DataMeds AI: $23.7M debt due, going-concern doubt
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
DataMeds AI, Inc. (MEDS) reported third-quarter revenue of $2,668,980, versus $3,012,904 a year earlier, and net income of $10,535,560 versus a $34,318,204 loss. The 2026 quarter included a $19,064,881 noncash gain from debt extinguishment. For the first nine months, revenue was $6,008,403 versus $21,667,212, net loss was $15,570,262, and operating cash use was $9,210,298.
At September 30, 2026, cash was $476,598, the working-capital deficit was $31,329,749, and aggregate debt principal was $25,186,014, of which $23,722,342 was due within 12 months. Management said cash was insufficient to repay obligations as they became due and concluded these conditions raised substantial doubt about the company’s ability to continue as a going concern.
The September settlement with Wellgistics sellers involved $450,000 in aggregate cash consideration and extinguished $17,500,000 of seller-note principal plus $1,687,192 accrued interest. Separately, the Company agreed to pay $2,000,000 for Kare Hub platform IP contributed to Healthstar, issuing 30,000 shares valued at $114,300 and recording $1,885,700 payable, at its election, on or prior to April 1, 2027 in additional shares.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Major pointSeller settlement extinguished $17,500,000 of principal and $1,687,192 accrued interest. 5.2× market cap
Negative
- Major pointSubstantial doubt about going concern; $23,722,342 principal due within 12 months.
- Moderate pointNine-month revenue fell to $6,008,403 from $21,667,212.
- Moderate pointOperating cash used was $9,210,298, versus $4,561,776 in 2025.
Filing Explained
As of September 30, 2026, 17,387,018 shares were potentially issuable alongside 4,730,148 outstanding; required approval for the May-note share cap had not been obtained.
Form 10-Q is an unaudited quarterly report; this report discloses 17,387,018 potentially issuable shares from warrants, convertible notes and other items as of
The May 2026 notes convert at the lesser of
Shares outstanding were 2,026,150 at
Key Figures
Key Terms
going concern financial
non-controlling interest financial
volume-weighted average price financial
Exchange Cap financial
antidilutive financial
debt extinguishment financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were MEDS's third-quarter 2026 revenue and earnings?
How much debt principal did MEDS have due within 12 months?
AI-generated analysis. How Rhea-AI works. Not financial advice.
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)
| (Former name, former address and former fiscal year, if changed since last report) |
Securities to be registered under Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
The
(The NASDAQ Capital Market) |
Indicate
by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
If
an emerging growth company, indicate by check mark if the Company has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate
by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As
of November 13, 2026, there were
TABLE OF CONTENTS
| Page | ||
| Part I. Financial Information | 3 | |
| Item 1. | Financial Statements | 3 |
| Condensed Consolidated Balance Sheets as of September 30, 2026 (unaudited) and December 31, 2025 | 3 | |
| Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2026 and 2025 (unaudited) | 4 | |
| Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2026 and 2025 (unaudited) | 5 | |
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 (unaudited) | 6 | |
| Notes to Condensed Consolidated Financial Statements (unaudited) | 7 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 38 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 50 |
| Item 4. | Controls and Procedures | 50 |
| Part II. Other Information | 51 | |
| Item 1 | Legal Proceedings | 51 |
| Item 1A | Risk Factors | 51 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 51 |
| Item 3 | Defaults Upon Senior Securities | 51 |
| Item 4 | Mine Safety Disclosures | 51 |
| Item 5 | Other Information | 51 |
| Item 6 | Exhibits | 52 |
| Signatures | 53 | |
In this Quarterly Report on Form 10-Q (this “Quarterly Report”), all references to “DataMeds AI, Inc.,” “DataMeds AI,” “we,” “us,” “our” or the “Company” mean DataMeds AI, Inc. (formerly known as Wellgistics Health, Inc.) and its wholly-owned subsidiaries, except where it is made clear that the term means only DataMeds AI, Inc. The Company changed its name from Wellgistics Health, Inc. to DataMeds AI, Inc. effective July 22, 2026, as described in Note 1 — Organization and Summary of Significant Accounting Policies. The Company’s common stock, par value $0.0001 per share, is referred to as “common stock.”
| 2 |
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
DATAMEDS AI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Due from related parties | - | |||||||
| Prepaid and other current assets | - | |||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Capitalized software | ||||||||
| Operating lease, right-of-use-assets | ||||||||
| Goodwill | ||||||||
| Other intangible assets, net | ||||||||
| Investment in SAFE | - | |||||||
| Deposits and other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable, related party | ||||||||
| Accounts payable | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Purchase consideration liability | - | |||||||
| Due to related parties | - | |||||||
| Convertible notes payable, net of debt discount | - | |||||||
| Current portion of debt obligations, net of debt discount | ||||||||
| Operating lease liabilities- current portion | ||||||||
| Total current liabilities | ||||||||
| Convertible notes payable | - | |||||||
| Note payable, net of discount | ||||||||
| Operating lease liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and contingencies (Note 15) | - | - | ||||||
| Stockholders’ equity (deficit): | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total DataMeds AI, Inc. stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Non-controlling interest | - | |||||||
| Total stockholders’ equity (deficit) | ( | ) | ||||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
See the accompanying notes to the unaudited condensed consolidated financial statements
| 3 |
DATAMEDS AI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Cost of net revenues | ||||||||||||||||
| Gross profit (loss) | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | - | |||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on extinguishment of vendor obligation | ( | ) | - | ( | ) | - | ||||||||||
| Gain (loss) on extinguishment of debt | ( | ) | ( | ) | ||||||||||||
| Loss on contract termination fee | - | - | ( | ) | - | |||||||||||
| Settlement fees | - | - | ( | ) | - | |||||||||||
| Other income | ||||||||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Net income (loss) before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net loss attributable to non-controlling interest | ( | ) | - | ( | ) | - | ||||||||||
| Net income (loss) attributable to DataMeds AI | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Weighted average common shares outstanding - basic and diluted | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Net income (loss) per common share - basic and diluted | ||||||||||||||||
| Basic | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
See the accompanying notes to the unaudited condensed consolidated financial statements
| 4 |
DATAMEDS AI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| Shares | Amount | Capital | Deficit | Interest | (Deficit) | |||||||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Non-controlling | Total Stockholders’ Equity | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Interest | (Deficit) | |||||||||||||||||||
| 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 | $ | $ | $ | ( | ) | $ | - | $ | ||||||||||||||||
| Common stock issued pursuant to equity purchase agreement | - | - | ||||||||||||||||||||||
| Issuance of commitment shares under equity purchase agreement | - | - | - | |||||||||||||||||||||
| Common stock issued in partial settlement of seller’s note | - | - | ||||||||||||||||||||||
| Vested restricted stock granted to employees | - | - | - | |||||||||||||||||||||
| Offering costs | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||
| Net loss | - | - | ( | ) | - | ( | ) | |||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | ) | $ | - | $ | ||||||||||||||||
| Common stock issued pursuant to equity purchase agreement | - | - | ||||||||||||||||||||||
| Common stock issued pursuant to public offering | - | - | ||||||||||||||||||||||
| Common stock issued in partial settlement of due to seller | - | - | ||||||||||||||||||||||
| Common stock issued for services | - | - | ||||||||||||||||||||||
| Common stock cancelled | ( | ) | - | - | - | - | - | |||||||||||||||||
| Vesting of restricted stock - Acceleration | - | - | ||||||||||||||||||||||
| Vested restricted stock granted to employees | - | - | - | |||||||||||||||||||||
| Vested restricted stock granted to consultants | - | - | - | - | ||||||||||||||||||||
| Offering costs | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | ( | ) | $ | - | $ | ||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | ) | $ | - | $ | ( | ) | ||||||||||||||
| Common stock and warrants issued in settlement of accrued compensation | - | - | ||||||||||||||||||||||
| Common stock issued in settlement of vendor obligation | - | - | ||||||||||||||||||||||
| Common stock issued as settlement and legal fees | - | - | ||||||||||||||||||||||
| Common stock issued pursuant to consulting agreement | - | - | ||||||||||||||||||||||
| Issuance of placement agent warrants in connection with convertible notes | - | - | - | - | ||||||||||||||||||||
| Vested restricted stock granted to employees | - | - | - | - | ||||||||||||||||||||
| Vested restricted stock granted to consultants | - | - | - | - | ||||||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | ) | $ | - | $ | ( | ) | ||||||||||||||
| Common stock issued in pursuance of exercise of warrants | - | - | ||||||||||||||||||||||
| Common stock issued pursuant to consulting agreement | - | - | ||||||||||||||||||||||
| Common stock issued in settlement of vendor obligation | - | - | ||||||||||||||||||||||
| Common stock issued in pursuance of contract termination fees | - | - | ||||||||||||||||||||||
| Vested restricted stock granted to employees | - | - | - | |||||||||||||||||||||
| Issuance of placement agent warrants in connection with convertible notes | - | - | - | - | ||||||||||||||||||||
| Issuance of PIPE warrants in connection with convertible notes | - | - | - | - | ||||||||||||||||||||
| Equity issuance costs | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||
| Effect of reverse stock split | - | - | - | - | - | |||||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | ( | ) | $ | - | $ | ( | ) | ||||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | - | $ | ( | ) | ||||||||||||||
| Common stock issued in settlement of vendor obligation | - | - | ||||||||||||||||||||||
| Common stock issued pursuant to business combination | - | - | ||||||||||||||||||||||
| Common stock issued for acquisition of intangible assets | - | - | ||||||||||||||||||||||
| Repurchase and retirement of common stock – settlement with sellers of Wellgistics, LLC | ( | ) | ( | ) | ( | ) | - | - | ( | ) | ||||||||||||||
| Vested restricted stock granted to employees | - | - | - | - | ||||||||||||||||||||
| Non-controlling interest recognized in assets acquisition | - | - | - | - | ||||||||||||||||||||
| Net loss attributable to non-controlling interest | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Net income attributable to DataMeds AI, Inc. | - | - | - | - | ||||||||||||||||||||
| Net income (loss) | - | - | - | - | ||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
See the accompanying notes to the unaudited condensed consolidated financial statements
| 5 |
DATAMEDS AI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| 2026 | 2025 | |||||||
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Allowances for credit losses | ||||||||
| Loss on extinguishment on vendor obligation | - | |||||||
| Gain on extinguishment of debt | ( | ) | ||||||
| Loss on contract termination fee | - | |||||||
| Amortization of debt discount | ||||||||
| Stock-based compensation | ||||||||
| Reserve for inventory obsolescence | ( | ) | - | |||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | ( | ) | ||||||
| Inventories, net | ||||||||
| Deposits | - | ( | ) | |||||
| Prepaid and other current assets | ( | ) | - | |||||
| Other assets | - | ( | ) | |||||
| Accounts payable | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Operating lease liabilities, net | ( | ) | ||||||
| Due from / to related parties, net | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Cash acquired in business combination | - | |||||||
| Investment in SAFE | ( | ) | - | |||||
| Investments in capitalized software | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of warrants | - | |||||||
| Proceeds from promissory note | - | |||||||
| Repayment of promissory note | ( | ) | - | |||||
| Repayment of seller promissory note | - | ( | ) | |||||
| Proceeds from term loan | - | |||||||
| Proceeds from revolving line of credit | - | |||||||
| Repayment of revolving line of credit | ( | ) | ( | ) | ||||
| Proceeds from convertible notes | - | |||||||
| Proceeds from Merchant cash advance | - | - | ||||||
| Proceeds from common stock issued pursuant to equity purchase agreement | - | |||||||
| Repayment of merchant cash advance | ( | ) | ( | ) | ||||
| Proceeds from Promissory notes - silverback | - | |||||||
| Repurchase of common stock | ( | ) | - | |||||
| Repayment of Seller Promissory note | ( | ) | - | |||||
| Repayment of term loan | ( | ) | - | |||||
| Proceeds from common stock issued pursuant to IPO | - | |||||||
| Proceeds from common stock issued pursuant to public offering | - | |||||||
| Debt issuance cost paid | ( | ) | - | |||||
| Offering costs | - | ( | ) | |||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Derecognition of promissory note and accrued interest pursuant to debt extinguishment | $ | $ | ||||||
| Issuance of commitment shares under equity purchase agreement | $ | - | $ | |||||
| Common stock issued in partial settlement of seller’s note | $ | - | $ | |||||
| Issuance of common stock and warrants in settlement of accrued compensation | $ | $ | - | |||||
| Issuance of common stock in settlement of vendor and debt obligation | $ | $ | - | |||||
| Fair value of PIPE and placement agent warrants issued in connection with New Notes | $ | $ | - | |||||
| Fair value of placement agent warrants issued in connection with original notes, recorded as debt issuance costs | $ | $ | - | |||||
| Convertible notes issued in lieu of cash for placement agent fees | $ | $ | - | |||||
| Common stock issued pursuant to business combination | $ | $ | - | |||||
| Convertible note issued pursuant to business combination | $ | $ | - | |||||
| Intellectual property acquired through issuance of common stock | $ | $ | - | |||||
| Intellectual property acquired through purchase consideration liability | $ | $ | - | |||||
See the accompanying notes to the unaudited condensed consolidated financial statements
| 6 |
DATAMEDS AI, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DataMeds AI, Inc. (formerly known as Wellgistics Health, Inc.) (the “Company,” “we,” “us,” or “our”) is a Delaware corporation headquartered in Tampa, Florida. The Company was initially organized as Ayan Sponsors LLC on September 6, 2022, and subsequently incorporated as Danam Health, Inc. on November 15, 2022. On October 4, 2024, the Company changed its corporate name to Wellgistics Health, Inc. by filing a duly authorized Certificate of Amendment to its Certificate of Incorporation. On July 20, 2026, the Company filed a further Certificate of Amendment to its Amended and Restated Certificate of Incorporation to change its corporate name to DataMeds AI, Inc., effective July 22, 2026. In connection with the name change, the Company’s common stock began trading on The Nasdaq Capital Market under the symbol “MEDS,” replacing the prior symbol “WGRX.”
The
Company operates as a holding company with Corexa Health, LLC (f/k/a Wood Sage LLC) as a directly held intermediate holding company subsidiary,
Corexa Tech & Hub, LLC (f/k/a Wellgistics Tech & Hub, LLC) and Corexa Pharmacy, LLC (f/k/a Wellgistics Pharmacy, LLC) as indirect
operating subsidiaries, Wellgistics, LLC and Helomics Corporation (“Helomics”) as direct operating subsidiaries, and Healthstar
Technologies, LLC (“Healthstar”) as a
In June 2024, the Company acquired Wood Sage (the “Wood Sage Acquisition”), including its two operating subsidiaries, Corexa Tech & Hub, LLC (f/k/a Wellgistics Tech & Hub, LLC and Alliance Pharma Solutions LLC d/b/a DelivMeds), a pharmaceutical technology hub, and Corexa Pharmacy, LLC (f/k/a Wellgistics Pharmacy, LLC and Community Specialty Pharmacy, LLC), a retail community specialty pharmacy. On August 30, 2024, the Company acquired Wellgistics, LLC (the “Wellgistics Acquisition”), a wholesale pharmaceutical distributor serving a network of independent pharmacies.
Healthstar Technologies, LLC
On
April 13, 2026, the Company entered into a Collaboration Agreement with Kare Rx Hub, LLC (“Kare Hub”) and Kare Pharmtech,
LLC (“Kare Pharmtech”), providing for the formation of Healthstar Technologies, LLC (“Healthstar”), a limited
liability company in which the Company holds a
The
Company evaluated its interest in Healthstar under ASC 810, Consolidation, and concluded that the Company holds a controlling
financial interest in Healthstar through its
On
September 28, 2026 (the “Healthstar Closing”), Kare Hub contributed certain intellectual property and related records (the
“Transfer IP”) to Healthstar pursuant to the Collaboration Agreement. In consideration, the Company agreed to pay Kare Pharmtech
a purchase price of $
Summary of Significant Accounting Policies
A description of the Company’s significant accounting policies and other financial information is included in the Company’s audited consolidated financial statements filed on March 20, 2026, with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”). These policies have been applied consistently in these unaudited condensed consolidated interim financial statements, except for the policies adopted during the nine months ended September 30, 2026 in connection with new transactions, as described below.
Unaudited Interim Financial Information
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of September 30, 2026 and for the three and nine months then ended. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or any other period.
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, 2025 included in the Form 10-K filed with the SEC on March 20, 2026.
| 7 |
Basis of Presentation and Principles of Consolidation
The Company’s fiscal year ends on December 31.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.GAAP”) in all material respects and have been consistently applied in preparing the accompanying unaudited condensed consolidated financial statements.
The
condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries, including Wood Sage
from June 16, 2024, Wellgistics, LLC from August 30, 2024, Helomics from September 11, 2026, and Healthstar, a
Non-controlling Interest
Non-controlling
interest represents the
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to:
| ● | the allowance for credit losses; | |
| ● | the reserve for inventory obsolescence; | |
| ● | the fair values of assets acquired and liabilities assumed in the Helomics Acquisition; | |
| ● | the measurement of the intellectual property and non-controlling interest recognized in connection with the Healthstar Closing; | |
| ● | the recoverability of goodwill and long-lived assets; | |
| ● | the fair value of equity instruments issued, including common stock, warrants and equity-based awards; the measurement of debt discounts and gains or losses on the extinguishment of debt; | |
| ● | the incremental borrowing rate used to measure lease liabilities; and | |
| ● | the valuation allowance on deferred tax assets. |
Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. Actual results could differ from those estimates.
Comprehensive Income (Loss)
Comprehensive income (loss) includes net income (loss) as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. For the three and nine months ended September 30, 2026 and 2025, there was no difference between net income (loss) and comprehensive income (loss).
Segment Reporting
In accordance with Accounting Standards Codification (“ASC”) 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. ASC 280 establishes standards for companies to report financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker (“CODM”), or group, in deciding how to allocate resources and assess performance.
The Company’s CODM consists of its President and Interim Chief Executive Officer and its Interim Co-Chief Executive
Officer, who review the operating results of the Company on a consolidated basis to make decisions about allocating resources and assessing
financial performance. Following the Helomics Acquisition and the Healthstar
Closing, the CODM continues to evaluate the Company’s operating results on a consolidated basis. Accordingly, management has determined
that the Company has
The measures of segment profit or loss reviewed by the CODM are consolidated gross profit, loss from operations and net income (loss). These metrics are reviewed and monitored by the CODM to manage and forecast cash. The CODM also reviews operating costs monitor compliance with the Company’s contractual obligations and budgeted spending.
See Note 14 for further details.
Concentration of Credit Risks, Major Customers and Vendors
Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and receivables. The Company places its cash and cash equivalents with financial institutions. Deposits are insured to Federal Deposit Insurance Corp limits.
| 8 |
For
the nine months ended September 30, 2026, no single customer accounted for more than 10% of the Company’s net revenues. For the
nine months ended September 30, 2025, one customer accounted for approximately
As
of September 30, 2026, no single customer accounted for more than 10% of gross accounts receivable. As of December 31, 2025, two customers
accounted for approximately
The Company’s pharmacy operations purchase substantially all of their pharmaceutical products from a single wholesale vendor. The loss of this vendor, or a disruption in its supply, could have a material adverse effect on the Company’s business, financial condition and results of operations.
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 and cash equivalents, accounts receivable, deposits, accounts payable, accrued expenses and other liabilities, and short-term debt obligations approximate their fair values due to the short-term nature of these instruments. The purchase consideration liability, which is required to be settled through the issuance of a variable number of shares of common stock with a fixed monetary value, is recorded at fair value, which approximates its settlement amount.
As
of September 30, 2026, the carrying amount and estimated fair value of the Company’s convertible notes payable were $
The Company also measures certain assets and liabilities at fair value on a non-recurring basis. During the three months ended September 30, 2026, the assets acquired and liabilities assumed in the Helomics Acquisition were measured at fair value as of the acquisition date, primarily using Level 3 inputs. See Note 9 — Business Combination and Asset Acquisition.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recorded at the net invoiced amount, net of allowance for credit losses, and do not bear interest. Expected credit losses include losses expected based on known credit issues with specific customers as well as a general expected credit loss allowance based on relevant information, including historical loss rates, current conditions, and reasonable economic forecasts that affect collectability. The Company reserves for any accounts receivable balances that are determined to be uncollectible in the allowance for credit losses. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance. Accounts receivable acquired in the Helomics Acquisition were recorded at fair value as of the acquisition date.
The Company uses a loss rate method to estimate its allowance for credit losses. The determination of the current expected credit loss rate begins with our review of historical loss experience as a percentage of accounts receivable. To determine the current allowance for credit losses, we combine the historical and expected credit loss rates and apply them to our period end accounts receivable.
| 9 |
The
Company provides for a
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. When the carrying value of inventory exceeds its estimated net realizable value, the Company records a reserve for obsolescence, which establishes a new cost basis for the related inventory. Inventory that is expired or otherwise determined to be unsaleable is written off against the reserve upon disposal or destruction. Provisions for inventory obsolescence and inventory write-downs are included in cost of net revenues in the condensed consolidated statements of operations. If actual conditions are less favorable than our assumptions, additional inventory write-downs may be required. Inventories acquired in a business combination are recorded at fair value as of the acquisition date.
Capitalized Software
The Company complies with the guidance of ASC 350-40, “Intangibles—Goodwill and Other—Internal Use Software”, in accounting for our internally developed system projects that it utilizes to provide our services to customers. These system projects generally relate to software of the Company that is not intended for sale or otherwise marketed. Internal and external costs incurred during the preliminary project stage are expensed as they are incurred. Once a project has reached the development stage, the Company capitalizes direct internal and external costs until the software is substantially complete and ready for our intended use. Costs for upgrades and enhancements are capitalized, whereas costs incurred for maintenance are expensed as incurred. These capitalized software costs are amortized on a project-by-project basis over the expected economic life of the underlying software on a straight-line basis, which is generally three to five years. Amortization commences when the software is available for our intended use.
As
of September 30, 2026 and December 31, 2025, the Company had capitalized $
The platform has not yet been placed in service and accordingly, amortization has not commenced.
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. PP&E acquired in a business combination is recorded at fair value as of the acquisition date. 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 – Shorter of the estimate useful life or remaining lease term
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.
| 10 |
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
Business Combinations
The Company accounts for business combinations in accordance with ASC 805, Business Combinations, using the acquisition method of accounting. The consideration transferred is measured at fair value as of the acquisition date and includes the fair value of equity securities issued and liabilities incurred. The identifiable assets acquired and liabilities assumed are recognized at their fair values as of the acquisition date, and the excess of the consideration transferred over the fair value of the identifiable net assets acquired is recorded as goodwill. Leases assumed in a business combination are measured as if they were new leases as of the acquisition date. Acquisition-related costs are expensed as incurred. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the provisional amounts recognized for the assets acquired and liabilities assumed, with a corresponding adjustment to goodwill, in the period in which the adjustments are determined.
Asset Acquisitions
When the assets acquired do not constitute a business, or substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the Company accounts for the transaction as an asset acquisition. The cost of an asset acquisition, which includes the fair value of the consideration transferred, any non-controlling interest recognized and direct transaction costs, is allocated to the assets acquired on a relative fair value basis. No goodwill is recognized in an asset acquisition. Acquired in-process research and development with no alternative future use is expensed as incurred.
Goodwill
Goodwill represents the excess of the consideration transferred over the fair value of net assets acquired in business combinations. In accordance with Intangibles – Goodwill and Other (Topic 350), goodwill is not amortized but is tested for impairment at least annually, or more frequently if indicators of potential impairment exist. Goodwill is tested for impairment at the reporting unit level. As the Company operates as a single operating and reportable segment, as described in Note 14, and no components below the segment level are separately reviewed by segment management, the Company has determined that it has a single reporting unit, coextensive with the Company as a whole, and all goodwill is tested for impairment on a consolidated basis.
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.
Alternatively, the Company may proceed directly to the quantitative test. Under the quantitative 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 is recognized, up to the maximum amount of goodwill allocated to that reporting unit.
Impairment of Long-Lived Assets
The Company evaluates its long-lived assets, including PP&E, capitalized software, right-of-use assets and finite-lived intangible assets, such as customer relationships, trademarks, license rights and intellectual property, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.
Recoverability is assessed by comparing the carrying amount of the asset or asset group to the undiscounted future net cash flows expected to be generated by the asset or asset group. If the carrying amount is not recoverable, an impairment loss is recognized for the amount by which the carrying amount exceeds the fair value of the asset or asset group, which is generally determined based on estimated discounted future cash flows. Finite-lived intangible assets are amortized over their estimated useful lives.
As described in Note 2, the Company’s distribution business experienced a significant decline in revenue during the nine months ended September 30, 2026. Management evaluated this decline and believes the Company has sufficient plans in place, including the financing transactions and strategic initiatives described in Note 2, to address its underlying causes. Based on this evaluation, no impairment of long-lived assets was recognized during the three and nine months ended September 30, 2026 and 2025.
| 11 |
Leases
The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred.
In calculating the right of use asset and lease liability, the Company has elected not to combine lease and non-lease components. The non-lease components are accounted for separately and recognized as expenses when incurred. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.
Leases assumed in a business combination are measured as of the acquisition date as if they were new leases. The lease liability is measured at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate as of the acquisition date, and the right-of-use asset is measured at the amount of the lease liability, adjusted to reflect any favorable or unfavorable terms of the lease relative to market terms.
Revenue Recognition
The Company recognizes revenue from contracts with customers under ASC 606, Revenue from Contracts with Customers (“ASC 606”).
To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract was determined to be within the scope of ASC 606, the Company assessed the goods or services promised within each contract and determined those that were performance obligations, and assessed whether each promised good or service was distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. The Company recognizes revenue at the point of sale. The majority of orders are placed via the Company’s website. Customers generally pay by credit card at the time they place their order. The Company does have larger customers to whom they have extended terms for payment. Generally, payments from these customers are due within 30 days of their order being shipped. However, a few customers have been given terms extending out to 45 days.
Distribution
Wellgistics, LLC provides distribution and third party logistics services to both pharmaceutical manufacturers and independent retail pharmacies. The Company recognizes revenue when goods are delivered to the customer. The gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, rebates, sales allowances and sales returns. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are considered when estimating the impact of these revenue deductions on gross sales for a reporting period. All revenue from distribution product sales is recognized at the point-in-time when the goods are delivered to customer based on contractual obligations. Any amount collected from customers for goods not yet delivered is recorded as a contract liability.
| 12 |
Pharmacy
Corexa Pharmacy, LLC operates a retail pharmacy business that fills prescriptions for drugs written by a doctor and recognizes revenue at the time the patient confirms delivery of the prescription. Customer returns are not material. The following are the steps taken to recognize revenue.
Step One: Identify the contract with the customer — The prescription is written by a doctor for a customer and delivered to the Company. The prescription identifies the performance obligations in the contract. The Company fills the prescription and delivers to the Customer the prescription, fulfilling the contract. The collection is probable because there is confirmation that the customer has insurance for the reimbursement to the Company prior to filling of the prescription.
Step Two: Identify the performance obligations in the contract — Each prescription is distinct to the Customer.
Step Three: Determine the transaction price — The consideration is not variable. The transaction price is determined to be the price of the prescription at the time of delivery which considers the expected reimbursements from third party payors (e.g., pharmacy benefit managers, insurance companies and government agencies).
Step Four: Allocate the transaction price — The price of the prescription invoiced represents the expected amount of reimbursement from third party payors. There is no difference between contract price and “stand-alone selling price”.
Step Five: Recognize revenue when or as the entity satisfies a performance obligation — Revenue is recognized upon the delivery of the prescription.
Technology and Platform
Technology and platform revenue consists of fees earned from patient access and hub services provided to pharmaceutical manufacturers through the KareHub platform, including prior authorization processing, prior authorization appeals and program management services. The Company’s promise to provide these services represents a series of distinct services that is satisfied over time, as the customer simultaneously receives and consumes the benefits of the services as they are performed. Program management fees are fixed monthly fees and are recognized ratably over the month in which the services are provided. Fees for prior authorizations processed and appeals filed are charged on a per-transaction basis and are recognized as the related services are performed. Fees that are payable only upon the approval of a prior authorization appeal represent variable consideration and are recognized when the appeal is approved. Services are billed monthly in arrears. The Company is the principal in these arrangements, as it controls the services before they are transferred to the customer, and recognizes revenue on a gross basis.
Disaggregation of Revenue
The following is a summary of the disaggregation of revenue for the three and nine months ended September 30, 2026 and 2025:
SCHEDULE OF DISAGGREGATION OF REVENUE
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | Six Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Product revenue - distribution services | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Pharmacy retail sales | ||||||||||||||||||||||||
| Third party logistics services | ||||||||||||||||||||||||
| Technology and Platform revenue | - | - | - | - | ||||||||||||||||||||
| Net revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
All revenue for the three and nine months ended September 30, 2026, and 2025, were within the United States.
Contract Assets and Liabilities
Contract assets would include costs and services incurred on contracts with open performance obligations. These amounts would be included in contract assets on the consolidated balance sheets. Contract liabilities include payment received for incomplete performance obligations and are included in Unearned revenue on the unaudited condensed consolidated balance sheets
At
September 30, 2026, and December 31, 2025, the Company had contract liabilities of $
| 13 |
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. See Note 10 for further details.
Net Income (Loss) per Share
Basic net income (loss) per share is computed by dividing net income (loss) attributable to DataMeds AI, Inc. by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, using the treasury stock method for warrants and unvested equity awards and the if-converted method for convertible notes. Shares whose issuance is contingent upon conditions that had not been satisfied as of the end of the period are excluded from the computation of diluted net income (loss) per share.
For the three months ended September 30, 2026, the Company reported net income attributable to DataMeds AI, Inc. For the nine months ended September 30, 2026 and the three and nine months ended September 30, 2025, the Company reported net losses; accordingly, all potentially dilutive securities were antidilutive, and basic and diluted net loss per share were the same.
The
May 2026 Convertible Notes are convertible at a conversion price equal to the lesser of $
For
the three months ended September 30, 2026, diluted net income per share was computed by adding interest expense of $
The following potentially dilutive securities were excluded from the computation of diluted net income (loss) per share because their effect would have been antidilutive or because the conditions for their issuance had not been satisfied as of the end of the period:
SCHEDULE OF POTENTIALLY DILUTIVE ITEMS OUTSTANDING
| 2026 | 2025 | |||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Unvested restricted common stock - 2023 Plan | ||||||||
| Unissued director share awards | - | |||||||
| Unvested ESOP awards | - | |||||||
| Warrants | ||||||||
| May 2026 Convertible Notes⁽¹⁾ | - | |||||||
| Helomics Note⁽²⁾ | - | |||||||
| Shares issuable in settlement of purchase consideration liability | - | |||||||
| Total | ||||||||
For
the three months ended September 30, 2026,
| ⁽¹⁾ |
| ⁽²⁾ |
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes, under which deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of a deferred tax asset will not be realized. As of September 30, 2026, the Company has recorded a full valuation allowance against its net deferred tax assets, as management has concluded that it is more likely than not that such assets will not be realized.
For interim periods, the Company determines its income tax provision by applying an estimated annual effective tax rate to year-to-date pre-tax income (loss), with the effect of discrete items recognized in the period in which they occur. As a result of the full valuation allowance recorded against its net deferred tax assets, the Company did not record a provision for income taxes for the three and nine months ended September 30, 2026 and 2025. The Company recognizes the effect of a tax position only if it is more likely than not to be sustained upon examination by the relevant taxing authority, based on the technical merits of the position, and measures the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.
Recent Accounting Pronouncements
ASU 2025-05 — Measurement of Credit Losses for Accounts Receivable and Contract Assets
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient permitting entities to assume that conditions at the balance sheet date remain unchanged over the life of current accounts receivable and current contract assets when estimating expected credit losses. The adoption did not have a material impact on its condensed consolidated financial statements.
| 14 |
ASU 2024-03 — Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires public business entities to disclose, in the notes to financial statements, specified information about certain costs and expenses included in expense line items presented on the face of the income statement. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of ASU 2024-03 on its condensed consolidated financial statements and related disclosures.
ASU 2025-06 — Targeted Improvements to the Accounting for Internal-Use Software
In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU requires entities to begin capitalizing software development costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform its intended function (the “probable-to-complete recognition threshold”). The amendments are effective for annual reporting periods beginning after December 15, 2027, with early adoption permitted. Entities may apply the amendments using a prospective, modified retrospective, or retrospective transition approach. The Company is currently evaluating the impact of ASU 2025-06 and will assess the impact upon adoption.
ASU 2025-11 — Interim Reporting: Narrow-Scope Improvements
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The ASU requires entities to disclose events occurring since the end of the last annual reporting period that have a material impact on the entity. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The amendments may be applied either prospectively or retrospectively. The Company expects ASU 2025-11 to impact its disclosures only and does not expect it to affect its results of operations, financial condition, or cash flows.
Note 2. LIQUIDITY AND GOING CONCERN
For
the three months ended September 30, 2026, the Company reported net income of $
As
of September 30, 2026, the Company had outstanding debt with an aggregate principal amount of $
Nasdaq Listing Compliance
On
December 10, 2025, the Company received a notice from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company
was not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires a minimum bid price of $
On
April 13, 2026, the Company received a notice from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule
5550(b)(1), which requires minimum stockholders’ equity of $
Management Plans
Management is pursuing multiple initiatives to address the Company’s liquidity position and the substantial doubt about its ability to continue as a going concern:
During
the nine months ended September 30, 2026, the Company received gross proceeds of $
On
September 11, 2026, the Company entered into a settlement agreement with the sellers of Wellgistics, LLC, pursuant to which $
During the nine months ended September 30, 2026, the Company settled outstanding creditor obligations through the issuance of common stock to Silverback Capital Corporation pursuant to a court-approved settlement agreement under Section 3(a)(10) of the Securities Act of 1933, as amended, and expects to continue to use this arrangement to reduce its outstanding liabilities. See Note 10 — Stockholders’ Equity.
On September 28, 2026, the Company issued a promissory note to a third-party
lender under which the lender may, at its sole discretion, advance up to $
In
connection with the Helomics Acquisition on September 11, 2026, the Company received $
On October 21, 2026, the Company entered into a non-binding
Second Amended and Restated Letter of Intent (the “Second A&R LOI”) relating to the Proposed Transaction described in
Note 11 — Terminated Proposed Transaction. The Second A&R LOI contemplated, among other things, a potential investment in the
Company of at least $
There can be no assurance that the Company will be successful in obtaining additional financing or reducing its outstanding liabilities on acceptable terms, or at all.
| 15 |
Wellgistics, LLC Distribution Business
Product revenue from distribution services declined significantly during the nine months ended September 30, 2026 as compared to the corresponding period in 2025, primarily due to liquidity constraints that limited the Company’s ability to procure and fulfill product orders. Management evaluated this decline and believes the Company has plans in place, including the financing transactions and strategic initiatives described above, to address its underlying causes. Based on this evaluation, management concluded that the carrying value of the goodwill and other intangible assets attributable to the distribution business was not impaired as of September 30, 2026.
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. In accordance with FASB ASU 2014-15, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management has concluded that the conditions described above raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the date these financial statements are issued.
Note 3. ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consist of the following:
SCHEDULE OF ACCOUNTS RECEIVABLE, NET
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Billed – Third Party | $ | $ | ||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Total accounts receivable, net | $ | $ | ||||||
Note 4. INVENTORIES, NET
Inventory consists of the following:
SCHEDULE OF INVENTORY
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| First Defense Nasal Screen Corp (“FDNS”) | $ | $ | ||||||
| Finished goods | ||||||||
| Raw materials and supplies | - | |||||||
| Total inventory, at cost | ||||||||
| Less: reserve for obsolescence | ( | ) | ( | ) | ||||
| Inventories, net | $ | $ | ||||||
The
FDNS inventory consists of products purchased by Wellgistics, LLC from First Defense Nasal Screen Corp (“FDNS”). Following
a legal dispute with the supplier, the Company was awarded $
The
FDNS inventory has experienced minimal sales activity and management has determined there is no active market for the product. Based
on this assessment, the carrying value was deemed not recoverable, and a reserve for obsolescence of $
Raw materials and supplies consist of laboratory reagents and consumables held by Helomics and were recorded at fair value as of the September 11, 2026 acquisition date. See Note 9 — Business Combination and Asset Acquisition.
For
the three and nine months ended September 30, 2026, the Company recorded provisions for inventory obsolescence related to finished goods
of $
| 16 |
Note 5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consist of the following:
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT, NET
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Leasehold Improvements | $ | $ | ||||||
| Equipment | ||||||||
| Computer Hardware | - | |||||||
| Furniture & Fixtures | ||||||||
| Property, plant and equipment, gross | ||||||||
| Less: Accumulated Depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
In
connection with the Helomics Acquisition, the Company acquired property, plant and equipment, consisting primarily of laboratory equipment,
with a fair value of $
Depreciation
expense was $
Note 6. INTANGIBLE ASSETS
Intangible assets consist of the following:
SCHEDULE OF INTANGIBLE ASSETS
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Software development costs - Delivmeds | $ | $ | ||||||
| Accumulated impairment | ( | ) | ( | ) | ||||
| Capitalized software | $ | $ | ||||||
| Customer relationships - Woodsage acquisition | ||||||||
| Customer relationships - Wellgistics acquisition | ||||||||
| Trademark - Wellgistics acquisition | ||||||||
| License rights | ||||||||
| Intellectual Property - Karehub Platform | - | |||||||
| Intangible assets, gross | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Accumulated impairment | ( | ) | ( | ) | ||||
| Other intangible assets, net | $ | $ | ||||||
Capitalized Software
Software
development costs relate to the DelivMeds platform developed by Corexa Tech & Hub, LLC. As of September 30, 2026 and December 31,
2025, the Company had gross capitalized software development costs of $
| 17 |
Customer Relationships and Trademark
Intangible
assets of $
Intangible
assets of $
Amortization
expense related to Wellgistics customer relationships was $
Amortization
expense related to the Wellgistics trademark was $
Intangible
assets of $
Total
amortization expense related to other intangible assets was $
The following table represents the future amortization of intangible assets:
SCHEDULE OF FUTURE AMORTIZATION OF INTANGIBLES ASSETS
| December 31, | ||||
| 2026 (remaining 3 months) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Intangible assets |
| 18 |
Note 7. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following:
SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accrued personnel costs | $ | $ | ||||||
| Accrued professional fees | ||||||||
| Accrued expenses | ||||||||
| Credit card obligation | ||||||||
| Unearned revenue | - | |||||||
| Accrued interest | ||||||||
| Accrued expenses and other liabilities | $ | $ | ||||||
The decrease in accrued interest was primarily attributable to the derecognition of accrued interest on the note payable to the sellers of Wellgistics, LLC in connection with the settlement described in Note 8 — Debt.
Note 8. DEBT
Outstanding debt consists of the following:
SCHEDULE OF OUTSTANDING DEBT
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Merchant cash advance | $ | $ | ||||||
| Loan payable | - | |||||||
| Note payable - owners of Wellgistics | - | |||||||
| Note payable - third party, net of debt discount | ||||||||
| Revolving line of credit | - | |||||||
| Promissory note – third-party lender, net of debt discount | - | |||||||
| May 2026 Convertible Notes, net of debt discount | - | |||||||
| Current portion of debt obligations | ||||||||
| Third party investor | $ | $ | ||||||
| Convertible notes - Helomics acq | - | |||||||
| Note payable - owners of Wellgistics | - | |||||||
| Long-term debt | ||||||||
| Total debt | $ | $ | ||||||
As
of September 30, 2026 and December 31, 2025, unamortized debt discount was $
Merchant Cash Advance
On
October 20, 2025, the Company entered into a merchant cash advance agreement with Cedar Advance LLC (the “October 2025 MCA”).
Under the October 2025 MCA, the stated purchase price was $
The Company accounts for the merchant cash advance as a debt obligation. The difference between the total repayment obligation and the net proceeds received has been recorded as a debt discount and is amortized to interest expense over the term of the arrangement using the effective interest method.
The
Company and Cedar Advance LLC are currently in mutual discussions to amend the weekly repayment amount under the October 2025 MCA. During
the three and nine months ended September 30, 2026, the Company made reduced weekly payments, compared to the contractual weekly installment
of $
For
the three and nine months ended September 30, 2026, the Company made total repayments of $
As
of December 31, 2025, the gross contractual repayment obligation was $
| 19 |
Loan Payable
On
October 29, 2025, the Company entered into a financing arrangement with Agile Capital Funding LLC (“Agile”) pursuant to which
it received net proceeds of $
During
the three months ended March 31, 2026, the Company made a scheduled weekly payment of $
The
Company recognized interest expense related to the Agile arrangement of $
As
of September 30, 2026, there were no amounts outstanding under the Agile arrangement. As of December 31, 2025, the net carrying amount
of the Agile obligation was $
Note payable – sellers of Wellgistics, LLC
On
August 23, 2024, the Company and the sellers of Wellgistics, LLC entered into the Fourth Amendment to the Membership Interest Purchase
Agreement (the “MIPA”), pursuant to which the Company issued a promissory note in the aggregate principal amount of $
On
July 24, 2025, the Company and the sellers of Wellgistics LLC executed the Eighth Amendment to the Membership Interest Purchase Agreement
(“MIPA”), pursuant to which the principal amount of the seller promissory note was increased from $
| 20 |
On
September 11, 2026, the Company entered into a settlement agreement and release (the “Seller Settlement”) with Brian Norton,
individually and as seller representative, Nomad Capital LLC and Strategix Global LLC (collectively, the “Selling Holders”),
the Company’s former Chief Executive Officer, former Chief Operating Officer and former Chief Financial Officer, and certain other
parties, to resolve all claims among the parties relating to the MIPA and the seller promissory note, including the litigation initiated
by the Company in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida and the litigation initiated
by the Selling Holders in the Court of Chancery of the State of Delaware, each as previously disclosed. Pursuant to the Seller Settlement,
the Company paid aggregate cash consideration of $
The
Company accounted for the extinguishment of the seller promissory note in accordance with ASC 470-50, Debt—Modifications and
Extinguishments. The Company recorded the repurchase of common stock at its fair value of $
Under the Seller Settlement, the Company agreed to indemnify its former Chief Executive Officer, former Chief Operating Officer and former Chief Financial Officer against certain third-party civil claims arising from their conduct as officers of the Company prior to September 11, 2026, subject to customary exceptions. See Note 15 — Commitments and Contingencies.
For
the three and nine months ended September 30, 2026, the Company recognized interest expense of $
As
of September 30, 2026, no amounts were outstanding under the seller promissory note. As of December 31, 2025, the outstanding principal
of the seller promissory note was $
Note Payable – Third party
On
January 2, 2025, the Company entered into an unsecured promissory note agreement with Arvoda Consulting LLC for a principal amount of
$
| 21 |
On
February 2, 2025, the Company entered into two separate unsecured promissory note agreement, each for a principal amount of $
On
April 8, 2025, the Company issued a promissory note to Strategic EP, LLC in the principal amount of $
In
September 2023, the Company entered into a promissory note agreement with a third party investor for a principal amount of $
Revolving line of credit – Wellgistics
In
November 2024, Wellgistics, LLC (“Wellgistics”), a wholly owned subsidiary of the Company, entered into a credit agreement
with Marco Capital, Inc. (“MCI”) for a revolving line of credit with a maximum borrowing capacity of $
On
May 1, 2026, Wellgistics entered into an Acknowledgment of Indebtedness, Forbearance and Repayment Agreement (the “Forbearance
Agreement”) with MCI, pursuant to which Wellgistics acknowledged approximately $
On
May 29, 2026, the Company repaid the outstanding balance under the line of credit in full, for a total payment of $
As
of September 30, 2026, there were
| 22 |
Promissory Note – Third-Party Lender
On September 28, 2026, the Company issued a promissory
note to a third-party lender (the “Lender”) under which the Lender may, at its sole discretion, advance up to $
The
Promissory Note is not convertible prior to an event of default. Events of default include, among others, a failure to pay amounts
when due, a failure to timely file required reports with the SEC and a default under any other indebtedness of the Company of $
The
Company agreed to file a registration statement covering the resale of the shares of common stock issuable upon conversion of the Promissory Note following an event of default and, if it fails to file or maintain the effectiveness of such registration statement within the specified
time periods, to pay
On
September 29 and 30, 2026, the Company received advances of $
On
October 30, 2026, the Company and the Lender entered into a First Amendment to the Promissory Note, which confirmed aggregate advances
of $
Convertible notes payable
On
January 16, 2026, the Company entered into a Note Purchase Agreement with certain investors pursuant to which the Company issued and
sold secured convertible promissory notes (the “Notes”) in an aggregate principal amount of $
| 23 |
In
connection with the January 2026 Original Note, the Company paid placement agent fees of $
May 2026 Refinancing
On
May 27, 2026, the Company entered into a new Note Purchase Agreement with substantially the same group of investors that held the Original
Notes, together with certain additional investors (the “New Notes”). Pursuant to this agreement, the Original Notes, with
an aggregate face amount of $
In
connection with the extinguishment, the Company calculated the reacquisition price of the Original Notes as the sum of the fair value
of the New Notes issued in respect of the rollover $
The
New Notes mature on
In
connection with the May 27, 2026 financing, the Company issued warrants to purchase an aggregate of
The Company accounts for the resulting discount and debt issuance costs as a reduction of the carrying amount of the New Notes, which is accreted to interest expense over the term of the New Notes using the effective interest method in accordance with ASC 835-30.
| 24 |
For
the three months ended September 30, 2026, the Company recognized interest expense related to the New Notes of $
As
of September 30, 2026, the gross principal amount of the New Notes was $
Helomics Note
In
connection with the Helomics Acquisition, on September 11, 2026, the Company issued to Axe Compute Inc. an unsecured convertible promissory
note in the principal amount of $
The
principal and accrued interest under the Helomics Note are convertible into shares of common stock at a conversion price of $
The
Helomics Note was issued as part of the consideration for the Helomics Acquisition and was recorded at its fair value as of the acquisition
date, which approximated its principal amount. For the three and nine months ended September 30, 2026, the Company recognized interest
expense of $
The following table is a summary of annual principal payments of the Company’s outstanding debt:
SCHEDULE OF ANNUAL PRINCIPAL PAYMENTS
| December 31, | ||||
| 2026 (remaining three months) | $ | |||
| 2027 | ||||
| 2028 | - | |||
| 2029 | ||||
| Principal gross | ||||
| Less : Unamortized debt discount | ( | ) | ||
| Principal Payment | $ |
| 25 |
Note 9. BUSINESS COMBINATION AND ASSET ACQUISITION
Helomics Acquisition
On
The purchase consideration consisted of the following:
SCHEDULE OF PURCHASE CONSIDERATION
| Amount | ||||
| Common stock issued ( | $ | |||
| Helomics notes | ||||
| Total Purchase consideration | $ | |||
The
fair value of the common stock issued was determined based on the closing price of the Company’s common stock of $
The following table summarizes the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed as of the Acquisition Date:
SCHEDULE OF PURCHASE CONSIDERATION OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
| Total | ||||
| Cash and cash equivalents | $ | |||
| Accounts receivable, net | ||||
| Inventories, net | ||||
| Prepaid and other current assets | ||||
| Property, plant and equipment, net | ||||
| Operating lease, right-of-use-assets | ||||
| Deposits and other assets | ||||
| Goodwill | ||||
| Accrued expenses and other liabilities | ( | ) | ||
| Operating lease liabilities- current portion | ( | ) | ||
| Operating lease liabilities | ( | ) | ||
| Net assets acquired | $ | |||
| 26 |
Goodwill represents the excess of the purchase consideration over the fair value of the net assets acquired and is attributable primarily to the assembled workforce, the laboratory capabilities of Helomics and expected synergies with the Company’s existing operations. Goodwill is not expected to be deductible for income tax purposes.
The purchase price allocation is preliminary and is based on management’s estimates of the fair values of the assets acquired and liabilities assumed as of the Acquisition Date. The Company is continuing to evaluate the fair values of the assets acquired and liabilities assumed, including identifiable intangible assets. The final purchase price allocation may differ from the preliminary allocation, and any adjustments will be recognized during the measurement period, which will not exceed one year from the Acquisition Date.
The
results of operations of Helomics have been included in the Company’s condensed consolidated financial statements from the Acquisition
Date. For the period from the Acquisition Date through September 30, 2026, Helomics did not generate revenue and incurred a net loss
of $
Unaudited Pro Forma Information
The following unaudited pro forma information presents the combined results of operations of the Company and Helomics as if the Helomics Acquisition had occurred on January 1, 2025:
SCHEDULE OF UNAUDITED PRO FORMA INFORMATION
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net Revenue | ||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the Helomics Acquisition occurred on January 1, 2025, or of future results of operations.
Healthstar Asset Acquisition
On
September 28, 2026 (the “Healthstar Closing”), pursuant to the Collaboration Agreement, Kare Hub contributed to Healthstar
certain intellectual property and related records underlying the KareHub platform (the “Transfer IP”), and the Company agreed
to pay Kare Pharmtech a purchase price of $
The
Company determined that substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable
asset and accounted for the transaction as an asset acquisition. Accordingly, no goodwill was recognized. The Company recognized
intellectual property of $
| 27 |
Note 10. STOCKHOLDERS’ EQUITY
Reverse Stock Split
On
May 26, 2026, the Company effected a
2026 Transactions
Consulting Agreement
On
January 13, 2026, the Company issued
On
March 4, 2026, the Company entered into a Marketing Services Agreement with Outside The Box Capital Inc. (“OTB”), pursuant
to which OTB agreed to provide marketing and distribution services to the Company for an initial term from March 5, 2026 through September
5, 2026. On May 20, 2026, the Company issued
Settlement Agreement
On January 28, 2026, the Company entered into a Settlement Agreement and Stipulation with Silverback Capital Corporation (“Silverback”), which was approved by the Circuit Court of the Twelfth Judicial Circuit in and for Desoto County, Florida on February 4, 2026, pursuant to Section 3(a)(10) of the Securities Act of 1933. Under the terms of the settlement, the Company agreed to issue shares of its common stock to Silverback, the proceeds from the resale of which were applied to satisfy certain outstanding obligations of the Company, including vendor payables and notes payable.
On
February 12, 2026, the Company issued
On
March 23, 2026, the Company issued an aggregate of
On
April 3, 2026, the Company delivered a termination letter to Silverback purporting to terminate the Settlement Agreement. In connection
with the purported termination, the Company issued an aggregate of
| 28 |
On
May 18, 2026, the Company and Silverback entered into an Agreement Rescinding Termination and Reinstating Settlement Agreement, pursuant
to which the parties rescinded the April 3, 2026 termination letter and reinstated the Settlement Agreement in its entirety, effective
as of that date. Following reinstatement, on May 20, 2026, the Company issued
During
the three months ended September 30, 2026, the Company issued an aggregate of
For
the three and nine months ended September 30, 2026, the Company recognized a net loss on extinguishment of vendor obligations of $
Helomics Acquisition
On
September 11, 2026, the Company issued
Healthstar Asset Acquisition
On
September 28, 2026, the Company issued an aggregate of
Repurchase and Retirement of Common Stock
In
connection with the Seller Settlement with the sellers of Wellgistics, LLC, the Company repurchased an aggregate of
Accrued Compensation Settlement
On
March 18, 2026, the Board of Directors approved the settlement of accrued compensation obligations owed to our Chairman of the Board
and our President and Interim Chief Executive Officer through the issuance of equity securities. Pursuant to the settlement, the Company
issued
The
fair value of the shares on the date of issuance, based on the closing market price of $
The
aggregate fair value of the equity consideration issued of $
| 29 |
During
the three months ended June 30, 2026, the exercise price of the warrants was reduced from $
2023 Equity Incentive Plan
The
Company adopted the 2023 Equity Incentive Plan (the “Plan”), which provides the issuance of up to
The Plan permits the grant of various types of stock-based awards, including incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares available for issuance as incentive stock options may not exceed the Initial Limit, as adjusted for any Annual Increases, subject to adjustment as provided under the terms of the Plan.
Shares subject to awards that expire, are canceled, or otherwise terminate without having been exercised or settled in full will again become available for future grant under the Plan. However, shares repurchased by the Company on the open market will not be added back to the share reserve. Awards that may be settled solely in cash do not count against the share reserve.
The
Plan also includes a limitation on annual compensation to non-employee directors. The aggregate value of all equity awards granted to
any non-employee director under the Plan, together with any cash compensation paid for service as a non-employee director, may not exceed
(i) $
Restricted Common Stock
A summary of restricted common stock activity for the nine months ended September 30, 2026 is as follows:
SCHEDULE OF RESTRICTED COMMON STOCKS
Restricted Common Stock | Weighted Average Fair Value | |||||||
| Unvested shares as of December 31, 2025 | $ | |||||||
| Granted | - | - | ||||||
| Vested | ( | ) | ||||||
| Forfeited and cancelled | - | - | ||||||
| Unvested shares as of September 30, 2026 | $ | |||||||
For
the three and nine months ended September 30, 2026, the Company recognized stock-based compensation expense of $
For
the three and nine months ended September 30, 2025, the Company recognized stock-based compensation expense of $
Equity Awards Approved by the Compensation Committee
On
May 12, 2026, the Compensation Committee of the Board of Directors approved the grant of shares of common stock to certain employees,
directors, consultants and other service providers, and on July 17, 2026, the Compensation Committee amended the terms of such awards
(the “ESOP Awards”). The ESOP Awards consist of an aggregate of
For
the three and nine months ended September 30, 2026, the Company recognized stock-based compensation expense of $
Unissued Director Equity Awards
Pursuant
to the Company’s non-employee director compensation policy, upon appointment to the Board of Directors, each non-employee director
is entitled to a grant of
| 30 |
On
February 4, 2026, the Company granted
For
the three and nine months ended September 30, 2026, the Company recognized stock-based compensation expense of $
As
of September 30, 2026, total unrecognized compensation expense related to unissued director equity awards was $
Warrants
A summary of warrant activity for the nine months ended September 30, 2026 is as follows:
SCHEDULE OF WARRANT ACTIVITY
| Warrants | Weighted Average Exercise Price | |||||||
| Outstanding, December 31, 2025 | $ | |||||||
| Issued | ||||||||
| Exercised | ( | ) | ||||||
| Expired and cancelled | - | - | ||||||
| Outstanding shares as of September 30, 2026 | $ | |||||||
There was no warrant activity during the three months ended September 30, 2026.
On
January 20, 2026, the Company issued
On
March 18, 2026, the Company issued an aggregate of
During
the three months ended June 30, 2026, the exercise price of these warrants was reduced to $
On
May 27, 2026, in connection with the Note Purchase Agreement described in Note 8, the Company issued warrants to purchase an aggregate
of
The following table presents the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of warrants issued:
SCHEDULE OF FAIR VALUE OF WARRANTS
| PIPE Warrants | PA Warrants | |||||||
| Stock price | $ | $ | ||||||
| Exercise price | ||||||||
| Risk-free interest rate | % | % | ||||||
| Expected term (in years) | ||||||||
| Expected volatility | % | % | ||||||
| Expected dividend yield | % | % | ||||||
| 31 |
Note 11. TERMINATED PROPOSED TRANSACTION
On May 20, 2026, the Company entered into a Fully Binding Term Sheet, dated May 18, 2026, with EOS Technology Holdings, Inc. (“EOS”), Scilex Holding Company (“Scilex”), Datavault AI Inc. (“Datavault”), HealthBridge Advisors, LLC (“HBA”), and Fortitude Advisors, LLC (“Fortitude”). On July 29, 2026, the Company entered into an Amended and Restated Letter of Intent (the “LOI” or the “First A&R LOI”) with EOS, Scilex, Datavault, and HBA, which superseded and replaced the Term Sheet in its entirety.
Pursuant
to the First A&R LOI, and subject to the negotiation and execution of definitive agreements, the Company would acquire or exclusively
license certain intellectual property assets from EOS and Scilex, expand its existing license arrangement with Datavault to include Datavault
AI Health, and acquire a controlling interest in Tollo Health, LLC (“Tollo”) through an exchange of membership interests
with HBA, the controlling member of Tollo (the “Proposed Transaction”). Consideration for the Proposed Transaction would
consist solely of shares of the Company’s common stock (the “Acquisition Stock”). Upon issuance of the Acquisition
Stock, EOS, Scilex and Datavault were each expected to own approximately
On
October 21, 2026, the Company entered into a non-binding Second Amended and Restated Letter of Intent, dated October 19, 2026 (the “Second
A&R LOI”), with EOS, Scilex, Datavault, HBA, Tollo Health, Inc. (“THI”) and REBOOT Health AI, Inc. (“REBOOT”),
which superseded and replaced the First A&R LOI in its entirety. Under the Second A&R LOI, the Proposed Transaction was expanded
to include the license of certain intellectual property from REBOOT, and the target post-closing ownership percentages, on a fully diluted
basis, were revised as follows: EOS,
Gerald Commissiong, the Company’s Interim Co-Chief Executive Officer, serves as Managing Partner of Fortitude and as Chief Executive Officer of Tollo and THI. See Note 13 — Related Party Transactions.
As of September 30, 2026, the Company had not entered into definitive agreements with respect to the Proposed Transaction, no Acquisition Stock had been issued, and no assets or liabilities had been recorded in connection with the Proposed Transaction.
On November 3, 2026, the Company terminated the Second A&R LOI, effective immediately. The termination does not affect the Company’s existing license agreement with Datavault or the REBOOT License Agreement. See Note 16 — Subsequent Events.
| 32 |
Note 12. LEASE OBLIGATIONS
Rent is classified by function on the consolidated statements of operations as general and administrative.
The Company determines whether an arrangement is or contains a lease at inception by evaluating potential lease agreements including services and operating agreements to determine whether an identified asset exists that the Company controls over the term of the arrangement. Lease commencement is determined to be when the lessor provides access to, and the right to control, the identified asset.
The rental payments for the Company’s leases are typically structured as either fixed or variable payments. Fixed rent payments include stated minimum rent and stated minimum rent with stated increases. The Company considers lease payments that cannot be predicted with reasonable certainty upon lease commencement to be variable lease payments, which are recorded as incurred each period and are excluded from the calculation of lease liabilities.
In
May 2024, the Company entered into a lease agreement for office space in Tampa, Florida. As a result, the Company recognized a right-of-use
asset and corresponding lease liability, calculated using a discount rate of
On
June 9, 2023, Integra Pharma Solutions entered into First amendment to the Vector Collective lease, which is sublease to Wellgistics
Pharmacy. The lease includes a monthly base rent of $
In
January 2022, Wellgistics LLC entered into lease agreement for warehousing facility located in Lefrois, Florida, which has a lease term
of
In
connection with the Helomics Acquisition, the Company assumed two operating leases for laboratory and office space in Pittsburgh, Pennsylvania,
which expire on February 29, 2028 and provide for aggregate monthly base rent of $
The following is the summary of operating lease assets and liabilities:
SCHEDULE OF OPERATING LEASE ASSETS AND LIABILITIES
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Operating Leases | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Lease liabilities, current portion | ||||||||
| Long-term lease liabilities | ||||||||
| Total lease liabilities | $ | $ | ||||||
| Weighted Average Remaining Lease Term | ||||||||
| Weighted Average Discount Rate | % | % | ||||||
The following is the summary of future minimum payments as of September 30, 2026:
SCHEDULE OF SUMMARY OF FUTURE MINIMUM PAYMENTS
| Year Ending December 31, | ||||
| 2026 (remaining 3 months) | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total lease payments | ||||
| Less: Imputed interest | ( | ) | ||
| Total | $ | |||
| 33 |
Note 13. RELATED PARTY TRANSACTIONS
Scietech, LLC
The
Company has 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. As of September 30, 2026 and December 31, 2025, accounts payable to Scietech, LLC was $
Officers and Directors
As
of December 31, 2025, the Company had an outstanding obligation of $
As
of September 30, 2026, the Company had outstanding advances of $
Fortitude Advisors, LLC and Tollo Health
Gerald Commissiong, who was appointed Interim Co-Chief Executive Officer of the Company effective May 20, 2026, also serves as Chief Executive Officer of Tollo Health, LLC and as Managing Partner of Fortitude Advisors, LLC (“Fortitude”), which qualifies Tollo Health and Fortitude as related parties of the Company effective May 20, 2026. Fortitude provides Chief Business Officer consulting services to the Company under an existing consulting agreement. In connection with the Proposed Transaction described in Note 11, the Company would acquire a controlling interest in Tollo, and Fortitude is expected to receive shares of the Company’s common stock.
For
the three and nine months ended September 30, 2026, the Company incurred consulting fees to Fortitude of $
Under the Second A&R LOI, Fortitude would have received shares of common stock, and HBA and THI, the holders of membership interests in Tollo, would have received Acquisition Stock in exchange for such membership interests. See Note 11 — Terminated Proposed Transaction. On November 3, 2026, the Company terminated the Second A&R LOI. See Note 16 — Subsequent Events.
During the three and nine months ended September 30, 2025, the Company had transactions with certain entities that were considered related parties at that time, including Integra Pharma Solutions, LLC (“IPS”) and companies affiliated with Nomad Capital LLC. These entities are no longer considered related parties as of the date of these financial statements. The following summarizes transactions with these entities for the three and nine months ended September 30, 2026 and 2025:
SCHEDULE OF RELATED PARTY TRANSACTION
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Sales to Integra Pharma Solutions, LLC | $ | - | $ | - | $ | - | $ | |||||||||
| Management services fees paid to Nomad Capital | $ | - | $ | - | $ | - | $ | |||||||||
| IT expenses paid to Cingo Solutions | $ | - | $ | $ | - | $ | ||||||||||
| SaaS expenses paid to RxERP | $ | - | $ | $ | - | $ | ||||||||||
| Related party transaction | $ | - | $ | $ | - | $ | ||||||||||
| 34 |
Note 14. SEGMENT AND GEOGRAPHIC INFORMATION
The
Company operates as
The following table presents selected financial information with respect to the Company’s single operating segment for the three and nine months ended September 30, 2026 and 2025:
SCHEDULE OF SEGMENT AND GEOGRAPHIC INFORMATION
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Cost of net revenues | ||||||||||||||||
| Gross profit (loss) | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income/(expense): | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on extinguishment of vendor obligation | ( | ) | - | ( | ) | - | ||||||||||
| Gain (loss) on extinguishment of debt | ( | ) | ( | ) | ||||||||||||
| Loss on contract termination fee | - | - | ( | ) | - | |||||||||||
| Settlement fees | - | - | ( | ) | - | |||||||||||
| Other income | ||||||||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Net income (loss) before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
All revenues were within the U.S. region. See Note 1, Organization and Summary of Significant Accounting Policies - Revenue Recognition for additional information about disaggregated revenue.
The Company’s long-lived tangible assets, as well as the Company’s operating lease right-of-use assets recognized on the unaudited condensed consolidated balance sheets were located as follows:
SCHEDULE OF LONG LIVED TANGIBLE ASSETS AND OPERATING LEASE RIGHT OF USE ASSETS
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| United States | ||||||||
| Property, plant and equipment, net | $ | $ | ||||||
| Operating lease, right-of-use assets | $ | $ | ||||||
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Note 15. COMMITMENTS AND CONTINGENCIES
From time to time, the Company is involved in legal proceedings and claims arising in the ordinary course of business. The Company, in conjunction with its legal counsel, assesses the need to record a liability for litigation and other loss contingencies, and records a liability when it is determined that a loss is both probable and reasonably estimable. Although the outcome of legal proceedings and claims cannot be predicted with certainty, other than the matters described below, the Company is not currently a party to any legal proceedings that management believes would, individually or in the aggregate, have a material adverse effect on its results of operations, cash flows or financial position.
Legal Matters
On
August 21, 2024, Blythe Global Advisors, LLC filed a demand for arbitration against the Company and the Chairman of the Board for breach
of contract, breach of the implied covenant of good faith and fair dealing, and breach of personal guaranty, claiming accounting services
of $
Relatedly, Wellgistics, LLC, Corexa Health, LLC (f/k/a Wood Sage, LLC), Corexa Tech & Hub, LLC (f/k/a Alliance Pharma Solutions, LLC) and Corexa Pharmacy, LLC (f/k/a Community Specialty Pharmacy, LLC), all subsidiaries of the Company, have sued Blythe Global Advisors, LLC in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida, asserting claims of improper UCC-1 filings, tortious interference with business relationships, slander of title, and state RICO violations. A motion to dismiss filed by Blythe remains pending. The Company is vigorously prosecuting its claims.
Wellgistics,
LLC is a defendant in a legal proceeding initiated by Lifsa Drugs LLC in the United States District Court for the District of New
Jersey. The complaint alleges that Wellgistics, LLC failed to make payment for certain pharmaceutical products and seeks damages of
approximately $
On August 25, 2026, Strategic EP filed suit against the Company seeking repayment of its $
Settlement with Sellers of Wellgistics, LLC and Former Management
The litigation initiated by the Company in October 2025 in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida against certain former officers of the Company, and the litigation initiated in June 2026 by Brian Norton, the Company’s former Chief Executive Officer, and certain other sellers of Wellgistics, LLC in the Court of Chancery of the State of Delaware, in which the plaintiffs sought monetary damages and shares of common stock in connection with the sale of their membership interests in Wellgistics, LLC, were resolved pursuant to the Seller Settlement on September 11, 2026 and dismissed with prejudice. See Note 8 — Debt.
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Pursuant to the Seller Settlement, the Company agreed to indemnify its former Chief Executive Officer, former Chief Operating Officer and former Chief Financial Officer against certain third-party civil claims asserted by stockholders, vendors or customers arising from their conduct as officers of the Company prior to September 11, 2026, excluding claims arising from intentional conduct, fraud or criminal acts. The indemnification obligation has no stated term or maximum amount. As of September 30, 2026, the Company was not aware of any claims subject to this indemnification and has not recorded a liability.
Vendor Demand Letter
The
Company and certain of its subsidiaries have received demand letters from various vendors requesting payment for goods and services
previously provided. The aggregate amount referenced in these demand letters is approximately $
Note 16. SUBSEQUENT EVENTS
REBOOT Intellectual Property License Agreement
On
October 13, 2026, the Company entered into an Intellectual Property License and Product and Services Agreement (the “REBOOT License
Agreement”) with REBOOT, pursuant to which REBOOT granted the Company an exclusive license, in the United States, to certain patents
and to use the REBOOT Health AI platform in the management of GLP-1 users in connection with the Company’s direct-to-consumer GLP-1
weight management business. As consideration for the license, the Company issued
Termination of Second Amended and Restated Letter of Intent
On October 21, 2026, the Company entered into the Second A&R LOI with EOS, Scilex, Datavault, HBA, THI and REBOOT. See Note 11 — Terminated Proposed Transaction. On November 3, 2026, the Company provided written notice to EOS, Scilex, Datavault, HBA, THI and REBOOT terminating the Second A&R LOI, effective immediately. The termination applies only to the Second A&R LOI and does not terminate or amend any separate agreement, including any existing license agreement with Datavault, any consulting or employment arrangement or separate letters of intent between the parties. The termination does not revive any prior proposal, term sheet, letter of intent or understanding superseded by the Second A&R LOI.
Nasdaq Listing Compliance
On October 19, 2026, the Company received a notice from the Listing Qualifications Staff of Nasdaq informing the Company that it had regained compliance with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1). Nasdaq will continue to monitor the Company’s compliance with this requirement, and if the Company does not evidence compliance at the time of its next periodic report, the Company may be subject to delisting proceedings.
Promissory Note Amendment
On October 30, 2026, the Company and the Lender entered into a First Amendment
to the Promissory Note (the “Note Amendment”). The Note Amendment confirmed that, as of October 30, 2026, the Lender had funded aggregate advances of $
The Note Amendment also requires the Company, at all times while any portion
of the Promissory Note remains outstanding, to reserve with its transfer agent a number of authorized and unissued shares of common stock equal to at least
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See “Cautionary Note Regarding Forward-Looking Statements” below. We have no obligation to update any of these forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements due to many factors, including, but not limited to, those set forth under the heading “Risk Factors” in this Quarterly Report. Factors that could cause or contribute to such differences include, but are not limited to, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this Quarterly Report.
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, including the integration of Helomics Corporation; the operation of Healthstar Technologies, LLC and our collaboration with Kare Rx Hub, LLC and Kare Pharmtech, LLC; our license arrangement with REBOOT Health AI, Inc.; our liability reduction initiatives; and our ability to maintain compliance with The Nasdaq Stock Market listing requirements.
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; | |
| ● | the Company deriving a portion of its sales from prescription drug sales reimbursed by pharmacy benefit management companies; | |
| ● | the Company 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; | |
| ● | the Company’s relationships with its primary wholesaler for pharmacy operations and Wellgistics Health’s manufacturer relationships of its wholesale and hub technology platform subsidiaries; | |
| ● | our ability to obtain sufficient financing, reduce our outstanding liabilities and continue as a going concern; | |
| ● | our ability to comply with the terms of our outstanding indebtedness, including our convertible notes; | |
| ● | our ability to maintain the listing of our common stock on The Nasdaq Capital Market; | |
| ● | our ability to integrate acquired businesses and assets, including Helomics and the KareHub platform; | |
| ● | changes in the healthcare industry and regulatory environments; | |
| ● | the effects of competition on the Company’s future business; | |
| ● | the Company’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 20, 2026, and those risks described in the section entitled “Risk Factors” of this Quarterly Report. |
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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
DataMeds AI, Inc. (formerly Wellgistics Health, Inc.) (“DataMeds,” the “Company,” “we,” “us” or “our”) was incorporated in 2022 as 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 and laboratory operations that provide prescription hub, clinical and patient access services. We strive to shift the dynamic of pharmaceutical care to revolve around the patient for a range of therapeutic conditions by offering various integrated solutions through leveraging our business segments to address access, care coordination, dispensing, delivery, and clinical management of certain pharmaceutical products. On July 22, 2026, the Company changed its name from Wellgistics Health, Inc. to DataMeds AI, Inc. and its trading symbol on The Nasdaq Capital Market from “WGRX” to “MEDS,” as described further under “Recent Developments” below.
We currently own two direct operating subsidiaries, Wellgistics, LLC and Helomics Corporation (“Helomics”); two indirect operating subsidiaries, Corexa Tech & Hub, LLC d/b/a DelivMeds (f/k/a Wellgistics Tech & Hub, LLC and Alliance Pharma Solutions, LLC) (“Corexa Tech & Hub”) and Corexa Pharmacy, LLC (f/k/a Wellgistics Pharmacy, LLC and Community Specialty Pharmacy, LLC) (“Corexa Pharmacy”), which we hold through our intermediate holding company subsidiary, Corexa Health, LLC (f/k/a Wood Sage, LLC) (“Corexa Health”); and a 51% interest in Healthstar Technologies, LLC (“Healthstar”). On August 10, 2026, we completed the renaming of our pharmacy and pharmacy technology subsidiaries to Corexa Pharmacy and Corexa Tech & Hub, respectively.
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.
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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.
Corexa Tech & Hub, LLC d/b/a DelivMeds
Founded in 2017 under the name Alliance Pharma Solutions, LLC and doing business as DelivMeds, Corexa 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, Corexa 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 Corexa Tech & Hub could serve as an end-to-end patient-centric solution automating the prescription journey. Powered by Corexa Pharmacy as the backend pharmacy, Corexa 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 Corexa 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. Corexa Tech & Hub’s business-to-business strategy approach enables prescriptions to be sent directly to Corexa 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 Corexa Tech & Hub through our acquisition of Wood Sage in June 2024.
Corexa Pharmacy, LLC
Founded in 2011, Corexa Pharmacy serves as the backbone dispensing pharmacy of our healthcare ecosystem. First operating as a retail community specialty pharmacy, Corexa 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, Corexa 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, Corexa Pharmacy is licensed in 32 states and the District of Columbia, with broad license coverage along the east coast. While Corexas Pharmacy voluntarily forfeited its specialty accreditations, Corexa Pharmacy maintains specialty internal standard operating procedures and performs all of the functions of a specialty pharmacy.
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Corexa 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. Corexa Pharmacy has several 340B relationships, acting as the dispensing pharmacy for these healthcare facilities that help drive revenue and prescription volume. Corexa 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, Corexa 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 Corexa Pharmacy through our acquisition of Wood Sage in June 2024.
Helomics Corporation
On September 11, 2026, we acquired Helomics from Axe Compute Inc. Helomics operates a CLIA-certified laboratory in Pittsburgh, Pennsylvania offering the ChemoFx® assay, a tumor drug-response test, and provides 3D tumor models and contract research services to pharmaceutical and biotechnology companies. The acquisition expands our capabilities into precision oncology laboratory services and data.
Healthstar Technologies, LLC
Healthstar is a limited liability company in which we hold a 51% membership interest and Kare Rx Hub, LLC holds a 49% membership interest. In September 2026, Kare Rx Hub, LLC contributed to Healthstar the intellectual property underlying the KareHub platform, which provides patient access and hub services to pharmaceutical manufacturers, including prior authorization processing, prior authorization appeals and program management services.
DataMeds AI, Inc.
As a micro health ecosystem, our portfolio of companies consists of a pharmacy, wholesale operations, a laboratory and a technology division with platforms for hub, patient access and clinical services. We are focused on improving the lives of patients while delivering solutions for pharmacies, providers, pharmaceutical manufacturers, and payors. Our patient-centric approach combined with innovative healthcare applications, is intended to shift the dynamic of care to revolve around the patient for a wide range of therapeutic conditions. We offer integrated solutions by leveraging our operating subsidiaries 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 Corexa Tech & Hub and Corexa Pharmacy through our acquisition of Wood Sage, LLC in June 2024, and acquired Wellgistics, LLC in August 2024 and Helomics in September 2026. 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, (iv) product procurement and distribution to independent pharmacies and (v) laboratory products and services.
We expect that our ability to source and distribute pharmaceutical products to our pharmacy and network of independent pharmacy partners throughout the U.S. will adequately position us to negotiate greater discounts based on market share. Our management believes that our digital pharmacy, including its hub and clinical services technology platform, is poised to add significant value in the key specialty-lite market by providing patients access and convenience, while providing partners with ready-to-go market solutions with big data.
Data released from the Centers for Medicare & Medicaid Services illustrates that the National Health Expenditure Data for 2022 grew to $4.5 trillion and accounted for 17.3% of gross domestic product (“GDP”), with an expected increase in the health spending share of GDP to 19.7% by 2032. A deeper dive of this report reveals that total retail prescription drug spending from 2021 to 2022 increased by 8.4% to $405.9 billion. IQVIA’S 2024 report on medicine spending trends found that overall spending in the U.S. market for medicines reached $435 billion in 2023. It is well documented in the literature that the specialty drug market accounts for less than 10% of total drugs in the market but is responsible for greater than 50% of the prescription drug spend per annum. After evaluating reasons for increased healthcare expenditure, poor medication adherence continues to be a challenge that causes unnecessary strain on the healthcare system, including, but not limited to, increased hospital admissions and readmissions rates from medication non-compliance and adverse events. Many of these factors are preventable by empowering patient autonomy in their healthcare journey, identifying cost savings opportunities, and providing access to clinical resources and support.
We believe that our business model 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 Corexa 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.
Recent Developments
Corporate Name and Trading Symbol Change
On July 20, 2026, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation to change its name from Wellgistics Health, Inc. to DataMeds AI, Inc., effective July 22, 2026. In connection with the name change, the Company’s common stock began trading on The Nasdaq Capital Market under the new ticker symbol “MEDS,” replacing its prior symbol “WGRX.” On August 10, 2026, the Company completed the renaming of its pharmacy and pharmacy technology subsidiaries to Corexa Pharmacy, LLC and Corexa Tech & Hub, LLC, respectively.
Reverse Stock Split
On May 20, 2026, the Company filed a Certificate of Amendment to effect a 1-for-50 reverse stock split of its common stock, which became effective May 26, 2026. The reverse stock split was intended to assist the Company in regaining compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2).
Nasdaq Listing Compliance
On June 9, 2026, Nasdaq notified the Company that it had regained compliance with the minimum bid price requirement. On October 19, 2026, Nasdaq notified the Company that it had regained compliance with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1), subject to the Company evidencing compliance in its next periodic report. See “Nasdaq Stockholders’ Equity Deficiency” below.
Helomics Acquisition
On September 11, 2026, the Company acquired all of the outstanding equity interests of Helomics from Axe Compute Inc. in exchange for 636,328 shares of common stock and a convertible promissory note in the principal amount of $1,363,672. See Note 9 to the condensed consolidated financial statements.
Healthstar Technologies, LLC
On September 28, 2026, the Company completed the closing under its Collaboration Agreement with Kare Rx Hub, LLC and Kare Pharmtech, LLC, pursuant to which Kare Rx Hub, LLC contributed the intellectual property underlying the KareHub platform to Healthstar, in which the Company holds a 51% membership interest, in exchange for a purchase price of $2,000,000 payable in shares of the Company’s common stock. See Note 9 to the condensed consolidated financial statements.
Settlement with Sellers of Wellgistics, LLC
On September 11, 2026, the Company entered into a settlement agreement and release with the sellers of Wellgistics, LLC and certain former officers of the Company, which resolved all pending litigation among the parties. Pursuant to the settlement, the Company paid aggregate cash consideration of $450,000, which included the repurchase of 364,099 shares of common stock, and the outstanding principal of $17,500,000 and accrued interest of $1,687,192 under the seller promissory note were extinguished, resulting in a gain on extinguishment of debt of $19,064,881. See Note 8 to the condensed consolidated financial statements.
Financing Activities
On May 27, 2026, the Company entered into a Securities Purchase Agreement with a group of investors, pursuant to which the previously outstanding convertible promissory notes issued in January and April 2026 were extinguished and replaced with new convertible promissory notes in an aggregate principal amount of $20,323,731, comprised of rollover and new money proceeds. On September 28, 2026, the Company issued a promissory note to a third-party lender in an aggregate principal amount of up to $1,200,000, under which the Company received advances of $650,000 during the three months ended September 30, 2026 and $150,000 in October 2026. See Notes 8 and 16 to the condensed consolidated financial statements.
Equity Awards
On July 17, 2026, the Compensation Committee amended the terms of equity awards approved on May 12, 2026, covering an aggregate of 1,011,600 shares of common stock granted to certain employees, directors, consultants and other service providers, of which 489,000 shares vested on September 30, 2026. See Note 10 to the condensed consolidated financial statements.
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Termination of Proposed Transaction
On October 21, 2026, the Company entered into a non-binding Second Amended and Restated Letter of Intent with EOS Technology Holdings, Inc., Scilex Holding Company, Datavault AI Inc., HealthBridge Advisors, LLC, Tollo Health, Inc. and REBOOT Health AI, Inc., which superseded the Amended and Restated Letter of Intent dated July 29, 2026. On November 3, 2026, the Company terminated the Second Amended and Restated Letter of Intent, effective immediately. See Note 11 to the condensed consolidated financial statements.
REBOOT License Agreement
On October 13, 2026, the Company entered into an Intellectual Property License and Product and Services Agreement with REBOOT Health AI, Inc., pursuant to which the Company obtained an exclusive license to certain patents and the REBOOT Health AI platform for use in its direct-to-consumer GLP-1 weight management business, in exchange for 666,667 shares of common stock, subject to the issuance of additional shares if the value of such shares is less than $2,000,000 180 days after the effective date. See Note 16 to the condensed consolidated financial statements.
Leadership Changes
On May 20, 2026, the Company’s Board of Directors appointed Gerald Commissiong as Interim Co-Chief Executive Officer of the Company, in connection with the Term Sheet described above.
Settlement Agreement — Silverback Capital Corporation
During the nine months ended September 30, 2026, the Company issued an aggregate of 1,954,220 shares of common stock to Silverback Capital Corporation pursuant to a court-approved Settlement Agreement under Section 3(a)(10) of the Securities Act of 1933, as amended, including 1,820,755 shares issued in satisfaction of outstanding creditor obligations, of which 1,591,435 shares were issued during the three months ended September 30, 2026. See Note 10 to the condensed consolidated financial statements.
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
The Company is a holding company specifically formed to hold operating companies. We did not generate any revenue prior to the Wood Sage Acquisition. We currently generate revenue through Corexa Pharmacy, Wellgistics, LLC and Corexa Tech & Hub, and, beginning in the third quarter of 2026, through the KareHub platform. We may add other sources of revenue through acquisitions, licenses and other strategic transactions.
The Company is 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. The Company’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 the Company offers. If inflation continues to increase, sourcing and procuring specialty lite products may prove to be capital intensive. The Company may not be able to adjust prices sufficiently to offset the effect without negatively impacting consumer demand or the Company’s gross margin. All of these inflationary risk factors could materially and adversely impact the Company’s business operations, financial condition and results of operations.
Corexa 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. Corexa Pharmacy fills prescriptions for prescription and over-the-counter drugs written by a provider and recognizes revenue upon delivery of the prescription to the patient.
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Cost of Net Revenues
Cost of net revenues consists primarily of the cost of pharmaceutical products sold by our distribution and pharmacy operations, including inbound freight, provisions for inventory obsolescence and inventory write-offs, as well as the direct costs of providing third-party logistics, patient access and laboratory services.
Expenses
Sales and Marketing Expense
Sales and marketing expenses consist of personnel and personnel-related expenses, including stock-based compensation for our business development team as well as trade events participation, public relations, white paper development, social media, pharmacy trade and patient materials, advertising, sales collateral, syndicated data fees, and other marketing expenses. We expect to increase our sales and marketing activities to grow our customer base and increase market share. We also expect that our sales and marketing expenses will increase over time as we continue to hire additional personnel to scale the business.
General and Administrative Expense
General and administrative expenses currently consist of business development, consulting, and information technology development and support and third-party software expenses.
General and administrative expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation expense) for personnel in executive, finance, accounting, corporate development and other administrative functions. General and administrative expenses will also include legal fees, professional fees paid for accounting, auditing, consulting, tax, and investor relations services, insurance costs, facility costs not otherwise included in research and development expenses. Following the Company’s registration as a public company, general and administrative expenses also include public company expenses such as costs associated with compliance with the rules and regulations of the SEC and the stock exchange.
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 maintain a full valuation allowance against our U.S. federal and state net deferred tax assets because we believe it is more likely than not that such assets will not be realized.
Results of Operations
For the Three and Nine Months Ended September 30, 2026 and 2025
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net revenues | $ | 2,668,980 | $ | 3,012,904 | $ | 6,008,403 | $ | 21,667,212 | ||||||||
| Cost of revenues | 2,237,100 | 2,781,892 | 5,224,098 | 20,237,807 | ||||||||||||
| Gross profit | 431,880 | 231,012 | 784,305 | 1,429,405 | ||||||||||||
| General and administrative | 3,343,627 | 30,172,800 | 15,269,233 | 66,205,669 | ||||||||||||
| Sales and marketing | 105,788 | 803,747 | 1,179,778 | 1,212,347 | ||||||||||||
| Depreciation and amortization | 356,421 | 802,794 | 1,069,842 | 2,408,462 | ||||||||||||
| Total operating expenses | 3,805,836 | 31,779,341 | 17,518,853 | 69,826,478 | ||||||||||||
| Loss from operations | (3,373,956 | ) | (31,548,329 | ) | (16,734,548 | ) | (68,397,073 | ) | ||||||||
| Total other income (expense) | 13,909,516 | (2,769,875 | ) | 1,164,286 | (5,024,498 | ) | ||||||||||
| Net income (loss) | $ | 10,535,560 | $ | (34,318,204 | ) | $ | (15,570,262 | ) | $ | (73,421,571 | ) | |||||
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Revenues and Cost of Revenues
Net revenues for the three months ended September 30, 2026 were $2,668,980, compared to $3,012,904 for the three months ended September 30, 2025, a decrease of $343,924, or approximately 11.4%. For the nine months ended September 30, 2026, net revenues were $6,008,403, compared to $21,667,212 for the nine months ended September 30, 2025, a decrease of $15,658,809, or approximately 72.3%. The decrease in both periods was primarily driven by a significant decline in distribution revenues within Wellgistics, LLC, which decreased to $37,690 for the three months ended September 30, 2026 from $2,637,790 for the three months ended September 30, 2025, and to $330,120 for the nine months ended September 30, 2026 from $20,854,677 for the nine months ended September 30, 2025, reflecting liquidity constraints that limited the Company’s ability to procure and fulfill product orders. These decreases were partially offset by growth in pharmacy retail revenues, which increased to $2,393,191 for the three months ended September 30, 2026 from $172,100 for the three months ended September 30, 2025, and to $5,117,974 for the nine months ended September 30, 2026 from $364,532 for the nine months ended September 30, 2025, reflecting the continued expansion of the Company’s pharmacy operations, and by technology and platform revenue of $144,755 generated through the KareHub platform during the three months ended September 30, 2026.
Cost of net revenues for the three months ended September 30, 2026 was $2,237,100, compared to $2,781,892 for the three months ended September 30, 2025, a decrease of $544,792, or approximately 19.6%. For the nine months ended September 30, 2026, cost of net revenues was $5,224,098, compared to $20,237,807 for the nine months ended September 30, 2025, a decrease of $15,013,709, or approximately 74.2%. The decrease in both periods was primarily attributable to the lower volume of distribution activity, consistent with the decline in distribution revenues.
Gross profit for the three months ended September 30, 2026 was $431,880, compared to $231,012 for the three months ended September 30, 2025, an increase of $200,868, or approximately 87.0%, and gross margin increased to 16.2% from 7.7%. For the nine months ended September 30, 2026, gross profit was $784,305, compared to $1,429,405 for the nine months ended September 30, 2025, a decrease of $645,100, or approximately 45.1%, while gross margin increased to 13.1% from 6.6%. The improvement in gross margin in both periods reflects the increased contribution of pharmacy retail revenues, which carry higher margins than distribution revenues, and, for the three months ended September 30, 2026, technology and platform revenue. The decrease in gross profit for the nine-month period reflects the lower overall revenue base.
The following is a summary of the disaggregation of revenue for the three and nine months ended September 30, 2026 and 2025:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Product revenue - distribution services | $ | 37,690 | $ | 2,637,790 | $ | 330,120 | $ | 20,854,677 | ||||||||
| Pharmacy retail sales | 2,393,191 | 172,100 | 5,117,974 | 364,532 | ||||||||||||
| Third party logistics services | 93,344 | 203,014 | 415,554 | 448,003 | ||||||||||||
| Technology and Platform revenue | 144,755 | - | 144,755 | - | ||||||||||||
| Net revenues | $ | 2,668,980 | $ | 3,012,904 | $ | 6,008,403 | $ | 21,667,212 | ||||||||
General and Administrative Expense
General and administrative expenses for the three months ended September 30, 2026 were $3,343,627, compared to $30,172,800 for the three months ended September 30, 2025, a decrease of $26,829,173, or approximately 88.9%. The decrease was primarily attributable to non-cash stock-based compensation expense of $25,370,523 recognized during the three months ended September 30, 2025, including $24,300,000 related to the accelerated vesting of restricted stock held by the Company’s former Chief Executive Officer, and a loss of $640,647 on the Company’s guarantee of a revolving credit note issued by Tollo Health, LLC during the three months ended September 30, 2025, partially offset by stock-based compensation expense of $1,988,853 recognized during the three months ended September 30, 2026, primarily in connection with the ESOP Awards
For the nine months ended September 30, 2026, general and administrative expenses were $15,269,233, compared to $66,205,669 for the nine months ended September 30, 2025, a decrease of $ 50,936,436, or approximately 76.9%. The decrease was primarily attributable to non-cash stock-based compensation expense of $53,692,827 recognized within general and administrative expenses during the nine months ended September 30, 2025, including approximately $27.2 million related to the immediate vesting of restricted shares granted in March 2025 and $24.3 million related to the accelerated vesting of restricted stock held by the Company’s former Chief Executive Officer.
Sales and Marketing Expense
Sales and marketing expenses for the three months ended September 30, 2026 were $105,788, compared to $803,747 for the three months ended September 30, 2025, a decrease of $697,959, or approximately 86.8%, primarily attributable to non-cash stock-based compensation expense of $346,000 for marketing services recognized during the three months ended September 30, 2025 and lower marketing and advertising spend in the current period. For the nine months ended September 30, 2026, sales and marketing expenses were $1,179,778, compared to $1,212,347 for the nine months ended September 30, 2025, a decrease of $32,569, or approximately 2.7%, as increased investment in brand awareness and customer acquisition initiatives during the three months ended March 31, 2026 and expense recognized under the Company’s marketing services agreement with Outside The Box Capital Inc. were offset by lower non-cash stock-based compensation expense.
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Depreciation and Amortization
Depreciation and amortization expense for the three months ended September 30, 2026 was $356,421, compared to $802,794 for the three months ended September 30, 2025, a decrease of $446,373, or approximately 55.6%. For the nine months ended September 30, 2026, depreciation and amortization expense was $1,069,842, compared to $2,408,462 for the nine months ended September 30, 2025, a decrease of $1,338,620, or approximately 55.6%. The decrease in both periods was primarily attributable to the impairment of intangible assets recognized during the year ended December 31, 2025, which reduced the carrying value of assets subject to amortization.
Other Expense, net
Interest expense, net, for the three months ended September 30, 2026 was $2,252,401, compared to $1,425,307 for the three months ended September 30, 2025, an increase of $827,094, or approximately 58.0%. For the nine months ended September 30, 2026, interest expense, net was $5,886,320, compared to $3,703,837 for the nine months ended September 30, 2025, an increase of $2,182,483, or approximately 58.9%. The increase in both periods was primarily attributable to the non-cash accretion of debt discount and debt issuance costs on the convertible promissory notes issued during 2026, which totaled $1,810,204 and $4,153,456 for the three and nine months ended September 30, 2026, respectively, partially offset by lower interest expense following the repayment of the revolving line of credit in May 2026 and the extinguishment of the seller promissory note in September 2026.
During the three months ended September 30, 2026, the Company recognized a gain on extinguishment of debt of $19,064,881 in connection with the settlement with the sellers of Wellgistics, LLC. For the nine months ended September 30, 2026, the Company recognized a net gain on extinguishment of debt of $10,183,187, reflecting the $19,064,881 gain, partially offset by a loss of $8,378,189 recognized in connection with the refinancing of the Company’s convertible promissory notes in May 2026 and a loss of $503,505 recognized in connection with the extinguishment of the Agile Capital Funding LLC arrangement during the three months ended March 31, 2026. During the three and nine months ended September 30, 2025, the Company recognized a loss on extinguishment of debt of $1,353,663 in connection with the amendment of the seller promissory note.
During the three months ended September 30, 2026, the Company recognized a loss on extinguishment of vendor obligations of $3,605,978 in connection with the settlement of obligations through the issuance of shares of common stock to Silverback Capital Corporation at a fair value in excess of the carrying amount of the obligations settled. For the nine months ended September 30, 2026, the Company recognized a net loss on extinguishment of vendor obligations of $3,666,098. There was no comparable amount for the three or nine months ended September 30, 2025.
During the nine months ended September 30, 2026, the Company recognized a loss on contract termination fee of $766,394 and settlement fees of $13,000 in connection with its Settlement Agreement with Silverback Capital Corporation, all of which were recognized during the six months ended June 30, 2026. There were no comparable amounts for the three or nine months ended September 30, 2025.
Other income for the three months ended September 30, 2026 was $703,014, compared to $9,095 for the three months ended September 30, 2025, an increase of $693,919, primarily attributable to $700,000 of cash received from the seller in connection with the Helomics Acquisition that did not relate to any obligation of Helomics or the Company as of the acquisition date. For the nine months ended September 30, 2026, other income was $1,312,911, compared to $33,002 for the nine months ended September 30, 2025, an increase of $1,279,909, primarily attributable to the $700,000 received from the seller in connection with the Helomics Acquisition and settlements reached with certain counterparties in the ordinary course of business during the six months ended June 30, 2026.
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Net Income (Loss)
Net income for the three months ended September 30, 2026 was $10,535,560, compared to a net loss of $34,318,204 for the three months ended September 30, 2025. Net income for the three months ended September 30, 2026 was primarily driven by the $19,064,881 non-cash gain on extinguishment of debt in connection with the settlement with the sellers of Wellgistics, LLC, partially offset by the loss on extinguishment of vendor obligations of $3,605,978, interest expense of $2,252,401 and the loss from operations. The net loss for the three months ended September 30, 2025 reflected $25,716,523 of non-cash stock-based compensation expense.
For the nine months ended September 30, 2026, net loss was $15,570,262, compared to $73,421,571 for the nine months ended September 30, 2025, a decrease of $57,851,309, or approximately 78.8%. The decrease was primarily driven by the non-cash stock-based compensation expense of $54,438,827 recognized during the nine months ended September 30, 2025 and the net gain on extinguishment of debt recognized during the nine months ended September 30, 2026, partially offset by higher interest expense, the loss on extinguishment of vendor obligations and lower gross profit.
Liquidity and Capital Resources
As of September 30, 2026, the Company had cash and cash equivalents of $476,598 and a working capital deficit of $31,329,749. For the three months ended September 30, 2026, the Company reported net income of $10,535,560, which included a non-cash gain on extinguishment of debt of $19,064,881. For the nine months ended September 30, 2026, the Company incurred a net loss of $15,570,262, and as of September 30, 2026, the Company had an accumulated deficit of $126,547,748. In addition, the Company’s current liabilities as of September 30, 2026 included convertible notes payable with an aggregate principal amount of $21,687,403 and other debt obligations that mature within the next twelve months. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. See Note 2 to the condensed consolidated financial statements for further information.
The Company has funded its operations primarily through the issuance of debt and equity securities and has used, and expects to continue to use, the issuance of common stock to settle certain outstanding liabilities. During the nine months ended September 30, 2026, the Company reduced its outstanding liabilities through the settlement with the sellers of Wellgistics, LLC, which extinguished $19,187,192 of debt and accrued interest, and through the issuance of common stock to settle creditor obligations under its Settlement Agreement with Silverback Capital Corporation. Management is actively pursuing additional sources of capital, including equity financing, debt arrangements and strategic transactions. However, there can be no assurance that such financing or transactions will be available on acceptable terms or at all.
The following table summarizes our cash flows from operating, investing, and financing activities for the nine months ended September 30, 2026 and 2025:
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | $ | (9,210,298 | ) | $ | (4,561,776 | ) | ||
| Net cash provided by (used in) investing activities | $ | 275,965 | $ | (626,144 | ) | |||
| Net cash provided by financing activities | $ | 9,368,360 | $ | 8,388,250 | ||||
| Net change in cash and cash equivalents | $ | 434,027 | $ | 3,200,330 | ||||
Cash Used In Operating Activities
Net cash used in operating activities for the nine months ended September 30, 2026 was $9,210,298, primarily due to our net loss of $15,570,262, partially offset by net non-cash adjustments of $4,314,933 and $2,045,031 of cash provided by changes in operating assets and liabilities. Non-cash adjustments consisted primarily of the amortization of debt discount of $4,187,290, stock-based compensation of $4,607,095, the loss on extinguishment of vendor obligations of $3,666,098 and amortization of intangible assets of $986,886, partially offset by the net gain on extinguishment of debt of $10,183,187. Cash provided by changes in operating assets and liabilities was primarily driven by increases in accounts payable of $3,538,066 and accrued expenses and other liabilities of $772,333, partially offset by an increase in amounts due from related parties of $1,387,125 and an increase in accounts receivable of $982,001.
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Net cash used in operating activities for the nine months ended September 30, 2025 was $4,561,776, primarily due to our net loss of $73,421,571, partially offset by non-cash adjustments of $58,906,317 and $9,953,478 of cash provided by changes in operating assets and liabilities. Non-cash adjustments consisted primarily of stock-based compensation of $54,438,827. Cash provided by changes in operating assets and liabilities was primarily driven by an increase in accounts payable of $4,101,943 and decreases in inventories of $2,026,708 and accounts receivable of $1,359,834.
Cash Provided by (Used in) Investing Activities
Net cash provided by investing activities for the nine months ended September 30, 2026 was $275,965, consisting of cash acquired in the Helomics Acquisition of $805,875, partially offset by capitalized software development costs related to the Company’s DelivMeds platform of $494,910 and an investment of $35,000 in a simple agreement for future equity. Net cash used in investing activities for the nine months ended September 30, 2025 was $626,144, consisting entirely of capitalized software development costs.
Cash Provided by Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2026 was $9,368,360, primarily driven by gross proceeds of $14,200,000 from the issuance of convertible promissory notes and $650,000 from advances under a promissory note with a third-party lender, partially offset by repayments of $2,104,557 under the Company’s term loan with Agile Capital Funding LLC, $1,643,923 under the Company’s revolving line of credit and $89,909 under the Company’s merchant cash advance agreement, payments of debt issuance costs of $1,157,500 and cash payments of $450,000 in connection with the settlement with the sellers of Wellgistics, LLC.
Net cash provided by financing activities for the nine months ended September 30, 2025 was $8,388,250, primarily driven by gross proceeds of $4,000,000 from the Company’s initial public offering, $4,534,053 from a public offering in September 2025, $2,838,787 from the issuance of common stock under an equity purchase agreement, $931,814 of net proceeds from term loans and $615,000 from promissory notes, partially offset by net repayments of $2,557,509 under the revolving line of credit, offering costs of $1,471,141 and repayments of a merchant cash advance and seller promissory note.
Nasdaq Stockholders’ Equity Deficiency
Background
On April 13, 2026, the Company received a notice from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based on the stockholders’ deficit of $12,447,801 reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, the Company no longer satisfied the minimum stockholders’ equity requirement of $2,500,000 for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1) (the “Equity Rule”), and that the Company did not meet the alternative compliance standards based on market value of listed securities or net income from continuing operations. The Company submitted a plan to regain compliance, and on June 9, 2026, the Staff granted the Company an extension through October 12, 2026 to evidence compliance with the Equity Rule.
On October 19, 2026, the Staff notified the Company that it had regained compliance with the Equity Rule. Nasdaq will continue to monitor the Company’s ongoing compliance with the Equity Rule and, if at the time of the Company’s next periodic report the Company does not evidence compliance, the Company may be subject to delisting proceedings. This Quarterly Report is the Company’s next periodic report following the Staff’s determination.
Transactions Subsequent to September 30, 2026
As of September 30, 2026, the Company reported total stockholders’ equity of $171,695. Subsequent to September 30, 2026 and through the date of this Quarterly Report, the Company completed the following transactions that affected its stockholders’ equity:
| ● | Settlement Agreement issuance. On October 2, 2026, the Company issued 235,000 shares of common stock to Silverback Capital Corporation pursuant to the Settlement Agreement, in satisfaction of $310,845 of outstanding vendor claims. The shares were recorded at their fair value of $864,800, based on the closing price of the common stock of $3.68 per share on that date, and the excess of the fair value of the shares over the carrying amount of the claims satisfied of $553,955 was recognized as a loss on extinguishment of vendor obligations. The issuance increased stockholders’ equity by $310,845, the carrying amount of the claims satisfied. |
| ● | REBOOT License Agreement. On October 13, 2026 (the “Effective Date”), the Company issued 666,667 shares of common stock to REBOOT Health AI, Inc. as consideration for an exclusive license of certain intellectual property. The shares had a fair value of $2,020,001, based on the closing price of the common stock of $3.03 per share on that date. If, 180 days after the Effective Date, the market value of such shares is less than $2,000,000, the Company is required to issue additional shares of common stock to cover the shortfall, calculated using the 10-day volume-weighted average price of the common stock as of that date. The Company estimated the fair value of this obligation at $953,906 using the Black-Scholes-Merton option pricing model and recorded it as a contingent consideration liability, which does not reduce stockholders’ equity. |
| ● | Shares issued for services. On October 14 and October 16, 2026, the Company issued an aggregate of 82,328 shares of common stock, with an aggregate fair value of $223,635, based on the closing prices of the common stock on the respective dates of issuance, as consideration for services to be rendered in future period. The fair value of the shares was recorded as a prepaid expense and an increase in additional paid-in capital, and will be recognized as expense over the period in which the services are rendered. |
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Unaudited Pro Forma Condensed Consolidated Balance Sheet
The following unaudited pro forma condensed consolidated balance sheet presents the Company’s condensed consolidated balance sheet as of September 30, 2026, as adjusted to give effect to the transactions described above as if they had occurred on September 30, 2026.
| September 30, | Pro Forma | |||||||||||||
| 2026 | Adjustments | Notes | Pro Forma | |||||||||||
| (Unaudited) | ||||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 476,598 | $ | (50,000 | ) | (A) | $ | 426,598 | ||||||
| Accounts receivable, net | 1,966,605 | - | 1,966,605 | |||||||||||
| Inventories, net | 1,440,296 | - | 1,440,296 | |||||||||||
| Due from related parties | 1,162,125 | - | 1,162,125 | |||||||||||
| Prepaid and other current assets | 174,411 | 223,635 | (C ) | 398,046 | ||||||||||
| Total current assets | 5,220,035 | 173,635 | 5,393,670 | |||||||||||
| Property, plant and equipment, net | 323,305 | - | 323,305 | |||||||||||
| Capitalized software | 2,345,268 | - | 2,345,268 | |||||||||||
| Operating lease, right-of-use-assets | 1,590,240 | - | 1,590,240 | |||||||||||
| Goodwill | 15,787,176 | - | 15,787,176 | |||||||||||
| Other intangible assets, net | 13,249,358 | 3,023,907 | (A) | 16,273,265 | ||||||||||
| Investment in SAFE | 35,000 | - | 35,000 | |||||||||||
| Deposits and other assets | 183,486 | - | 183,486 | |||||||||||
| Total assets | $ | 38,733,868 | $ | 3,197,542 | $ | 41,931,410 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 13,061,543 | $ | (310,845 | ) | (B) | $ | 12,750,698 | ||||||
| Accounts payable, related party | 25,500 | - | 25,500 | |||||||||||
| Accrued expenses and other liabilities | 3,647,245 | - | 3,647,245 | |||||||||||
| Purchase consideration liability | 1,885,700 | - | 1,885,700 | |||||||||||
| Contingent consideration liability | - | 953,906 | (A) | 953,906 | ||||||||||
| Convertible notes payable, net of debt discount | 13,912,007 | - | 13,912,007 | |||||||||||
| Current portion of debt obligations, net of debt discount | 2,788,058 | - | 2,788,058 | |||||||||||
| Operating lease liabilities- current portion | 1,229,731 | - | 1,229,731 | |||||||||||
| Total current liabilities | 36,549,784 | 643,061 | 37,192,845 | |||||||||||
| Convertible notes payable | 1,363,672 | - | 1,363,672 | |||||||||||
| Note payable, net of discount | 100,000 | - | 100,000 | |||||||||||
| Operating lease liabilities | 548,717 | - | 548,717 | |||||||||||
| Total liabilities | $ | 38,562,173 | $ | 643,061 | $ | 39,205,234 | ||||||||
| Stockholders’ equity (deficit): | ||||||||||||||
| Common Stock | 473 | 99 | (A) (B) (C) | 572 | ||||||||||
| Additional paid-in capital | 124,851,605 | 3,108,337 | (A) (B) (C) | 127,959,942 | ||||||||||
| Accumulated deficit | (126,547,748 | ) | (553,955 | ) | (B) | (127,101,703 | ) | |||||||
| Total DataMeds AI, Inc. stockholders’ equity (deficit) | (1,695,670 | ) | 2,554,481 | 858,811 | ||||||||||
| Non-controlling interest | 1,867,365 | - | 1,867,365 | |||||||||||
| Total stockholders’ equity (deficit) | 171,695 | 2,554,481 | 2,726,176 | |||||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 38,733,868 | $ | 3,197,542 | $ | 41,931,410 | ||||||||
Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
| (A) | Reflects the REBOOT License Agreement entered into on October 13, 2026, including (i) the issuance of 666,667 shares of common stock with a fair value of $2,020,001, based on the closing price of the common stock of $3.03 per share on that date; (ii) the recognition of a contingent consideration liability of $953,906, representing the estimated fair value of the Company’s obligation to issue additional shares of common stock if, 180 days after the effective date of the agreement, the market value of the shares issued is less than $2,000,000, determined using the Black-Scholes-Merton option pricing model; and (iii) a cash payment of $50,000 toward the reconfiguration of the licensed platform. The aggregate cost of $3,023,907 is recorded as an intangible asset. The accounting for this transaction is preliminary. |
| (B) | Reflects the issuance of 235,000 shares of common stock to Silverback Capital Corporation, pursuant to the Settlement Agreement, in satisfaction of $310,845 of outstanding vendor claims included in accounts payable. The shares are recorded at their fair value of $864,800, based on the closing price of the common stock of $3.68 per share on the date of issuance, and the excess of the fair value of the shares over the carrying amount of the claims satisfied of $553,955 is reflected as an increase in accumulated deficit. The net increase in stockholders’ equity is $310,845. |
| (C) | Reflects the issuance of an aggregate of 82,328 shares of common stock on October 14 and October 16, 2026 as consideration for services to be rendered in future period. The shares are recorded at their aggregate fair value of $223,635, based on the closing prices of the common stock on the respective dates of issuance, as a prepaid expense and an increase in additional paid-in capital. |
Compliance Assessment
On a pro forma basis, after giving effect to the transactions described above, the Company’s total stockholders’ equity as of September 30, 2026 would have been $2,726,176, which exceeds the minimum stockholders’ equity of $2,500,000 required under the Equity Rule. However, there can be no assurance that Nasdaq will conclude that the Company has evidenced compliance with the Equity Rule, or that the Company will be able to maintain compliance with the Equity Rule or the other continued listing requirements of Nasdaq in future periods. The Company’s stockholders’ equity will be reduced by its continued operating losses and may be further reduced by increases in the fair value of the contingent consideration liability resulting from declines in the market price of the Company’s common stock, as well as by other factors. If the Company fails to evidence or maintain compliance with the Equity Rule, its common stock may be subject to delisting from The Nasdaq Capital Market, which could adversely affect the liquidity and market price of the common stock and the Company’s ability to raise capital. See Note 2 — Liquidity and Going Concern.
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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 condensed consolidated 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 Quarterly Report.
There have been no material changes to the critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, 2025, except as described below.
Business Combinations
We account for business combinations using the acquisition method, which requires us to estimate the fair values of the consideration transferred, the assets acquired and the liabilities assumed as of the acquisition date. In connection with the Helomics Acquisition, we estimated the fair values of the common stock and convertible note issued as consideration, property, plant and equipment, and operating lease right-of-use assets and liabilities, which required judgments regarding, among other things, the incremental borrowing rate used to measure the lease liabilities and the terms of the leases relative to market terms. The purchase price allocation is preliminary and may be adjusted during the measurement period.
Asset Acquisitions and Non-controlling Interest
In connection with the Healthstar Closing, we determined that the transaction was an asset acquisition and measured the intellectual property acquired based on the consideration transferred and the non-controlling interest recognized. The measurement of the non-controlling interest, and therefore the intellectual property, required judgment regarding the value of Kare Hub’s 49% membership interest in Healthstar. We also estimated the useful life of the intellectual property.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company is not required to provide the information required by this Item 3 as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
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, and 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.
As required by Rule 13a-15(b) 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 September 30, 2026. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2026, due to the material weaknesses in our internal control over financial reporting described below.
Material Weaknesses in Internal Control Over Financial Reporting
As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, management identified material weaknesses in the following components of the COSO framework: control environment, risk assessment, control activities, information and communication, and monitoring. Specifically, the material weaknesses identified relate to the fact that the Company has not yet designed and maintained an effective control environment commensurate with its financial reporting requirements, including: (a) the Company has not yet completed formally documenting policies and procedures with respect to review, supervision, and monitoring of the Company’s accounting and reporting functions; (b) lack of evidence to support the performance of controls and the adequacy of review procedures, including the completeness and accuracy of information used in the performance of controls; and (c) the Company has limited accounting personnel and other supervisory resources necessary to adequately execute its accounting processes and address its internal controls over financial reporting.
Plan for Remediation
To remediate these material weaknesses, management has implemented or is in the process of implementing the following measures: (i) hiring additional accounting personnel with appropriate technical expertise in U.S. GAAP and SEC reporting; (ii) enhancing internal review procedures for complex accounting transactions; (iii) providing targeted training to existing finance staff on U.S. GAAP and SEC reporting requirements; and (iv) upgrading to NetSuite’s enterprise resource planning system to improve the consistency and accuracy of financial data and reporting processes. Management will continue to monitor the effectiveness of these remediation efforts. However, the material weaknesses will not be considered fully remediated until the applicable controls operate effectively for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Changes in Internal Control Over Financial Reporting
On September 11, 2026, we completed the Helomics Acquisition, and on September 28, 2026, we completed the Healthstar Closing. We are in the process of integrating Helomics and Healthstar into our internal control over financial reporting. Other than the integration of these businesses and the remediation measures described above that remain in progress, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
Information regarding legal proceedings is set forth in Note 15 — Commitments and Contingencies to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report and is incorporated herein by reference. As described in Note 8 — Debt and Note 15, on September 11, 2026, the Company entered into a settlement agreement with the sellers of Wellgistics, LLC and certain former officers of the Company, pursuant to which the litigation pending in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida and in the Court of Chancery of the State of Delaware was dismissed with prejudice.
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, 2025, filed with the SEC on March 20, 2026.
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 ended September 30, 2026, that were not registered under the Securities Act of 1933, as amended (the “Securities Act”). Also included is the consideration received by us for such securities and information relating to the section of the Securities Act, or rule of the SEC, under which exemption from registration was claimed.
During the three months ended September 30, 2026, the Company issued an aggregate of 1,591,435 shares of common stock to Silverback Capital Corporation pursuant to the Settlement Agreement, in satisfaction of outstanding creditor claims. These shares were issued in reliance on the exemption from registration provided by Section 3(a)(10) of the Securities Act, based upon the fairness determination made by the Circuit Court of the Twelfth Judicial Circuit in and for DeSoto County, Florida.
On September 11, 2026, in connection with the Helomics Acquisition, the Company issued 636,328 shares of common stock and a convertible promissory note in the principal amount of $1,363,672 to Axe Compute Inc.
On September 28, 2026, the Company issued an aggregate of 30,000 shares of common stock to Kare Pharmtech, LLC and its designee as partial consideration under the Collaboration Agreement.
The securities described above, other than the shares issued to Silverback Capital Corporation pursuant to the Settlement Agreement, were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The recipients represented that they acquired the securities for investment purposes only and not with a view to any distribution thereof, the Company did not engage in any general solicitation or advertising, and the securities bear appropriate restrictive legends.
Repurchases
Issuer Purchases of Equity Securities
| Period | Total number of Shares Purchased | Average Price Paid per Share | ||||||
| July 1 - July 31, 2026 | - | $ | - | |||||
| August 1 - August 31, 2026 | - | - | ||||||
| September 1 - September 301, 2026 | 364,099⁽¹⁾ | 0.96 | ||||||
| Total | 364,099 | $ | 0.96 | |||||
⁽¹⁾ Represents shares repurchased from the sellers of Wellgistics, LLC in connection with the Seller Settlement described in Note 8 to the condensed consolidated financial statements. The repurchase was not made pursuant to a publicly announced plan or program.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During
the quarter ended September 30, 2026, none of the Company’s directors or officers
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Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
| Exhibit | ||
| Number | Description | |
| 3.1 | Form of Certificate of Amendment (incorporated by reference to Exhibit 3.1 of Form 8-K filed with the SEC on May 21, 2026). | |
| 3.2 | Certificate of Amendment to Amended and Restated Certificate of Incorporation dated July 20, 2026 (incorporated by reference to Exhibit 3.1 to Form 8-K filed with the SEC on July 21, 2026). | |
| 4.1 | Form of Convertible Promissory Note (incorporated by reference to Exhibit 4.1 of Form 8-K filed with the SEC on May 29, 2026). | |
| 4.2 | Form of PIPE Warrant (incorporated by reference to Exhibit 4.2 of Form 8-K filed with the SEC on May 29, 2026). | |
| 4.3 | Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.3 to Form 8-K/A filed with the SEC on June 3, 2026). | |
| 10.1 | Amendment to Note Purchase Agreement, dated May 19, 2026 (incorporated by reference to Exhibit 10.2 of Form 8-K filed with the SEC on May 21, 2026). | |
| 10.2 | Amended and Restated Promissory Note dated May 19, 2026 (incorporated by reference to Exhibit 10.3 of Form 8-K filed with the SEC on May 21, 2026). | |
| 10.3 | Securities Purchase Agreement, dated May 27, 2026, by and among Wellgistics Health, Inc. and the Purchasers party thereto (incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC on May 29, 2026). | |
| 10.4 | Registration Rights Agreement, dated May 27, 2026, by and among Wellgistics Health, Inc. and the Purchasers party thereto (incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC on May 29, 2026). | |
| 10.5 | Placement Agency Agreement, dated May 27, 2026, by and between Wellgistics Health, Inc. and Dawson James Securities, Inc. (incorporated by reference to Exhibit 10.3 to Form 8-K filed with the SEC on May 29, 2026). | |
| 10.6 | Form of Lock-Up Agreement (incorporated by reference to Exhibit 10.4 to Form 8-K filed with the SEC on May 29, 2026). | |
| 10.7 | Amended and Restated Letter of Intent dated July 29, 2026 (incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC on August 4, 2026). | |
| 31.1* | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1* | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101) | |
| * | Furnished herewith. |
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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.
| DATAMEDS AI, INC. | ||
| Date: November 13, 2026 | ||
| By: | /s/ Prashant Patel | |
| Name: | Prashant Patel | |
| Title: | President and Interim Chief Executive Officer (Principal Executive Officer) | |
| By: | /s/ Eric Sherb | |
| Name: | Eric Sherb | |
| Title: | Interim Chief Financial Officer | |
| (Principal Financial Officer and Accounting Officer) | ||
| Date: November 13, 2026 | ||
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