing | 1,212,347 | - | ||||||
| Depreciation and amortization | 2,408,462 | 467,423 | ||||||
| Total operating expenses | 69,826,478 | 2,916,236 | ||||||
| Loss from operations | (68,397,073 | ) | (2,397,600 | ) | ||||
| Total other income (expense) | (5,024,498 | ) | (126,874 | ) | ||||
| Net loss | $ | (73,421,571 | ) | $ | (2,524,474 | ) | ||
Revenues and Cost of Revenues
Net revenues were $21,667,212 for the nine months ended September 30, 2025, compared to $5,718,408 for the same period in 2024. The increase in revenues was primarily attributable to 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 2025 period reflects a full nine months of post-acquisition activity, while the 2024 period included only limited revenues generated during the post-acquisition period following the August 30, 2024 closing of the Wellgistics acquisition.
Cost of revenues for the nine months ended September 30, 2025 totaled $20,237,807, compared to $5,199,772 for the same period in 2024. The increase primarily reflects the inclusion of cost of sales from the newly acquired subsidiaries and higher purchase volumes associated with expanded distribution activities.
Gross profit for the nine months ended September 30, 2025, was $1,429,405, compared to $518,636 for the same period in 2024, representing an increase of approximately 176%. The increase in gross profit was primarily attributable to the significant rise in revenues following the inclusion of operations from Wellgistics Pharmacy and Wellgistics Tech & Hub, which were acquired as part of the Company’s acquisitions of Wood Sage LLC on June 16, 2024, and Wellgistics LLC on August 30, 2024. The 2025 period reflects a full nine months of post-acquisition activity, whereas the 2024 period included only limited revenues following the August 2024 acquisition. Gross margin decreased to 6.6% for the nine months ended September 30, 2025, from 9.1% in the prior-year period. The significant decline in gross margin was primarily attributable to lower revenues resulting from reduced sales volumes and the Company’s constrained liquidity position, which limited its ability to procure inventory.
These liquidity constraints and the resulting sales impact were concentrated in the third quarter 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 subsequent quarter.
The following is a summary of the disaggregation of revenue for the nine months ended September 30, 2025 and 2024:
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Product revenue - distribution services | $ | 20,854,677 | $ | 5,484,247 | ||||
| Pharmacy retail sales | 364,532 | 188,706 | ||||||
| Third party logistics services | 448,003 | 45,455 | ||||||
| Net revenues | $ | 21,667,212 | $ | 5,718,408 | ||||
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General and Administrative Expense
General and administrative expenses were $66,205,669 for the nine months ended September 30, 2025, compared to $2,448,813 for the nine months ended September, 2024. The increase was primarily due to the acquisition of Wellgistics LLC in August 2024 and full-scale operations of the consolidated company in 2025. General and administrative expenses include personnel costs, and professional fees including audit, tax and legal. For the nine months ended September 30, 2025, general and administrative expenses also included $53,692,827 of non-cash stock-based compensation consist of $24,300,000 related to the accelerated vesting of 9,000,000 restricted shares granted to the Chief Executive Officer under the Company’s Amended and Restated 2023 Equity Incentive Plan and $29,392,827 related to the issuance of common stock and restricted stock units to directors, employees, and consultants in exchange for services rendered The Company also recorded a loss of $640,647 related to the satisfaction of its guaranty of a revolving credit note issued by Tollo Health, LLC within general and administrative expense.
Sales and Marketing Expense
Sales and marketing expenses were $1,212,347 for the nine months ended September 30, 2025, compared to $0 for the same period in 2024. The increase reflects the Company’s expanded promotional activities and marketing initiatives following the acquisitions of Wood Sage and Wellgistics. For the nine months ended September 30, 2025, sales and marketing expenses also included $746,000 of non-cash stock-based compensation.
Depreciation and Amortization
Depreciation and amortization was $2,408,462 for the nine months ended September 30, 2025, compared to $467,423 for the nine months ended September 30, 2024. This included amortization of $2,289,194 pertaining to intangible assets identified from acquisitions of Wood Sage and Wellgistics, LLC. Depreciation expense of $119,269 relates to fixed assets acquired from the Wellgistics acquisition.
Other Expense, net
Other expenses, net for the nine months ended September 30, 2025 included total expense of $5,024,498, compared to $126,874 for the same period in 2024. The significant increase was primarily due to interest expense associated with financing activities, a loss on debt extinguishment related to the Wellgistics acquisition, and a one-time loss on guarantee.
Interest expense was $3,703,837 and $142,281 for the nine months ended September 30, 2025 and 2024, respectively. Interest expense in 2025 was incurred on Wellgistics Health’s outstanding loans, promissory notes, revolving line of credit, and merchant cash advance agreements.
The Company recognized a loss of $1,353,663 for the nine months ended September 30, 2025, in connection with the Eighth Amendment to the Membership Interest Purchase Agreement (“MIPA”) with Wellgistics LLC, executed on July 24, 2025. Under the amendment, the Company increased the principal balance of the related promissory note from $15 million to $17.5 million. The original $15 million promissory note, including $1,146,337 of accrued interest through July 24, 2025, was derecognized and replaced with a new note recorded at the present value of its future cash flows. The resulting difference between the carrying amount of the old debt and the fair value of the new note was recognized as a loss on debt extinguishment for the period.
Liquidity and Capital Resources
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 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 stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we are unable to obtain sufficient financial resources, our business, financial condition and results of operations may be materially and adversely affected. We may be required to delay, limit, reduce or terminate parts of its strategic business plan or future commercialization efforts. There can be no assurance that we will be able to obtain financing on acceptable terms.
Our short-term liquidity requirements include initiatives related to the (i) expansion of existing facilities and upgrade of equipment in order to increase operational capacity, (ii) recruitment of additional employees to increase operational and business needs, upgrade of information technology, and (iii) continued buildout of corporate functions and public company compliance requirements, inclusive of accounting and legal fees. Our long-term liquidity requirements include initiatives related to (a) strategic acquisitions mean to further the development of our health ecosystem such as electronic health record systems, (b) expansion of micro-distribution centers for wholesale and other wholly owned pharmacies in strategic demographic regions, (c) investments into artificial intelligence, machine learning, and data warehousing capabilities, and (d) additional integrations with third-party partners such as PMS systems, ride-sharing logistics providers, enterprise health systems, and others to bolster the value proposition of our health ecosystem with a focus on improving operational efficiency while simultaneously removing interdependencies.
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Equity Purchase Agreement
As of September 30, 2025, the Company had issued a total of 3,426,254 shares of common stock pursuant to put notices under the Agreement, resulting in net proceeds of $2,838,787. On August 13, 2025, the Company delivered written notice to the Investor of its election to terminate the Hudson EPA.
September 2025 Offering
On September 29, 2025, the Company filed a prospectus supplement with the U.S. Securities and Exchange Commission pursuant to Rule 424(b)(5) in connection with a public offering of 7,142,862 shares of common stock and warrants to purchase up to 7,142,862 shares of common stock. The warrants are exercisable immediately at $0.70 per share and expire five years from the date of issuance. As of September 30, 2024, the Company had issued total of 7,142,862 shares pursuant to this offering generated net proceeds of approximately $4.53 million, after deducting placement-agent fees and other offering expenses. Management intends to use the proceeds from the offering to strengthen the Company’s working capital position, support ongoing operations, fund marketing initiatives, and pursue potential strategic acquisitions. All warrants remained outstanding as of September 30, 2025.
Debt
Outstanding debt consists of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Merchant cash advance | $ | 1,154,148 | $ | 1,259,415 | ||||
| Loan payable | 1,132,924 | - | ||||||
| Note payable - owners of Wellgistics | 5,000,000 | 5,000,000 | ||||||
| Note payable - Integral Health | 1,300,000 | - | ||||||
| Note payable - third party, net of debt discount | 648,411 | - | ||||||
| Revolving line of credit | 2,973,751 | 5,531,260 | ||||||
| Seller promissory note | - | 137,141 | ||||||
| Current portion of debt obligations | 12,209,234 | 11,927,816 | ||||||
| Merchant cash advance | $ | - | $ | 55,085 | ||||
| Third party investor | 100,000 | 100,000 | ||||||
| Note payable - Integral Health | - | 1,300,000 | ||||||
| Note payable - owners of Wellgistics | 12,500,000 | 10,000,000 | ||||||
| Long-term debt | 12,600,000 | 11,455,085 | ||||||
| Total debt | $ | 24,809,234 | $ | 23,382,901 | ||||
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”), by and among the Company, Integra Health Inc., a Florida corporation (“Integra Health”), and WoodSage. The Integra Health DCA addressed the conversion of indebtedness in the amount of $1,300,000 due pursuant to a promissory note issued by WoodSage in favor of Integra Health, dated as of August 22, 2023 (the “Note”). Under the Integra Health DCA, the indebtedness in the among of $1,300,000 was converted into shares of the Company’s common stock at a price per share of $0.70 for an aggregate number of shares of 1,857,143 in full satisfaction of the obligations of WoodSage outstanding under the Note.
Merchant Cash Advance
On March 18, 2025, the Company entered into a merchant cash advance agreement with a third-party lender. Pursuant to the agreement, the Company received gross funding of $1,900,000 in exchange for the sale of future receivables totaling $2,840,000. Of the $1,900,000 in funding, $1,118,250 was directly applied by the lender to settle existing obligations under a prior agreement with the same lender, effectively refinancing the earlier balance. The remaining $781,750 was disbursed to the Company for working capital and operational needs.
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The MCA Agreement resets the Purchased Amount, repayment terms, and structure under a new contract. The Company is obligated to remit weekly payments of $56,800 until the full Purchased Amount of $2,840,000 is repaid.
The Company accounts for the merchant cash advance as a debt obligation. On restructuring, the Company recorded a liability equal to the full Purchased Amount of $2,840,000, with a corresponding debt discount of $940,000 representing the difference between the repayment obligation and the net proceeds received. During the nine months ended September 30, 2025, the Company made repayments totaling $1,147,363. After considering the net proceeds received of $781,750, the Company recorded a net repayment of $365,613 for the period. In connection with the refinancing of the prior MCA arrangement, the Company recognized a non-cash charge of $205,261 related to the write-off of the remaining unamortized debt discount. This amount is included in interest expense and presented as a non-cash adjustment within the operating section of the Company’s Statement of Cash Flows. The debt discount is being amortized to interest expense over the term of the arrangement. For the three and nine months ended September 30, 2025, interest expense recorded was $281,091 and $668,148, respectively. As of September 30, 2025, the carrying amount of the loan, net of the remaining unamortized discount of $271,852, was $ 1,154,148.
Loan Payable
On August 26, 2025, the Company entered into a Business Loan and Security Agreement with Agile Capital Funding, LLC (as Collateral Agent) and Agile Lending, LLC (as Lead Lender) for a secured term loan of $1,300,000 (the “Agile Term Loan”). The loan bears an imputed interest charge of $572,000, resulting in a total repayment obligation of $1,872,000, payable in weekly installments of $58,500 commencing September 3, 2025 through April 8, 2026. The loan carries an effective borrowing cost and does not bear a separately stated interest rate.
At inception, the Company received net proceeds of $500,074 after deduction of (i) repayment of the prior Agile loans originated in May 2025, $459,300 and June 2025, $275,626, and (ii) an administrative agent fee of $65,000. Accordingly, the Company recorded a debt discount of $637,000, representing the difference between the total repayment obligation and the proceeds received. The debt discount is being amortized to interest expense using the effective interest method over the 32-week term of the loan. During the nine months ended September 30, 2025, the Company received total cash proceeds of $1,250,074 from Agile loan arrangements, consisting of proceeds from loans originated in May 2025, July 2025, and August 2025. Total repayments made during the period were $318,260, resulting in net cash received of $931,814, which is presented within financing activities in the Company’s Statement of Cash Flows. In connection with the repayment of the May and July 2025 Agile loans, the Company recognized a non-cash charge of $201,110 related to the write-off of the remaining unamortized debt discount. This amount is included in interest expense and presented as a non-cash adjustment within the operating section of the Statement of Cash Flows. For the three and nine months ended September 30, 2025, the Company recorded interest expense $131,924 and $508,686, respectively. As of September 30, 2025, the carrying amount of the loan, net of the remaining unamortized discount of $505,076, was $ 1,132,924.
Note payable – sellers of Wellgistics, LLC
On August 23, 2024, Wellgistics Health and Wellgistics LLC entered into the Fourth Amendment to the Wellgistics MIPA. Pursuant to the amended agreement, Wellgistics Health agreed to pay Wellgistics LLC a promissory note in the aggregate principal amount of $15,000,000 plus simple interest accruing annually equal to the “Prime Rate” as published by the Wall Street Journal on January 1 of the applicable year, together payable in three equal annual instalments commencing on the first anniversary of the date that registration statement becomes effective.
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, modified the repayment schedule $5,000000 principle shall be payable on the first and second anniversaries and $7,500,000 principal shall be payable on the third anniversary, of the effective date of Promissory Note, and resulted in an accounting extinguishment of the original note. As part of the modification, accrued interest of $1,146,337 on the original note was derecognized, and the Company recorded a non-cash loss on debt extinguishment of $1,353,663.
For the three and nine months ended September 30, 2025, the Company recorded total interest expenses of $277,123 related to the amended note. As of September 30, 2025, accrued interest on the note totaled $277,123, which is included in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet. As of September 30, 2025, $5,000,000 of the the amended note was included as a current liability on the consolidated balance sheet and the remaining $12,359,882 was classified as non-current.
Note Payable – Third party
On January 2, 2025, the Company entered into an unsecured promissory note agreement for a principal amount of $448,411. The promissory note bears interest at a rate of 10% per annum, with both principal and accrued interest due in full on May 15, 2025. In the event of default, interest accrues at a default rate of 12% per annum. In connection with this note, the Company received net proceeds of $415,000, with the remaining $33,411 recognized as a debt discount. For the three and nine months ended September 30, 2025, the Company recorded interest expense of $11,210 and $33,232, respectively. For the same periods, the Company recognized amortization of debt discount of $0 and $33,41,1 related to this promissory note. As of September 30, 2025, accrued interest payable on this note was $33,232 and the outstanding principal of $448,411 is classified under current liabilities. As of the issuance date of these financial statements, the parties are currently working on an extension.
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On February 2, 2025, the Company entered into an unsecured promissory note agreement for a principal amount of $100,000. The promissory note bears interest at a rate of 10% per annum, with both principal and accrued interest due in full on August 15, 2025. In the event of default, interest accrues at a default rate of 12% per annum. For the three and nine months ended September 30, 2025, the Company recorded interest expense of $2,500 and $6,562 related to this note. As of September 30, 2025, accrued interest payable on this note was $6,562, and the outstanding principal of $100,000 is classified under current liabilities.
On February 2, 2025, the Company entered into another unsecured promissory note agreement a principal amount of $100,000. The promissory note bears interest at a rate of 10% per annum, with both principal and accrued interest due in full on August 15, 2025. In the event of default, interest accrues at a default rate of 12% per annum. For the three and nine months ended September 30, 2025, the Company recorded interest expense of $2,500 and $6,562 related to this note. As of September 30, 2025, accrued interest payable on this note was $6,562, and the outstanding principal of $100,000 is classified under current liabilities.
As of September 30, 2024, the $100,000 short-term note entered into in September 2023 with third party investor remains outstanding. The note bears interest at 8% per annum and provides that the lender will be issued 35,000 shares of common stock upon the consummation of a SPAC transaction or merger. For the three and nine months ended September 30, 2024, the Company recorded interest expense of $2,000 and $6,000, respectively related to this note. As of September 30, 2025, accrued interest payable on this note was $17,666, and the outstanding principal of $100,000 is classified under non-current liabilities.
Revolving line of credit – Wellgistics
In November 2024, Wellgistics, LLC entered into a new credit agreement with for a line of credit of $10,000,000. The new line of credit has interest annual rate equal to the Term Secured Overnight Financing Rate (“SOFR”) plus 11.5%, calculated and prorated daily on the daily balance (an aggregate rate of 16.84% per annum). The line of credit is collateralized by accounts receivable and inventory balances. Interest expense related to the line of credit amounted to $262,558 and $876,757 for the three and nine months ended September 30, 2025, respectively. The outstanding balance on the line of credit as of September 30, 2025 and December 31, 2024 was $2,973,751 and $5,531,260 respectively, which is included as a current liability on the condensed consolidated balance sheet.
Seller Promissory Note - Wellgistics
In May 2022, Wellgistics, LLC entered into a promissory note agreement in the amount of $1.2 million. The promissory note was part of the consideration to the seller in connection with its acquisition of American Pharmaceutical Ingredients, LLC (a subsidiary of Wellgistics LLC). The promissory note bore interest at a rate of 2% per annum and was scheduled to mature on April 1, 2025.
The Company assumed this debt as part of the acquisition of Wellgistics. As of September 30, 2025, the promissory note had been fully repaid, and the outstanding balance was $0, compared to $137,141 as of December 31, 2024. Interest expense related to the promissory note was immaterial for the nine months ended September 30, 2025.
The following table is a summary of annual principal payments of the Company’s outstanding debt:
| December 31, | ||||
| 2025 (remaining three months) | $ | 6,062,055 | ||
| 2026 | 6,247,179 | |||
| 2027 | 5,000,000 | |||
| 2028 | 7,500,000 | |||
| $ | 24,809,234 | |||
Dividends
We intend to retain future earnings, if any, for future operations, expansion and debt repayment (if any) and we have no current plans to pay any cash dividends for the foreseeable future. In addition, our ability to pay dividends is likely to be limited by covenants of any future indebtedness. There are no, and we do not intend in the future for there to be any, restrictions in the covenants of any existing and outstanding indebtedness on our wholly-owned subsidiaries from distributing earnings in the form of dividends, loans or advances and through repayment of loans or advances to us.
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Cash Flows
The following table summarizes our cash flows from operating, investing, and financing activities :
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash (used in) provided by operating activities | $ | (4,561,776 | ) | $ | 1,398,784 | |||
| Net cash used in investing activities | $ | (626,144 | ) | $ | (333,482 | ) | ||
| Net cash provided by (used in) financing activities | $ | 8,388,250 | $ | (273,518 | ) | |||
| Net change in cash and cash equivalents | $ | 3,200,330 | $ | 791,784 | ||||
Cash from operating activities
Net cash used in operating activities for the nine months ended September 30, 2025 was $4,561,776, primarily due to our net loss of $72,981,336, partially offset by non-cash expenses of $58,906,317 and $9,953,478 in cash provided in operating assets and liabilities. Non-cash expenses was primary driven by stock-based compensation of $54,438,827, loss on debt extinguishment of $1,353,663, and amortization of intangible assets of $2,289,194. Cash provided by operating assets and liabilities was primarily driven by an increase in accounts payable of $4,101,943 and decrease in accounts receivable of $1,359,834, partially offset by decreases in inventories and increase in accrued expenses.
Net cash provided by operating activities for the nine months ended September 30, 2024 was primarily a result changes in operating assets and liabilities of $3,429,169, partially offset by our net loss of $2,524,474 and non-cash expenses of $494,089.
Cash from investing activities
Net cash used in investing activities for the nine months ended September 30, 2025, was $626,144 due to expenditures made for capitalized software.
Cash from financing activities
Net cash provided by financing activities for the nine months ended September 30, 2025, was $8,388,250. This was primarily driven by gross proceeds of $4,000,000 from the issuance of common stock in our IPO, $4,534,053 from the September 2025 public offerings, $2,838,787 from common stock issuances under our equity purchase agreement, $615,000 from promissory notes, and $931,814 from the AGILE debt modification and $20,070,000 from revolving line of credit. These inflows were partially offset by $1,471,141 in offering costs, as well as repayments totaling $22,993,122, which included repayments of the revolving line of credit and merchant cash advance.
Net cash used in financing activities for the nine months ended September 30, 2024 consists of $10,000 Founder’s initial contribution, and $283,518 in offering costs incurred.
Off-Balance Sheet Arrangements
During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules.
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Critical Accounting Policies and Estimates
Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. Preparation of the financial statements requires our management to make a number of judgments, estimates and assumptions relating to the reported amount of expenses, assets and liabilities and the disclosure of contingent assets and liabilities. We consider an accounting judgment, estimate or assumption to be critical when (i) the estimate or assumption is complex in nature or requires a high degree of judgment and (ii) the use of different judgments, estimates and assumptions could have a material impact on our consolidated financial statements. Our significant accounting policies are described in Note 1 to our financial statements included elsewhere in this proxy statement/prospectus.
Our critical accounting policies include:
Revenue Recognition
The Company adopted Accounting Standards Codification (“ASC”) 606 upon inception.
To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract was determined to be within the scope of ASC 606, the Company assessed the goods or services promised within each contract and determined those that were performance obligations, and assessed whether each promised good or service was distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. The Company recognizes revenue at the point of sale. The majority of orders are placed via the Company’s website. Customers generally pay by credit card at the time they place their order. The Company does have larger customers to whom they have extended terms for payment. Generally, payments from these customers are due within 30 days of their order being shipped. However, a few customers have been given terms extending out to 45 days.
Distribution
Wellgistics, LLC provides distribution and third party logistics services to both pharmaceutical manufacturers and independent retail pharmacies. The Company recognizes revenue when goods are delivered to the customer. The gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, rebates, sales allowances and sales returns. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are considered when estimating the impact of these revenue deductions on gross sales for a reporting period. All revenue for the Company is recognized at the point-in-time when delivered to customer based on contractual obligations. Any amount collected from customers for goods not yet delivered is recorded as unearned revenue.
Wellgistics Pharmacy
The Company is in the retail pharmacy business. and fills prescriptions for drugs written by a doctor and recognizes revenue at the time the patient confirms delivery of the prescription. Customer returns are not material. The following are the steps taken to recognize revenue.
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Step One: Identify the contract with the customer — The prescription is written by a doctor for a customer and delivered to the Company. The prescription identifies the performance obligations in the contract. The Company fills the prescription and delivers the prescription to the customer, fulfilling the contract. The collection is probable because there is confirmation that the customer has insurance for the reimbursement to the Company prior to filling of the prescription.
Step Two: Identify the performance obligations in the contract — Each prescription is distinct to the customer.
Step Three: Determine the transaction price — The consideration is not variable. The transaction price is determined to be the price of the prescription at the time of delivery which considers the expected reimbursements from third party payors (e.g., pharmacy benefit managers, insurance companies and government agencies).
Step Four: Allocate the transaction price — The price of the prescription invoiced represents the expected amount of reimbursement from third party payors. There is no difference between contract price and “stand-alone selling price”.
Step Five: Recognize revenue when or as the entity satisfies a performance obligation — Revenue is recognized upon the delivery of the prescription.
Business Combinations
The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company is not required to provide the information required by this Item 3 as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of September 30, 2025, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2025, due to the material weakness described below.
Description of Material Weakness
Management identified a material weakness in our internal control over financial reporting. Specifically, the Company did not maintain sufficient resources with appropriate accounting expertise to adequately review and account for complex, non-routine transactions. This control deficiency could result in a material misstatement of the Company’s annual or interim financial statements that may not be prevented or detected on a timely basis.
Plan for Remediation
To remediate this material weakness, management is implementing the following measures:
| ● | Hiring additional accounting personnel with appropriate technical expertise; | |
| ● | Enhancing internal review procedures for complex transactions; | |
| ● | Providing targeted training to existing finance staff on U.S. GAAP and SEC reporting requirements; | |
| ● | Upgrading to NetSuite’s enterprise resource program; and | |
| ● | Change of independent registered audit firm. |
Management expects these remediation efforts to be completed during fiscal year 2025, subject to the timing of hiring and training.
Changes in Management
Subsequent to September 30, 2025, the Company’s board of directors approved changes in senior management, including the appointment of a new President and changes to the composition of the Board and Audit Committee. Management is currently evaluating the impact of these leadership changes on the Company’s internal control environment and will disclose any material effects on internal control over financial reporting in future filings.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than the remediation measures described above.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. 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, 2024, filed with the SEC on April 1, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities
Set forth below is information regarding securities that we issued during the Nine months ending June 30, 2025, that were not registered under the Securities Act of 1933, as amended, (the “Securities Act”). Also included is the consideration received by us for such securities and information relating to the section of the Securities Act, or rule of the SEC, under which exemption from registration was claimed.
On July 2, 2025, the Company issued 200,000 shares of restricted common stock to Michael Peterson, a member of the Board of Directors. Of these, 66,000 shares vested immediately, while the remaining 134,000 shares are scheduled to vest in equal installments on July 2, 2026, and July 2, 2027.
On July 24, 2025, the Company issued an aggregate of 7,940,118 shares of Common Stock to the sellers of Wellgistics, LLC under the revised Wellgistics MIPA.
On August 4, 2025, the Company issued 243,428 shares of Common Stock to a third party for services rendered to the Company. These shares were issued in reliance on the exemptions from registration contained in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.
On August 26, 2025, the Company issued an aggregate of 200,000 shares of Common Stock to a third party for services rendered to the Company. These shares were issued in reliance on the exemptions from registration contained in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.
As of September 30, 2025, the Company had issued a total of 3,426,254 shares of common stock pursuant to put notices under the Hudson EPA, resulting in net proceeds of $2,838,787.
The forgoing issuances were not registered under the Securities Act in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. In each transaction, we did not engage in any general solicitation or advertising and we offered the securities to a limited number of persons with whom we had pre-existing relationships. We exercised reasonable care to ensure that the purchasers of securities were not underwriters within the meaning of the Securities Act, including making reasonable inquiry prior to the issuances, making written disclosure regarding the restricted nature of the securities, and placing a legend on the certificates representing the shares. The recipients of securities in each of these transactions acquired the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof. No underwriters were involved in the above transactions.
Repurchases
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During
the quarter ended September 30, 2025, none of the Company’s directors or officers
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Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WELLGISTICS HEALTH, INC. | ||
| By: | /s/ Eric Sherb | |
| Name: | Eric Sherb | |
| Title: | Chief Financial Officer | |
| (Principal Financial Officer and Accounting Officer) | ||
| Date: November 19, 2025 | ||
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