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 May 9, 2025, there were 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.”
| ii |
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
WELLGISTICS HEALTH, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, related party | ||||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses | ||||||||
| Inventories, net | ||||||||
| Due from related parties | ||||||||
| Deferred offering costs | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Intangible assets under development | ||||||||
| Operating lease, right-of-use-assets | ||||||||
| Goodwill | ||||||||
| Other intangible assets, net | ||||||||
| Note receivable | ||||||||
| Investments in unconsolidated entity | ||||||||
| Other assets | ||||||||
| Deposits | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable, related party | ||||||||
| Accrued expenses and other liabilities | ||||||||
| 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 (See Note 14) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and and shares outstanding as of March 31, 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 consolidated financial statements
| 3 |
WELLGISTICS HEALTH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net sales | $ | $ | ||||||
| Cost of sales | ||||||||
| 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 | ( | ) | ( | ) | ||||
| Other income | ||||||||
| Total other income/(expense), net | ( | ) | ( | ) | ||||
| Net loss before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding - basic and diluted | ||||||||
| Net loss per common share - basic and diluted | $ | ) | $ | ) | ||||
See the accompanying notes to the unaudited consolidated financial statements
| 4 |
WELLGISTICS HEALTH, INC.
CONSOLIDATED 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 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued pursuant to public offering | ||||||||||||||||||||
| 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 | $ | $ | $ | ( | ) | $ | ||||||||||||||
See the accompanying notes to the unaudited consolidated financial statements
| 5 |
WELLGISTICS HEALTH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Bad debt | ||||||||
| Amortization of debt discount | ||||||||
| Stock-based compensation | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Deferred offering costs | ( | ) | ||||||
| Accounts receivable, net | ( | ) | ||||||
| Inventories, net | ( | ) | ||||||
| Prepaid expenses | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued expenses and other liabilities | ( | ) | ||||||
| Operating lease liabilities, net | ( | ) | ||||||
| Due from / to related parties, net | ( | ) | ||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Investments in intangible assets under development | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from promissory note | ||||||||
| Repayment of seller promissory note | ( | ) | ||||||
| Proceeds from revolving line of credit | ( | ) | ||||||
| Proceeds from merchant cash advance | ||||||||
| Proceeds received from note payable | ||||||||
| Common stock issued pursuant to public offering | ||||||||
| Offering costs | ( | ) | ||||||
| Proceeds received for common stock to be issued | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of year | ||||||||
| Cash and cash equivalents at end of year | $ | $ | ||||||
| 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 common stock for prepaid consulting services | $ | $ | ||||||
See the accompanying notes to the unaudited consolidated financial statements
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WELLGISTICS HEALTH, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was initially organized in the name of Ayan Sponsors LLC on September 6, 2022. It was 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.
The Company is a parent company for various existing and planned strategic businesses centered around pharmaceuticals and healthcare services. 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.
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 Wood Sage’s two 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. The Company also indirectly acquired American Pharmaceutical Ingredients, LLC, a wholly owned subsidiary of Wellgistics, LLC, as part of the Wellgistics Acquisition.
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.
As such, Wellgistics Health currently exists as a holding company with Wood Sage and Wellgistics, LLC as a directly held intermediate holding company subsidiary, DelivMeds and Wellgistics Pharmacy as indirect operating subsidiaries, Wellgistics, LLC as a direct operating subsidiary, and American Pharmaceutical Ingredients, LLC, a wholly owned subsidiary of Wellgistics, LLC, as an indirect operating subsidiary.
Initial Public Offering
On
February 20, 2025, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Craft Capital Management
LLC (the “Underwriters”), relating to the Company’s initial public offering (the “Offering” or “IPO”)
of shares of common stock, par value at a public offering price of $ per share, generating gross proceeds of $
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.
| 7 |
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 $
Acquisition of membership interest in Wood Sage LLC
In
January 2023, we entered into a Membership Interest Purchase Agreement (the “Wood Sage MIPA”) with Nikul Panchal, an individual
resident of the State of Florida in connection with our acquisition of Wood Sage (the “Wood Sage Acquisition”). We completed
the Wood Sage Acquisition on June 16, 2024, paying Mr. Panchal in shares of our common stock equal to approximately $
Wellgistics Tech & Hub, LLC (DelivMeds)
DelivMeds was founded in 2017 as a holding company for technology solutions, wholly owned by Integral Health, Inc. (“Integral”). In 2020, DelivMeds recommissioned its technology hub project so that it would serve as a pharmaceutical hub, facilitating prescription transfer and clinical concierge services to a network of independent pharmacies. After conducting an extensive market research survey focusing on competition, established several key differentiators for the DelivMeds hub. These differentiators included various integrations of the hub with pharmacy management software systems and pharmacy point of sale systems, among others such that DelivMeds would serve as an end-to-end patient-centric solution automating the prescription journey. Powered by Wellgistics Pharmacy as the backend pharmacy, DelivMeds is the frontend technology serving as the middleware between all key stakeholders referenced in what is referred to as the 5P-Model: Patients, Providers, Pharmacies, Payors or Pharmacy Benefit Managers, and Pharmaceutical Manufacturing Companies.
DelivMeds aims to preserve patient autonomy, improve price transparency, and aide in making a meaningful impact on patient outcomes by eliminating barriers to therapy while simultaneously boosting adherence. DelivMeds works 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. DelivMeds’ 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. Wood Sage acquired DelivMeds in August 2023 and Wellgistics Health acquired Wood Sage in June 2024 as discussed above. DelivMeds now serves as the middleware technology arm to Wellgistics Health’s integrated healthcare ecosystem.
Wellgistics Pharmacy, LLC
Wellgistics Pharmacy, was founded in 2011 as a retail community specialty pharmacy. Specializing in HIV/AIDS, the pharmacy obtained URAC and ACHC accreditations for Specialty Pharmacy and also performed general pharmacy services in its community. In 2018, Integral acquired Wellgistics Pharmacy and relocated Wellgistics Pharmacy to Tampa, Florida. Subsequently, Wellgistics Pharmacy expanded its business operations to perform 340B services by partnering with local clinics and provider groups. During this time period, the pharmacy initiated its pursuit of additional pharmacy state licenses to convert Wellgistics Pharmacy’s business to 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. As a result of this strategic business shift Wellgistics Pharmacy’s leadership team chose to voluntarily forfeit Wellgistics Pharmacy’s specialty accreditations. However, Wellgistics Pharmacy maintains specialty internal standard operating procedures and performs all of the functions of a specialty pharmacy.
| 8 |
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. 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. Wellgistics Pharmacy 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. These relationships help drive revenue and prescription volume. Our relationship with Wellgistics along with our deep-rooted ties to other wholesalers enables Wellgistics Pharmacy to offer a competitive cash-based formulary for the uninsured and underinsured patient populations. Wellgistics Pharmacy continues to see an uptick in utilization, as more patients elect to pay out of pocket due to our low-cost model, which Wellgistics Pharmacy believes is an opportunity to gain market share with small- to medium-size employer groups in a partnership model with other consumer driven healthcare companies. The services that Wellgistics Pharmacy provides to its patients and other constituents are vital to the revenue and prescription volume generated from this division.
Wood Sage acquired Wellgistics Pharmacy in August 2023 and Wellgistics Health acquired Wood Sage in June 2024 as discussed above. Wellgistics Pharmacy now serves as the backbone of Wellgistics Health’s healthcare ecosystem.
Acquisition of Wellgistics, LLC
On May 11, 2023, we entered into a Membership Interest Purchase Agreement with Wellgistics, LLC and its owners, Strategix Global LLC, Nomad Capital LLC, Jouska Holdings LLC, and Brian Norton (the “Wellgistics MIPA”), whereby we agreed to acquire all of the issued outstanding membership interests of Wellgistics, LLC. Wellgistics, LLC was founded in 2013 and has been continuously operating.
On August 4, 2023, the Company and Wellgistics, LLC amended the Wellgistics MIPA to extend the termination date of the Wellgistics MIPA to no later than December 26, 2023, and designate Brian Norton as a representative who may act on behalf of all named sellers in the Wellgistics MIPA. On December 26, 2023, the Company and Wellgistics, LLC further amended the Wellgistics MIPA to extend the termination date to March 29, 2024. On March 22, 2024, the Company and Wellgistics, LLC further amended the Wellgistics MIPA to extend the termination date to August 31, 2024, and to provide for the Company to extend such date for a maximum of ninety days, among other things.
On August 23, 2024, Wellgistics Health and Wellgistics, LLC entered into the Fourth Amendment to the Wellgistics MIPA, which amended the purchase price to be paid by Wellgistics Health for acquiring Wellgistics, LLC, the closing date of the transaction, and certain other terms and conditions. The parties further amended the Wellgistics MIPA on November 4, 2024, and March 6, 2025. As amended, the purchase consideration that Wellgistics Health agreed to pay Wellgistics, LLC under the revised Wellgistics MIPA consists of:
| ● | a closing cash payment of $ | |
| ● | a promissory note in the aggregate principal amount of $ | |
| ● | bonus payments in the form of Wellgistics Health Common Stock in an aggregate amount of shares, after accounting for the reverse stock split that Wellgistics Health effected on December 5, 2024, that vest over three years commencing December 31, 2024; | |
| ● | shares of restricted Common Stock in an aggregate amount of up to shares, after accounting for the reverse stock split that Wellgistics Health effected on December 5, 2024, that vest only if certain financial metrics are met, with unvested shares of Common Stock subject to repurchase by Wellgistics Health for a nominal purchase price if such financial metrics are not met (the “Financial Contingent Bonus Payments”); and | |
| ● |
The Financial Contingent Bonus Payments will vest, and therefore will no longer be subject to repurchase by Wellgistics Health, according to the following terms:
| ● | For the calendar year ending December 31, 2024: | |
| ● | For the calendar year ending December 31, 2025: | |
| ● | For the calendar year ending December 31, 2026: |
| 9 |
On August 30, 2024, we closed on the acquisition of Wellgistics, LLC, thereby making Wellgistics, LLC a wholly owned subsidiary of the Company (the “Wellgistics Acquisition”). In connection with the Wellgistics Acquisition, we acquired American Pharmaceutical Ingredients, LLC, a wholly owned subsidiary of Wellgistics, LLC.
On
March 6, 2025, the Company and Wellgistics, LLC further amended the Wellgistics MIPA to extend the due date of the $
Unaudited Interim Financial Information
The unaudited interim financial statements and related notes have been prepared in accordance with U.S. GAAP for interim financial information, within the rules and regulations of the SEC. Certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the results for the interim periods presented and of the financial condition as of the date of the interim balance sheet. The financial data and the other information disclosed in these notes to the interim financial statements related to the three-month periods are unaudited. Unaudited interim results are not necessarily indicative of the results for the full fiscal year.
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.
Use of Estimates
The preparation of the Company’s financial statements in conformity with U.S.GAAP requires the Company to make estimates and assumptions that affect the reported amounts of certain assets and liabilities; the reported amounts of revenues and expenses for the periods covered and certain amounts disclosed in the notes to the financial statements. These estimates are based on information available through the date of the issuance of the financial statements and actual results could differ from those estimates. Areas requiring significant estimates and assumptions by the Company include, but are not limited to:
| ● | provisions for income taxes and related valuation allowances and tax uncertainties | |
| ● | business combinations and purchase price allocations | |
| ● | recoverability of long-lived assets and their related estimated lives | |
| ● | fair value of long-term debt and notes receivable | |
| ● | evaluation of goodwill for impairment | |
| ● | accruals for estimated liabilities |
| 10 |
| ● | evaluation of equity method investments and | |
| ● | net-realizable value of inventory |
Comprehensive Loss
Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. There was no difference between net loss and comprehensive loss presented in the financial statements for the three months ended March 31, 2025 and 2024.
Segment Reporting
The Company’s chief operating decision-maker is its Chief Executive Officer, who makes resource allocation decisions and assesses performance based on financial information presented on an aggregate basis. There are no segment managers who are held accountable by the chief operating decision-maker, or anyone else, for any planning, strategy and key decision-making regarding operations. Accordingly, the Company has a single reportable segment and operating segment structure.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, certificates of deposits and money market funds that are readily convertible into cash, all with original maturity dates of three months or less.
Concentration of Credit Risks and Major Customers
Financial
instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and receivables. The
Company places its cash and cash equivalents with financial institutions. Deposits are insured to Federal Deposit Insurance Corp limits.
During the three months ended March 31, 2025, sales to Axia Medical Solutions exceeds
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.
| 11 |
Accounts Receivable, Net
Accounts receivable are recorded at the invoiced amount and do not bear interest. Accounts receivable are due from various customers and are shown net of applicable reserves for doubtful accounts as shown on the face of the balance sheet. There were no accounts that had been placed on non-accrual status. The allowance for doubtful accounts has been estimated by management based on historical experience, current market trends and, for larger customer accounts, their assessment of the ability of the customers to pay outstanding balances. Past due balances and other higher risk amounts are reviewed individually for collectability. Changes in circumstances relating to the collectability of accounts receivable may result in the need to increase or decrease the allowance for doubtful accounts in the future.
The
company provides for
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.
Property, Plant and Equipment, Net
Property, plant and equipment, net (“PP&E”) is stated at cost less accumulated depreciation and amortization and any accumulated impairment losses. Depreciation and amortization are computed using the straight-line method over the assets’ estimated useful lives. The estimated useful lives of PP&E are as follows:
Equipment
–
Furniture
and Fixtures –
Software
–
Leasehold improvements –
Major renewals and improvements are capitalized. Replacements, maintenance, and repairs, which do not significantly improve or extend the useful life of the assets, are expensed when incurred.
Upon the sale or retirement of assets, costs and the related accumulated depreciation and amortization are removed from the accounts and any gain or loss is included in the results of operations.
The Company evaluates its long-lived assets or asset groups for indicators of possible impairment by determining whether there were any triggering events that could impact the Company’s assets. If events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable the Company performs a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by such asset or asset group. Should an impairment exist, the impairment loss is measured based on the excess carrying value of the asset over the asset’s fair value generally determined by estimates of future discounted cash flows.
The
Company has
Intangible Assets under Development
Research expenditures are recognized as an expense and development expenditures that meet specified criteria are recognized as the cost of an intangible asset. The Company has begun capitalizing the expenses related to the Delivmeds application as management has determined that the Company’s application has crossed the research phase and has begun development. As per ASC 350-40, the Company capitalizes costs in the application development stage. Costs related to preliminary project activities and post implementation activities are expensed as incurred.
As
of March 31, 2025 and December 31, 2024, the Company capitalized $
| 12 |
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.
Wellgistics, LLC
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. The company recognizes a refund liability if it receives consideration from a customer and expects to refund some or all of that consideration to the customer. A refund liability is measured at the amount of consideration received (or receivable) for which the company does not expect to be entitled (that is, amounts not included in the transaction price). The refund liability (and corresponding change in the transaction price and, therefore, the contract liability) is updated at the end of each reporting period for changes in circumstances.
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.
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.
| 13 |
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 months ended March 31, 2025 and 2024:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Product revenue - distribution services | $ | $ | ||||||
| Pharmacy retail sales | ||||||||
| Third party logistics services | ||||||||
| Net sales | $ | $ | ||||||
Leases
The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred.
In calculating the right of use asset and lease liability, the Company has elected to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.
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.
| 14 |
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.
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. Management can resume the qualitative assessment in any subsequent period for any reporting unit.
For
the three months ended March 31, 2025, management performed a qualitative impairment assessment of our reporting units, of which there
were no indications that it was more likely than not that the fair value of our reporting units were less than their respective carrying
values. As such, a quantitative goodwill test was not required, and
Intangible Assets
In connection with the Wood Sage acquisition, the Company identified intangible assets, which are solely customer relationships . The Company amortizes the customer relationships intangible on a straight-line basis over a useful life of eight years.
In connection with Wellgistics, LLC acquisition, the Company identified intangible assets such as trademark and customer relationships. The Company amortizes the trademark and customer relationship intangibles on a straight-line basis over a useful life of nine and six years, respectively.
The Company has evaluated the intangible assets acquired and their respective useful lives as per ASC 805.
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. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
Offering Costs
The
Company complies with the requirements of ASC 340-10-S999-1. Prior to the completion of an offering, offering costs are capitalized.
The deferred offering costs are charged to stockholders’ equity upon the completion of an offering or to expense if the offering
is not completed. As of March 31, 2025 and December 31, 2024, the Company had capitalized $ and $
| 15 |
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 March 31, 2025, diluted net loss per share is the same as basic net loss per share for each period. Potentially dilutive items outstanding as of March 31, 2025 and 2024 is as follows:
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Unvested restricted common stock issued not outstanding | ||||||||
| Total potentially dilutive shares | ||||||||
Recent Accounting Pronouncements
The Company has implemented all new relevant accounting pronouncements that are in effect through the date of these financial statements. The pronouncements did not have any material impact on the financial statements unless otherwise disclosed., and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Note 2. 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
In
February 2025, the Company completed its IPO for net proceeds of approximately $
| 16 |
There are no assurances that management will be able to raise capital on terms acceptable to the Company. If it 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 financial statements do not include any adjustments that might result from these uncertainties.
The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
Note 3. Business Combinations
On June 16, 2024, the Company completed the acquisition of Wood Sage and its subsidiaries, DelivMeds and Wellgistics Pharmacy. On August 29, 2024, the Company completed the acquisition of Wellgistics, LLC. Collectively, these entities are referred to as the “Acquired Entities.” The transactions were accounted for as business combinations in accordance with ASC Topic 805, Business Combinations, and were previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
The total purchase consideration for the acquisitions consisted of a combination of cash, notes payable, and shares of the Company’s common stock. These transactions support the Company’s strategic objective to expand its presence in pharmaceutical distribution and enhance its operational scale and capabilities.
The Company allocated the purchase price to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The identifiable intangible assets acquired include customer relationships, trademarks, and intangible assets under development. The excess of purchase consideration over the net fair value of identifiable assets acquired and liabilities assumed was recorded as goodwill, which primarily reflects anticipated operational synergies, enhanced market positioning, and the value of the acquired workforce. Goodwill is not expected to be deductible for tax purposes.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information presents the Company’s financial results as if the Wood Sage and Wellgistics, LLC acquisition had occurred as of January 1, 2024. The unaudited pro forma financial information is not necessarily indicative of what the financial results actually would have been had the acquisitions been completed on this date. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project, the Company’s future financial results. The unaudited pro forma information does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisition:
| Three Months | ||||
| Ended | ||||
| March 31, | ||||
| 2024 | ||||
| Net sales | $ | |||
| Net loss | $ | ( | ) | |
| Net loss per common share | $ | ( | ) | |
| 17 |
Note 4. ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consist of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Billed – Third Party | $ | $ | ||||||
| Billed – Affiliates | ||||||||
| Total Accounts Receivable | ||||||||
| Less: Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Total accounts receivable, net | $ | $ | ||||||
Note 5. INVENTORIES, NET
Inventory consists of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| FDNS | $ | $ | ||||||
| Finished goods | ||||||||
| Total inventory, at cost | ||||||||
| Less: reserve for expired goods | ( | ) | ( | ) | ||||
| Inventories, net | $ | $ | ||||||
Note 6. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consist of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Leasehold Improvements | $ | $ | ||||||
| Equipment | ||||||||
| Furniture & Fixtures | ||||||||
| Less: Accumulated Depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
Depreciation
expense for the three months ended March 31, 2025 and 2024 amounted to $
| 18 |
Note 7. INTANGIBLE ASSETS
Intangible assets consist of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Internal development costs - Delivmeds | $ | $ | ||||||
| Customer relationships - Woodsage acquisition | ||||||||
| Customer relationships - Wellgistics acquisition | ||||||||
| Trademark - Wellgistics acqusition | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Intangible
assets of $
Intangible
assets of $
The following table represents the future amortization of intangibles assets:
| Year Ended December 31, | ||||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| 19 |
Note 8. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accrued personnel costs | $ | $ | ||||||
| Accrued professional fees | ||||||||
| Accrued expenses | ||||||||
| Credit card obligation | ||||||||
| Unearned revenue | ||||||||
| Accrued interest | ||||||||
| $ | $ | |||||||
Note 9. DEBT
Outstanding debt consists of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Merchant cash advance | $ | $ | ||||||
| Note payable - owners of Wellgistics | ||||||||
| Note
payable - third party, net of debt discount of $ | ||||||||
| Revolving line of credit | ||||||||
| Seller promissory note | ||||||||
| Current portion of debt obligations | ||||||||
| Merchant cash advance | $ | $ | ||||||
| Third party investor | ||||||||
| Note payable - Scienture Holdings | ||||||||
| Note payable - owners of Wellgistics | ||||||||
| Long-term debt | ||||||||
| Total debt | $ | $ | ||||||
Wellgistics Health Inc. (formerly Danam)
On
August 22, 2023, Wood Sage entered into a non-interest bearing promissory note (“Note”) with Integral pursuant to
which Integral made a certain loan to Wood Sage in the amount of $
On
October 11, 2024, the Company entered a merchant cash advance agreement with a third-party lender. This advance is secured by expected
future sales transactions of the Company with expected payments on weekly basis. The Company received total proceeds of $
On
March 27, 2025, the Company entered into a merchant cash advance agreement with a third-party lender. Pursuant to the agreement, the
Company will receive total funding of $
| 20 |
Note payable – owners 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
March 6, 2025, the Company and Wellgistics, LLC further amended the Wellgistics MIPA to extend the due date of the $
For
the three months ended March 31, 2025, the Company recorded interest expense 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 a principal amount of $
Revolving line of credit – Wellgistics
In
November 2024, Wellgistics, LLC entered into a new credit agreement with for a line of credit of $
| 21 |
Seller Promissory Note - Wellgistics
In
May 2022, Wellgistics, LLC entered into a promissory note agreement with in the amount of $
The following table is a summary of annual principal payments of the Company’s outstanding debt:
| December 31, | ||||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| $ | ||||
Note 10. STOCKHOLDERS’ EQUITY
Initial Public Offering
On
February 24, 2025, the Company closed its initial public offering (“IPO”) of shares of common stock at a public offering
price of $ per share. The IPO generated gross proceeds of $
Advisor and Consulting Agreements
On
February 25, 2025, the Company entered into a consulting agreement with Hudson Global Ventures, LLC (“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 $
The Company recognized stock-based compensation expense of $ in connection with the equity issuance, which was recorded within general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2025. The fair value of the restricted stock was determined based on the market price of the Company’s common stock on the grant date.
On March 17, 2025, the Company entered into consulting agreement with Draper, Inc. (“Draper”), pursuant to which Draper agreed to provide investor relations and business development services. As consideration for services under the initial three-month term of the agreement, the Company issued 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.
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 $
| 22 |
Restricted Common Stock
On February 28, 2025, in connection with the appointment of Brian Norton as Chief Executive Officer of the Company, Brian Norton was granted and issued restricted common stock under the Company’s Amended and Restated 2023 Equity Incentive Plan. Restricted common stock vest in three equal annual installments over a three-year period, contingent upon the achievement of specified gross revenue and gross profit targets established by the Company’s Compensation Committee. As of March 31, 2025, restricted common stock were unvested and are not included in the outstanding shares common stock. These unvested shares will be reflected as outstanding as they vest in accordance with the applicable vesting schedules. The stock-based compensation expense has been recognized in connection with the performance-based restricted common stock granted to the Company’s Chief Executive Officer, as the Company has not yet determined that the performance conditions are probable of being achieved. The Company will begin recognizing expense once achievement of the performance targets becomes probable, in accordance with ASC 718.
On March 14, 2025, the Company granted and issued a total of shares of restricted stock under the Company’s Amended and Restated 2023 Equity Incentive Plan to directors, employees, and consultants. Of the total shares issued, shares were vested immediately and the remaining were vest as per vesting metrics. As of March 31, 2025, vested restricted shares are included in the total outstanding common stock reported in the consolidated statement of stockholders’ equity. The remaining shares of restricted common stock were unvested as of that date and are not included in the outstanding shares common stock. These unvested shares will be reflected as outstanding as they vest in accordance with the applicable vesting schedules.
For the three months ended March 31, 2025, the Company recognized $ in stock-based compensation expense in accordance with ASC 718 based on the grant-date fair value of the stock in respect to vested shares. All stock-based compensation pertaining to the restricted common stock were included in general and administrative expenses in the consolidated statements of operations. As of March 31, 2025, total unrecognized compensation expense related to non-vested restricted stock awards was $, which is expected to be recognized over a weighted-average period of years.
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.
| 23 |
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.
Refer to Note 10 on issuances of restricted common stock pursuant to the Amended and Restated 2023 Equity Incentive Plan.
Note 12. 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:
| March 31, | ||||
| 2025 | ||||
| Operating Leases | ||||
| Right-of-use assets | $ | |||
| Short-term lease liabilities | ||||
| 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:
Note 13. RELATED PARTY TRANSACTIONS
The Company had transactions with Scienture Holdings, Inc. (f/k/a/ TrXade Health, Inc / TRG / TrXade Health / Scienture), which included Integra Pharma Solutions, LLC (“IPS”), in which certain of the board members of the Company are currently the management and members of Scienture’s board. The common management between the entities classifies Scienture as a related party.
Wellgistics, LLC. was previously partly owned by a private equity company, Nomad Capital, 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, which include software expenses and marketing expenses, with affiliated companies, are recorded within general and administrative expenses. Wellgistics, LLC. is charged a managerial service fee by the members of Nomad, 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 Company also had transactions with Green Apotoker, LLC. which qualifies as a related party on account of a former officer of the Company having a significant influence.
| 24 |
The following is a summary of due from and to related parties, as well as accounts receivable and accounts payable, as of March 31, 2025:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Due from TRG | $ | $ | ||||||
| Due from IPS | ||||||||
| Due from Scienture Holdings | ||||||||
| Due from related parties | $ | $ | ||||||
| Due to TRG | $ | $ | ||||||
| Due to IPS | ||||||||
| Due to Scienture Holdings | ||||||||
| Due to related parties | $ | $ | ||||||
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accounts receivable from affiliates of Company | $ | $ | ||||||
| Accounts payable from affiliates of Company | $ | $ | ||||||
The Company had the following transactions with related parties during the three months ended March 31, 2025 and 2024:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Sales to Integra Pharma Solutions, LLC | $ | $ | ||||||
| IT expenses paid to Cingo Solutions (common management) | $ | $ | ||||||
| Management services fees paid to Nomad Capital | $ | $ | ||||||
Note 14. INVESTMENT IN UNCONSOLIDATED AFFILIATES
Wellgistics,
LLC has investments in affiliates that are not consolidated. As of March 31, 2025, and December 31, 2024, the Company had an investment
in Gift Health totaling $
Note 15. 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.
| 25 |
Note 16. SUBSEQUENT EVENTS
Promissory note
On
April 7, 2025, the Company issued a $
Merger Agreement
On April 8, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Wellgistics Health, Inc., Wellpeek Merger Sub 1, Inc. (“Merger Sub 1”), Wellpeek Merger Sub 2, LLC (“Merger Sub 2” and together with Merger Sub 1, the “Merger Subs”), Peek Healthcare Technologies, Inc. (“Peek”), and the Stockholder Representative (as defined in the Merger Agreement). Pursuant to the Merger Agreement, at the Effective Time (as defined in the Merger Agreement), Merger Sub 1 will merge with and into Peek (the “First Merger”), with Peek continuing as the surviving entity and a wholly owned subsidiary of the Company. Immediately thereafter, Peek will merge with and into Merger Sub 2 (the “Second Merger” and, together with the First Merger, the “Mergers”), with Merger Sub 2 continuing as the surviving entity. The Mergers, taken together, are intended to constitute an integrated plan and be treated as a “reorganization” for U.S. federal income tax purposes. The board of directors and officers of Merger Sub 2 existing as of the Effective Time will serve as the board of directors and officers of Merger Sub 2, as the ultimate surviving entity.
Peek is a pioneering digital prescription platform that seeks to transform how patients shop for medications by providing real-time pricing transparency to assist consumers with making more informed medication purchase decisions. Peek’s mission is to empower individuals with price transparency, innovative comparison tools, and seamless access to affordable prescriptions nationwide. Lumina Marketing, LLC, a Florida limited liability company (“Lumina Marketing”), and Lumina Therapeutics, LLC, a Delaware limited liability company (“Lumina Therapeutics” and, together with Lumina Marketing, the “Lumina Entities”) are affiliates of Peek and provide a range of consulting services to brand-name and specialty-lite drug manufacturers in the areas of market access, branding, and commercialization.
As a condition to and prior to the closing of the Mergers, Peek will acquire all of the assets of each of the Lumina Entities in exchange for newly issued shares of Class A Common Stock of Peek (the “Lumina Contribution Shares”). Following closing of the transactions contemplated by the Merger Agreement, the legacy Peek and Lumina Entity businesses will operate under a single, wholly-owned subsidiary of the Company.
At the effective time of the First Merger (the “First Effective Time”), the Lumina Contribution Shares that are issued and outstanding immediately prior to the First Effective Time will be converted into the right to receive Closing Merger Consideration as follows:
| ● | A
cash payment by the Company equal to $ | |
| ● | An
unsecured promissory note made by the Company (the “Note”) in the principal amount
of $ |
Also at the First Effective Time, all shares of Class A Common Stock of Peek (other than the Lumina Contribution Shares) and all shares of Class B Common Stock of Peek (collectively, the “Specified Shares”) that are issued and outstanding immediately prior to the First Effective Time will be converted into the right to receive shares of Company common stock (the “Stock Consideration”) in Closing Merger Consideration as follows:
| ● | shares of Company common stock (the “Guaranteed Stock Consideration”); and | |
| ● | shares of Company common stock (the “Earn-Out Shares”), which shall be subject to forfeiture based on the Surviving Company’s ability to achieve the target aggregate revenue amount of $ during the period commencing on the Closing Date and ending on December 31, 2027. |
| 26 |
In order to preserve the intended U.S. federal income tax treatment of the Mergers, it is possible that all or a portion of the final payment under the Note may be made in the form of additional shares of Company common stock, depending on whether and the extent to which any Earn-Out Shares issued at the First Effective Time are forfeited pursuant to the terms of the Merger Agreement.
The acquisition has not yet closed as of the issuance date of these financial statements.
Equity Purchase Agreement and Registration Rights Agreement
On
April 9, 2025, the Company entered into an equity purchase agreement (the “ELOC Purchase Agreement”) with Hudson Global Ventures,
LLC (the “Investor”), pursuant to which the Company has the right, but not the obligation, to direct the Investor to purchase
up to $
The
Investor has no right to require any sales by the Company, but is obligated to make purchases at the Company’s direction subject
to certain conditions.
The
purchase price to be paid by the Investor for the ELOC Shares will be the lesser of (i) ninety percent (
Actual sales of ELOC Shares to the Investor from time to time will depend on a variety of factors, including, without limitation, market conditions, the trading price of the Company’s common stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. The net proceeds that the Company may receive under the ELOC Purchase Agreement, if any, cannot be determined at this time, since the amount will depend on the frequency and prices at which the Company sells ELOC Shares to the Investor, the Company’s ability to meet the conditions of the ELOC Purchase Agreement, the other limitations, terms and conditions of the ELOC Purchase Agreement, and any impacts of the Beneficial Ownership Limitation (described below).
As
consideration for the Investor’s execution and delivery of the ELOC Purchase Agreement, the Company issued to the Investor
shares of common stock as a commitment fee and paid $
Unless earlier terminated as provided in the ELOC Purchase Agreement, the ELOC Purchase Agreement will terminate automatically on the earliest to occur of: (i) twenty-four (24) months after the execution of the ELOC Purchase Agreement, (ii) the date on which the Investor shall have purchased the maximum amount of ELOC Shares issuable under the ELOC Purchase Agreement, or (iii) the effective date of any written notice of termination delivered pursuant to the terms of the ELOC Purchase Agreement.
On May 5, 2025, the Company filed a Registration Statement on Form S-1 with the Commission (File No. 333-286981), which registers the commitment fee shares and up to shares issuable to the Investor on the direction of the Company. On May 7, 2025, the Commission declared the registration statement effective and the Company filed a final prospectus describing the terms of the offering.
Change in board of directors
On April 9, 2025, Sajid Sayed resigned from the Company’s Board of Directors. His resignation did not result from any disagreement with the Company. On April 10, 2025, the Board appointed Michael L. Peterson as an independent director to fill the resulting vacancy. Mr. Peterson was also appointed Chairman of the Audit Committee and a member of the Compensation and Nominating & Corporate Governance Committees.
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Seventh amendment to MIPA dated May 11, 2023
On
April 14, 2025, the Company and the other parties to the Wellgistics MIPA further amended the Wellgistics MIPA to convert a cash payment
of $
Appointment of Chief Financial Officer
On
April 22, 2025, the Company appointed Mark DiSiena as Chief Financial Officer, effective as of that date. Mr. DiSiena brings
extensive leadership and financial management experience, having served in senior finance roles across multiple public and private
companies, as well as providing interim CFO and advisory services through his consulting firm. Mr. DiSiena succeeds Vishnu Balu, who
resigned as Chief Financial Officer effective April 22, 2025. Mr. Balu’s resignation was not due to any disagreement with the
Company on any matter relating to its operations, policies, or practices. In connection with his appointment, the Company entered
into an employment agreement with Mr. DiSiena providing for an initial annual salary of $
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 Statement Regarding Forward-Looking Information” 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.
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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
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
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 (“CMS”) illustrates that the National Health Expenditure Data for 2022 grew to $4.5 trillion dollars and accounted for 17.3% of GDP. A deeper dive of this report reveals that total retail prescription 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. CMS anticipates an increase in the health spending share of GDP to 19.7% by 2032. IQVIA’S 2024 report on medicine spending trends found that overall spending in the U.S. market for medicines reached $435 billion in 2023. 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. Our management believes that 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 our acquisition of Wood Sage, but now expect to generate all of our revenues through Wellgistics Tech & Hub, 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.
Expenses
Research and Development Expense
Our research and development expenses will consist primarily of internal and external expenses incurred in connection with our research activities and development programs. These expenses will include, but are not limited to, software development, integrations with pharmacy management systems, development supplies, testing materials, personnel costs (including salaries and benefits), depreciation expense, overhead allocation, (consisting of various support and facility costs), stock-based compensation and consulting fees. Research and development costs will be expensed as incurred.
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Sales and Marketing Expense
Sales and marketing expenses will 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.
In the future, general and administrative expenses will consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation expense) for personnel in executive, finance, accounting, corporate development and other administrative functions. General and administrative expenses will also include legal fees, professional fees paid for accounting, auditing, consulting, tax, and investor relations services, insurance costs, facility costs not otherwise included in research and development expenses. Following Wellgistics Health’s registration as a public company, also include public company expenses such as costs associated with compliance with the rules and regulations of the SEC and the stock exchange.
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.
Results of Operations
For the Three Months Ended March 31, 2025 and 2024
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net sales | $ | 10,863,443 | $ | - | ||||
| Cost of sales | 10,170,802 | - | ||||||
| Gross profit | 692,641 | - | ||||||
| Total operating expenses | 32,041,009 | 79,764 | ||||||
| Loss from operations | (31,348,368 | ) | (79,764 | ) | ||||
| Total other income (expense) | (1,082,535 | ) | (3,358 | ) | ||||
| Net loss | (32,430,903 | ) | (83,122 | ) | ||||
Revenues and Cost of Revenues
Net sales were $10,863,443 for the three months ended March 31, 2025, consisting of revenue primarily derived from Wellgistics Pharmacy operations after the closings of our acquisitions of Wood Sage on June 16, 2024, and of Wellgistics, LLC on August 30, 2024. Cost of revenues for the same period was $10,170,802. Gross profit was $692,641, representing a gross margin of $6.4%. The Company did not earn revenue for the three months ended March 31, 2024.
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The following is a summary of the disaggregation of revenue for the three months ended March 31, 2025 and 2024:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Product revenue - distribution services | $ | 10,668,287 | $ | - | ||||
| Pharmacy retail sales | 114,676 | - | ||||||
| Third party logistics services | 80,480 | - | ||||||
| Net sales | $ | 10,863,443 | $ | - | ||||
General and Administrative Expense
General and administrative expenses were $32,041,009 for the three months ended March 31, 2025, compared to $79,764 for the three months ended March 31, 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 March 31, 2025, general and administrative expenses also included $27,773,421 of non-cash stock-based compensation related to the issuance of common stock to directors, employees, and consultants in exchange for services rendered.
Depreciation and amortization
Depreciation and amortization was $802,872 for the three months ended March 31, 2025, compared to $0 for the three months ended March 31, 2024. This included amortization of $763,064, which relates to intangible assets identified from acquisitions of Wood Sage and Wellgistics, LLC. Depreciation expense of $39,807 relates to fixed assets acquired from the Wellgistics, LLC acquisition.
Interest Expense
Interest expense was $1,094,490 and $3,358 for the three months ended March 31, 2025 and 2024, respectively. Interest expense in 2025 was incurred on Wellgistics Health’s outstanding notes and merchant cash advance agreements.
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 operating cash flows, the issuance of debt and the sale of equity securities. We expect to generate positive cash flow from the operations in 2025 due to the annual revenue generated from Wood Sage and Wellgistics, LLC. In order to proceed with our business plan, we may need to raise additional funds through the issuance of debt, equity or other commercial arrangements that may not be available to us when needed or on terms that we deem favorable. To the extent we raise additional capital through the sale of equity or convertible securities, our stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common 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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Debt
Outstanding debt consists of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Merchant cash advance | $ | 1,785,659 | $ | 1,259,415 | ||||
| Note payable - owners of Wellgistics | 10,000,000 | 5,000,000 | ||||||
| Note payable - third party, net of debt discount of $11,304 and $0 | 637,107 | - | ||||||
| Revolving line of credit | 5,220,699 | 5,531,260 | ||||||
| Seller promissory note | 68,570 | 137,141 | ||||||
| Current portion of debt obligations | 17,712,035 | 11,927,816 | ||||||
| Merchant cash advance | $ | - | $ | 55,085 | ||||
| Third party investor | 100,000 | 100,000 | ||||||
| Note payable - Scienture Holdings | 1,300,000 | 1,300,000 | ||||||
| Note payable - owners of Wellgistics | 5,000,000 | 10,000,000 | ||||||
| Long-term debt | 6,400,000 | 11,455,085 | ||||||
| Total debt | $ | 24,112,035 | $ | 23,382,901 | ||||
Wellgistics Health Inc. (formerly Danam)
On August 22, 2023, Wood Sage entered into a non-interest bearing promissory note (“Note”) with Integral pursuant to which Integral made a certain loan to Wood Sage in the amount of $1,300,000 to satisfy the purchase price under the CSP MIPA and APS MIPA. No later than 30 days after a change in control to Wood Sage, the aggregate unpaid principal balance of the Note will be due and payable by Wood Sage. As of March 31, 2025, the note is still outstanding and the parties mutually agreed for an extension.
On October 11, 2024, the Company entered a merchant cash advance agreement with a third-party lender. This advance is secured by expected future sales transactions of the Company with expected payments on weekly basis. The Company received total proceeds of $1,500,000 against future receivables of $2,236,500. During the three months ended March 31, 2025, Company made total cash repayments of $700,680, including principal repayments of $401,511 and interest expense of $299,169. As of March 31, 2025, $1,003,909 in principal remained outstanding, which was included as a current liability on the consolidated balance sheet.
On March 27, 2025, the Company entered into a merchant cash advance agreement with a third-party lender. Pursuant to the agreement, the Company will receive total funding of $1,900,000, secured by its future sales transactions, with repayments scheduled to be made on a weekly basis in the amount of $56,800. The funding was made against future receivables totaling $2,840,000. The Company received net proceeds of $781,750 on March 27, 2025. As of March 31, 2025, the outstanding balance of $781,750 is classified as a current liability on the consolidated balance sheet.
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Note payable – owners 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 March 6, 2025, the Company and Wellgistics, LLC further amended the Wellgistics MIPA to extend the due date of the $10 million closing cash payment such that the closing cash payment will be due on June 14, 2025.
For the three months ended March 31, 2025, the Company recorded interest expense of $318,750 pertaining to the note. As of March 31, 2025 and December 31, 2024, accrued interest on the note totaled $743,750 and $425,000 respectively. As of March 31, 2025, $10,000,000 was included as a current liability on the consolidated balance sheet and the remaining $5,000,000 was classified as long-term.
Note Payable – Third party
On January 2, 2025, the Company entered into an unsecured promissory note agreement for a principal amount of $448,411. The promissory note bears interest at a rate of 10% per annum, with both principal and accrued interest due in full on May 15, 2025. In the event of default, interest accrues at a default rate of 12% per annum. In connection with this note, the Company received net proceeds of $415,000, with the remaining $33,411 recognized as a debt discount. For the three months ended March 31, 2025, the Company recorded interest expense of $11,304 and amortization of debt discount $22,107 related to this promissory note. As of March 31, 2025, the outstanding principal of $448,411 is classified under current liabilities.
On February 2, 2025, the Company entered into an unsecured promissory note agreement for a principal amount of $100,000. The promissory note bears interest at a rate of 10% per annum, with both principal and accrued interest due in full on August 15, 2025. In the event of default, interest accrues at a default rate of 12% per annum. For the three months ended March 31, 2025, the Company recorded interest expense of $1,562 related to this promissory note. As of March 31, 2025, the outstanding principal of $100,000 is classified under current liabilities.
On February 2, 2025, the Company entered into an 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 months ended March 31, 2025, the Company recorded interest expense of $1,562 related to this promissory note. As of March 31, 2025, the outstanding principal of $100,000 is classified under 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 SOFR plus 11.5%, calculated and prorated daily on the daily balance. The new line of credit is collateralized by accounts receivable and inventory balances. Interest related to the line of credit amounted to $332,439 for the three months ended March 31, 2025. The outstanding balance on the line of credit as of March 31, 2025, and December 31, 2024 was $5,220,699 and $5,531,260 respectively, which is included as a current liability on the consolidated balance sheet. The Company assumed the initial revolving line of credit as part of the Wellgistics, LLC acquisition.
Seller Promissory Note - Wellgistics
In May 2022, Wellgistics, LLC entered into a promissory note agreement with 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 bears interest at a rate of 2% per annum and will mature on April 1, 2025. Interest expense related to the promissory note was immaterial for the three months ended March 31, 2025. As of March 31, 2025 and December 31, 2024 the amount outstanding is $68,570 and $137,141, which is included as a current liability on the consolidated balance sheet. The Company assumed this debt as part of the Wellgistics, LLC acquisition.
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The following table is a summary of annual principal payments of the Company’s outstanding debt:
| December 31, | ||||
| 2025 | $ | 17,723,339 | ||
| 2026 | 1,400,000 | |||
| 2027 | 5,000,000 | |||
| $ | 24,123,339 | |||
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.
Cash Flows
The following table summarizes our cash flows from operating, investing, and financing activities :
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash provided by (used in) operating activities | $ | (1,347,449 | ) | $ | 31,237 | |||
| Net cash used in investing activities | $ | (273,133 | ) | $ | - | |||
| Net cash provided by financing activities | $ | 3,108,831 | $ | 260,000 | ||||
| Net change in cash and cash equivalents | $ | 1,488,249 | $ | 291,237 | ||||
Cash from operating activities
Net cash used in operating activities for the three months ended March 31, 2025, was $1,347,449, primarily due to our net loss of $32,341,047, partially offset by non-cash expenses of $28,674,553, and $2,408,901 in cash provided in operating assets and liabilities. Non-cash expenses was driven by stock-based compensation of $27,773,421. Cash provided by operating assets and liabilities was primarily driven by an increase in accounts payable of $1,876,683.
Net cash provided by operating activities for the three months ended March 31, 2024, was primarily a result changes in operating assets and liabilities of $114,358, partially offset by our net loss of $83,122.
Cash from investing activities
Net cash used in investing activities for the three months ended March 31, 2025, was $273,133 due to payments made for intangible assets under development.
Cash from financing activities
Net cash provided by financing activities for the three months ended March 31, 2025, was $3,108,831. This was primarily driven by gross proceeds of $4,000,00 from the issuance of common stock in our IPO, $615,000 from promissory notes, and $471,158 in net proceeds from a merchant cash advance. These inflows were partially offset by $1,598,196 in offering costs, as well as repayments of a note payable and revolving line of credit.
Net cash provided by financing activities for the three months ended March 31, 2024, consists of $250,000 in proceeds from a note payable and $10,000 in proceeds from common stock to be issued.
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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.
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.
Wellgistics, LLC.
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. The company recognizes a refund liability if it receives consideration from a customer and expects to refund some or all of that consideration to the customer. A refund liability is measured at the amount of consideration received (or receivable) for which the company does not expect to be entitled (that is, amounts not included in the transaction price). The refund liability (and corresponding change in the transaction price and, therefore, the contract liability) is updated at the end of each reporting period for changes in circumstances.
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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.
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.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
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In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. As required by Rule 13a-15(b) or Rule 15d-15(b) promulgated by the SEC under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2025, the end of the period covered by this Quarterly Report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2025, the end of the period covered by this Quarterly Report at the reasonable assurance level.
Changes in Internal Control
There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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 March 25, 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 three months ending March 31, 2025, that were not registered under 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.
Between March 21, 2025, and March 27, 2025, we issued 19,764,108 shares of restricted stock under the Wellgistics Health, Inc. Amended and Restated 2023 Equity Incentive Plan (the “Plan”) to the following individuals:
| ● | 600,000 shares to the Company’s independent directors, with 198,000 shares vesting immediately and the remainder vesting in equal amounts on March 4, 2026, and March 4, 2027; | |
| ● | 8,164,494 shares to the Company’s non-independent directors, with each share vesting immediately; | |
| ● | 503,158 shares to certain employees, with 15,000 shares vesting immediately, 116,942 vesting on October 1, 2025, 126,942 vesting on October 1, 2026, 126,942 vesting on October 1, 2027, 58,666 vesting on October 1, 2028, and 58,666 vesting on October 1, 2029; | |
| ● | 9,000,000 shares to the Company’s chief executive officer, which vest only upon the achievement of certain financial metrics for the fiscal years ending December 31, 2025, 2026, and 2027, with the first vesting opportunity occurring during the first quarter 2026; | |
| ● | 223,333 shares to former employees, with each share vesting immediately; and | |
| ● | 1,273,123 shares to consultants or advisers, with 1,041,123 shares vesting immediately and the remainder vesting in equal amounts over 3 years. |
On April 11, 2025, we issued 152,000 shares of common stock as a commitment fee to Hudson Global Ventures, LLC pursuant to an equity purchase agreement.
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.
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Use of Proceeds
On February 24, 2025, we completed our initial public offering in which we issued and sold 888,889 shares of our common stock at a public offering price of $4.50 per share. We received net proceeds of approximately $3.1 million, after deducting underwriting discounts, commissions, and expenses of approximately $880,000. All shares sold were registered pursuant to a registration statement on Form S-1 (File No. 333-280945), as amended (the “IPO Registration Statement”), declared effective by the SEC on February 14, 2025.
Craft Capital Management LLC acted as representatives of the underwriters for the offering. The offering terminated after the sale of all securities registered pursuant to the IPO Registration Statement. No payments for such expenses were made directly or indirectly to (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities, or (iii) any of our affiliates.
We used the net proceeds from our initial public offering for cash and general working capital purposes. There has been no material change in the expected use of the net proceeds from our initial public offering as described in the prospectus forming a part of the IPO Registration Statement.
Repurchases
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During
the quarter ended March 31, 2025, none of the Company’s directors or officers
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’s departure. In connection with this appointment, the board of directors designated Mr. Peterson as the Chairman of the Board’s Audit Committee after determining that Mr. Peterson qualifies as an audit committee financial expert within the meaning of the rules and regulations of the SEC and meets the financial sophistication requirements of Nasdaq listing rules. In making this determination, the Company’s board of directors considered Mr. Peterson’s formal education and previous experience in financial roles. The Company’s board of directors also appointed Mr. Peterson to fill the vacancies caused by Mr. Syed’s resignation as a member of the Compensation Committee and Nominating and Corporate Governance Committee.
As consideration for Mr. Peterson joining the Company, the Company’s board of directors determined, after his appointment, to pay Mr. Peterson a retainer of $120,000 per year and a one-time issuance of 200,000 shares of the Company’s common stock at a price per share equal to the fair market value of the Company’s common stock on the grant date that vests in equal amounts of a three year period beginning on the first anniversary date of the grant. Vesting of Mr. Peterson’s shares of common stock accelerates if or when he leaves the Company. The firm also committed to carry director and officer insurance for Mr. Peterson. Mr. Peterson’s compensation differs from the compensation provided to the Company’s other independent directors.
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As previously disclosed on the Company’s Current Report on Form 8-K filed with the SEC on April 24, 2025, the Company’s Board of Directors appointed Mark DiSiena as Chief Financial Officer of the Company, effective as of April 22, 2025 (the “Commencement Date”). Mr. DiSiena will succeed Vishnu Balu, who served as the Company’s Chief Financial Officer since April 2024, and who resigned from his position, effective as of the Commencement Date. Mr. Balu’s decision to resign was not the result 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.
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/ Mark DiSiena | |
| Name: | Mark DiSiena | |
| Title: | Chief Financial Officer | |
| (Principal Financial Officer and Accounting Officer) | ||
| Date: May 12, 2025 | ||
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