Wellgistics Health Inc(WGRX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements of Wellgistics Health, Inc. for the periods ended June 30, 2025, and December 31, 2024 (for balance sheets) or June 30, 2024 (for income statements and cash flows), including balance sheets, statements of operations, stockholders' equity, cash flows, and detailed notes explaining significant accounting policies, liquidity, debt, equity, and related party transactions Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Total Assets | $54,225,015 | $57,332,650 | | Current assets | $13,509,643 | $15,168,668 | | Goodwill | $16,219,929 | $16,219,929 | | Other intangible assets, net | $19,219,880 | $20,746,009 | | Total Liabilities | $53,319,760 | $50,598,204 | | Current liabilities | $42,403,542 | $38,046,747 | | Total Stockholders' Equity | $905,255 | $6,734,446 | - Total assets decreased by approximately $3.1 million from December 31, 2024, to June 30, 2025, primarily due to a decrease in current assets and other intangible assets[9] - Total liabilities increased by approximately $2.7 million, driven by an increase in current liabilities[9] - Total stockholders' equity significantly decreased from $6,734,446 to $905,255, largely due to an accumulated deficit[9] Condensed Consolidated Statements of Operations This section outlines the company's financial performance, including revenues, expenses, and net income or loss over specific periods Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Net revenues | $7,790,865 | $44,540 | | Cost of revenues | $7,285,113 | $47,148 | | Gross profit (loss) | $505,752 | $(2,608) | | Total operating expenses | $6,006,128 | $570,408 | | Loss from operations | $(5,500,376) | $(573,016) | | Net loss | $(6,672,464) | $(574,325) | | Net loss per common share | $(0.11) | $(0.01) | Condensed Consolidated Statements of Operations (Six Months Ended June 30) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Net revenues | $18,654,308 | $44,540 | | Cost of revenues | $17,455,915 | $47,148 | | Gross profit (loss) | $1,198,393 | $(2,608) | | Total operating expenses | $38,047,137 | $650,172 | | Loss from operations | $(36,848,744) | $(652,780) | | Net loss | $(39,103,367) | $(657,447) | | Net loss per common share | $(0.69) | $(0.01) | - Net revenues for the three months ended June 30, 2025, increased significantly to $7,790,865 from $44,540 in the prior year, primarily due to acquisitions[11] - The Company reported a substantial net loss of $6,672,464 for the three months ended June 30, 2025, compared to $574,325 in the prior year, driven by increased operating expenses[11] Condensed Consolidated Statements of Stockholders' Equity This section details changes in the company's equity, including stock issuances, net income/loss, and other comprehensive income Changes in Stockholders' Equity (Six Months Ended June 30, 2025) | Item | Amount | | :------------------------------------------ | :------------- | | Balance at December 31, 2024 | $6,734,446 | | Common stock issued pursuant to public offering | $4,000,000 | | Common stock issued pursuant to consulting agreements | $543,520 | | Vested restricted stock granted to consultants | $2,875,560 | | Vested restricted stock granted to directors | $24,278,758 | | Vested restricted stock granted to employees | $75,583 | | Offering costs | $(1,598,196) | | Net loss | $(32,430,903) | | Common stock issued pursuant to equity purchase agreement | $1,149,417 | | Issuance of commitment shares under equity purchase agreement | $594,320 | | Common stock issued in partial settlement of seller's note | $1,500,000 | | Vested restricted stock granted to employees | $354,563 | | Offering costs | $(499,349) | | Net loss | $(6,672,464) | | Balance at June 30, 2025 | $905,255 | - The Company's total stockholders' equity decreased significantly from $6,734,446 at December 31, 2024, to $905,255 at June 30, 2025, primarily due to a net loss of $39,103,367[12] - Key increases in equity came from a public offering ($4.0 million) and various stock issuances for consulting, directors, and employees, totaling over $30 million in additional paid-in capital[12] Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Activity | June 30, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------ | | Net cash (used in) provided by operating activities | $(3,426,447) | $361,193 | | Net cash used in investing activities | $(405,059) | $(17,545) | | Net cash provided by (used in) financing activities | $3,223,112 | $(278,037) | | Net change in cash and cash equivalents | $(608,394) | $65,611 | | Cash and cash equivalents at end of period | $419,942 | $66,975 | - Net cash used in operating activities was $3,426,447 for the six months ended June 30, 2025, a significant change from net cash provided of $361,193 in the prior year[14] - Net cash provided by financing activities was $3,223,112 in 2025, primarily from the IPO and equity purchase agreements, offsetting cash used in operating and investing activities[14] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note describes the company's business, recent IPO, and key accounting policies applied in preparing the financial statements - Wellgistics Health, Inc. was incorporated in November 2022 and operates as a holding company for healthcare technology and pharmaceutical services subsidiaries, including Wood Sage LLC, Wellgistics Tech & Hub, LLC (DelivMeds), Wellgistics Pharmacy, LLC, and Wellgistics LLC[15][16][17][18] - The Company completed its Initial Public Offering (IPO) on February 24, 2025, issuing 888,889 shares at $4.50 per share, generating gross proceeds of approximately $4 million and net proceeds of $3.1 million[20][22] Its common stock commenced trading on Nasdaq under 'WGRX' on February 21, 2025 - The Company operates as a single operating and reportable segment, with the CEO reviewing consolidated results to allocate resources and assess performance[29] - For the six months ended June 30, 2025, one customer accounted for approximately 15% of total revenue, posing a concentration risk[32] - The allowance for credit losses increased to $1,111,824 as of June 30, 2025, from $940,596 as of December 31, 2024, with a provision for credit losses of $200,454 recognized in 2025[38][39] - Capitalized software for the Delivmeds platform increased to $2,023,076 as of June 30, 2025, from $1,618,017 as of December 31, 2024, but amortization has not yet commenced as the platform is not in service[43] Disaggregation of Revenue (Three and Six Months Ended June 30) | Revenue Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Product revenue - distribution services | $7,548,600 | $- | $18,216,887 | $- | | Pharmacy retail sales | $77,756 | $44,540 | $192,432 | $44,540 | | Third party logistics services | $164,509 | $- | $244,989 | $- | | Net revenues | $7,790,865 | $44,540 | $18,654,308 | $44,540 | - The Company recognized $28,708,643 in stock-based compensation expense for the six months ended June 30, 2025[14] Note 2. LIQUIDITY AND GOING CONCERN This note assesses the company's ability to meet its short-term and long-term obligations, highlighting potential going concern issues - The Company reported a net loss of $39,103,367 and an accumulated deficit of $48,860,527 as of June 30, 2025, along with net cash used in operating activities of $3,426,447 for the six months ended June 30, 2025[73] - These factors raise substantial doubt about the Company's ability to continue as a going concern[73][77] - Management's plan to address liquidity included the Hudson Equity Purchase Agreement (EPA), under which the Company sold 1,155,030 shares for net proceeds of $1,149,417 by June 30, 2025[75] However, the Hudson EPA was terminated effective August 13, 2025 Note 3. ACCOUNTS RECEIVABLE, NET This note details the composition and changes in the company's accounts receivable, including the allowance for credit losses Accounts Receivable, Net (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Third Party | $2,498,247 | $3,394,112 | | Affiliates | $775,027 | $271,298 | | Total Accounts Receivable | $3,273,274 | $3,665,410 | | Less: Allowance for credit losses | $(1,111,824) | $(940,596) | | Total accounts receivable, net | $2,161,450 | $2,724,814 | - Total accounts receivable, net, decreased by $563,364 from December 31, 2024, to June 30, 2025[80] - Allowance for credit losses increased by $171,228 during the period[80] Note 4. INVENTORIES, NET This note provides a breakdown of the company's inventory, including finished goods and reserves for obsolescence Inventories, Net (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | First Defense Nasal Screen Corp ("FDNS") | $6,005,624 | $6,717,373 | | Finished goods | $3,271,255 | $3,034,836 | | Total inventory, at cost | $9,276,879 | $9,752,209 | | Less: reserve for obsolescence | $(245,736) | $(233,601) | | Inventories, net | $9,031,143 | $9,518,608 | - Net inventories decreased by $487,465 from December 31, 2024, to June 30, 2025[81] Note 5. PROPERTY, PLANT AND EQUIPMENT, NET This note presents the company's tangible assets, their cost, and accumulated depreciation Property, Plant and Equipment, Net (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Leasehold improvements | $766,467 | $766,467 | | Equipment | $589,208 | $589,208 | | Furniture and fixtures | $152,161 | $152,161 | | Total at cost | $1,507,836 | $1,507,836 | | Less: Accumulated depreciation | $(1,199,194) | $(1,119,656) | | Property, plant and equipment, net | $308,642 | $388,180 | - Depreciation expense for the three and six months ended June 30, 2025, was $39,731 and $79,538, respectively[82] Note 6. INTANGIBLE ASSETS This note details the company's intangible assets, including software development costs, customer relationships, and trademarks, along with their amortization Intangible Assets, Net (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :------------------ | | Software development costs - Delivmeds | $2,023,076 | $1,618,017 | | Customer relationships - Wood Sage acquisition | $393,853 | $393,853 | | Customer relationships - Wellgistics acquisition | $11,256,067 | $11,256,067 | | Trademark - Wellgistics acquisition | $10,143,137 | $10,143,137 | | Total at cost | $21,793,057 | $21,793,057 | | Accumulated amortization | $(2,573,177) | $(1,047,048) | | Intangible assets, net | $19,219,880 | $20,746,009 | - Net intangible assets decreased by $1,526,129 from December 31, 2024, to June 30, 2025, primarily due to accumulated amortization[84] - Amortization expense for the six months ended June 30, 2025, totaled $1,526,129, including $938,006 for Wellgistics customer relationships and $563,508 for the Wellgistics trademark[85][86] Future Amortization of Intangible Assets | Year Ended December 31, | Amount | | :------------------------ | :------------- | | 2025 (remaining six months) | $1,526,129 | | 2026 | $3,052,258 | | 2027 | $3,052,258 | | 2028 | $3,052,258 | | 2029 | $3,052,258 | | Thereafter | $5,484,719 | | Total | $19,219,880 | Note 7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES This note outlines the company's short-term liabilities, such as accrued personnel costs, professional fees, and interest Accrued Expenses and Other Current Liabilities (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Accrued personnel costs | $3,426,314 | $3,112,470 | | Accrued professional fees | $139,557 | $347,829 | | Accrued expenses | $227,973 | $- | | Credit card obligation | $222,485 | $110,201 | | Unearned revenue | $245,765 | $245,765 | | Accrued interest | $1,204,072 | $504,152 | | Total | $5,466,166 | $4,320,417 | - Total accrued expenses and other current liabilities increased by $1,145,749 from December 31, 2024, to June 30, 2025, primarily due to increases in accrued personnel costs and accrued interest[87] Note 8. DEBT This note provides a comprehensive overview of the company's outstanding debt obligations, including various loans and notes payable Outstanding Debt (June 30, 2025 vs. December 31, 2024) | Debt Type | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :------------------ | | Merchant cash advance, net of debt discount | $1,548,657 | $1,259,415 | | Loan payable | $703,366 | $- | | Note payable - sellers of Wellgistics | $5,000,000 | $5,000,000 | | Note payable, net of debt discount | $648,411 | $- | | Note payable – Integral Health | $1,300,000 | $- | | Revolving line of credit | $3,979,766 | $5,531,260 | | Seller promissory note | $- | $137,141 | | Current portion of debt obligations | $13,180,200 | $11,927,816 | | Long-term debt | $10,100,000 | $11,455,085 | | Total debt | $23,280,200 | $23,382,901 | - Total debt remained relatively stable at $23.28 million as of June 30, 2025, compared to $23.38 million at December 31, 2024[88] - Current portion of debt obligations increased by $1,252,384, while long-term debt decreased by $1,355,085[88] - New debt agreements in 2025 include a merchant cash advance ($1.9 million gross funding), a business loan ($756,000 principal), and a cash advance ($367,200 purchased amount)[90][93][94] - The promissory note to Wellgistics LLC sellers has a principal of $15 million, with $5 million classified as current and $10 million as non-current as of June 30, 2025[95] Interest expense for this note was $637,500 for the six months ended June 30, 2025[96] - The revolving line of credit balance decreased from $5,531,260 at December 31, 2024, to $3,979,766 at June 30, 2025[101] Interest expense for this line of credit was $614,199 for the six months ended June 30, 2025[101] Note 9. STOCKHOLDERS' EQUITY This note details changes in stockholders' equity, including stock issuances, stock-based compensation, and the impact of net loss - The Company closed its IPO on February 24, 2025, generating $4.0 million in gross proceeds and approximately $3.1 million in net proceeds[105] - Stock-based compensation expense for the six months ended June 30, 2025, totaled $28,708,643, with $28,308,643 included in general and administrative expenses and $400,000 in sales and marketing expenses[121] - As of June 30, 2025, 10,070,051 shares of restricted common stock were unvested, with total unrecognized compensation expense of $2,811,224 expected to be recognized over 2.54 years[121] - An additional $26,100,000 in unrecognized compensation relates to 9,000,000 performance-based restricted shares granted to the CEO, which will be recognized upon probable achievement of revenue and profit targets[119][121] - The Company issued 1,155,030 shares of common stock under the Hudson EPA, resulting in net proceeds of $1,149,417, and 152,000 commitment shares valued at $594,320[111][112] Note 10. LEASE OBLIGATIONS This note describes the company's operating lease assets and liabilities, including future minimum lease payments Operating Lease Assets and Liabilities (June 30, 2025) | Category | Amount | | :-------------------------- | :------------- | | Right-of-use assets | $1,280,459 | | Lease liabilities, current portion | $546,255 | | Long-term lease liabilities | $816,218 | | Total lease liabilities | $1,362,473 | | Weighted Average Remaining Lease Term | 2.43 years | | Weighted Average Discount Rate | 7.36% | Future Minimum Lease Payments (December 31) | Year | Amount | | :--- | :------------- | | 2025 (remaining 6 months) | $307,086 | | 2026 | $621,530 | | 2027 | $458,656 | | 2028 | $84,977 | | Total lease payments | $1,472,249 | | Less: Imputed interest | $(109,776) | | Total | $1,362,473 | Note 11. RELATED PARTY TRANSACTIONS This note discloses transactions and balances with entities and individuals considered related parties to the company - The Company has related party transactions with entities like Scienture Holdings, IPS, Integral Health, Tollo Health, Nomad Capital LLC, Cingo Solutions, RxERP, and Scietech, LLC, due to common ownership, management, or board members[124][125][126] Due From and To Related Parties (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Due from related parties | $1,249,888 | $1,021,000 | | Due to related parties | $5,234,770 | $4,944,770 | | Accounts receivable – IPS (Integral Health) | $775,027 | $271,298 | | Accounts payable - Scietech | $25,500 | $25,500 | Related Party Transactions (Six Months Ended June 30, 2025) | Transaction Type | Six Months Ended June 30, 2025 | | :--------------------------------------- | :--------------------------- | | Sales to IPS | $503,730 | | IT expenses paid to Cingo Solutions | $199,440 | | SaaS expenses paid to RxERP | $150,000 | | Management services fees paid to Nomad Capital | $160,000 | Note 12. SEGMENT AND GEOGRAPHIC INFORMATION This note provides information on the company's operating segments and geographic revenue distribution - The Company operates as a single operating segment, with the CEO reviewing consolidated gross margin, operating income, and net income to assess performance and allocate resources[129] - All revenues for the three and six months ended June 30, 2025, and 2024 were generated within the United States[52][131] Selected Financial Information by Segment (Six Months Ended June 30) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Net revenues | $18,654,308 | $44,540 | | Gross profit (loss) | $1,198,393 | $(2,608) | | Loss from operations | $(36,848,744) | $(652,780) | | Net loss | $(39,103,367) | $(657,447) | Note 13. COMMITMENTS AND CONTINGENCIES This note outlines potential future obligations and legal matters that could impact the company's financial position - The Company is involved in an arbitration demand from Blythe Global Advisors, LLC for $377,947.36 for unpaid accounting services, which the Company is vigorously defending[136] - The Company's subsidiaries have also sued Blythe Global Advisors, LLC for improper UCC-1 filings, tortious interference, slander of title, and RICO violations, claiming substantial damages[137] Note 14. SUBSEQUENT EVENTS This note describes significant events that occurred after the balance sheet date but before the financial statements were issued - On July 24, 2025, the Wellgistics MIPA was amended to convert an $8,139,259 cash payment owed to former owners of Wellgistics, LLC into approximately 7,606,785 shares of the Company's common stock[138] - The Hudson Equity Purchase Agreement (EPA) was terminated on August 13, 2025, after the Company exercised its put right for 3,426,254 shares by July 25, 2025[139] - On July 25, 2025, the Company paid $640,647 in principal and interest as a guarantor for a defaulted revolving credit note issued by Tollo Health, LLC, Tollo Health Inc., and Gerald Commissiong[142] - The 'One Big Beautiful Bill Act' was signed into law on July 4, 2025, and the Company is currently evaluating its impact on its consolidated financial statements[143] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and operational results, including an overview of its business, a discussion of the pending acquisition of Peek Healthcare Technologies, Inc., and a detailed analysis of revenues, expenses, liquidity, and cash flows for the three and six months ended June 30, 2025, compared to the prior year, also highlighting critical accounting policies and forward-looking statements Cautionary Statement Regarding Forward-Looking Information This section advises readers that the report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ - The report contains forward-looking statements subject to safe-harbor provisions, based on current expectations and projections about the Company and its industry[145] - Actual results may differ materially due to various risks and uncertainties, including shifts in pharmacy mix, margin compression, changes in drug costs, economic conditions, regulatory changes, and competition[147][152] Overview This section provides a general description of the company's business model, operations, and market opportunities - Wellgistics Health, Inc. operates as a holding company for a micro health ecosystem, encompassing a technology platform (Wellgistics Tech & Hub dba DelivMeds), a pharmacy (Wellgistics Pharmacy), and wholesale operations (Wellgistics, LLC)[150][151] - Wellgistics, LLC, acquired in August 2024, is a 50-state FDA licensed pharmaceutical wholesaler serving over 5,000 pharmacies, focusing on niche therapeutic products and providing distribution and third-party logistics[153][154][155] - Wellgistics Tech & Hub, LLC (DelivMeds), acquired in June 2024, is a middleware technology arm facilitating prescription transfer and clinical concierge services, aiming to improve price transparency and patient adherence[156][157][158] - Wellgistics Pharmacy, LLC, acquired in June 2024, provides general and specialty pharmacy services, licensed in 32 states and D.C., and focuses on 340B services and a competitive cash-based formulary[159][160][161] - The Company's revenues are derived from pharmaceutical dispensing, care management services, SaaS fees for platform technology, and product procurement and distribution to independent pharmacies[163] - The U.S. retail prescription drug spending reached $435 billion in 2023, with specialty drugs accounting for over 50% of the spend, presenting a significant market opportunity for the Company's patient-centric digital health tools[165][166] Pending Acquisition – Merger Agreement This section details the terms and conditions of the company's pending acquisition of Peek Healthcare Technologies, Inc - On April 8, 2025, the Company entered into a Merger Agreement to acquire Peek Healthcare Technologies, Inc., a digital prescription platform focused on real-time pricing transparency[168][169] - As a condition, Peek will acquire Lumina Marketing, LLC and Lumina Therapeutics, LLC, affiliates providing consulting services to drug manufacturers, which will then operate under a single subsidiary of the Company[169][170] - The merger consideration includes a cash payment of $2,000,000 (adjusted for indebtedness and working capital) and an unsecured promissory note of $6,000,000[171] - Additionally, Peek stockholders will receive 1,777,778 shares of Company common stock, comprising 507,615 guaranteed shares and 1,270,163 earn-out shares subject to forfeiture based on revenue targets[172][179] Key Components of Results of Operations This section provides information regarding key components of results of operations Revenues This section discusses the sources of the company's revenue and factors influencing its recognition and growth - The Company's revenues are generated through its subsidiaries: DelivMeds, Wellgistics Pharmacy, and Wellgistics LLC, primarily from pharmaceutical dispensing, care management, SaaS fees, and product distribution[175] - The Company faces risks from inflationary pressures on product prices, particularly in the 'specialty lite' business segment ($500 - $3,000 therapies), which could impact consumer affordability and gross margins[176] - Revenue recognition for Wellgistics Pharmacy occurs when the patient confirms delivery of the prescription, reflecting expected reimbursements from third-party payors[177] Expenses This section analyzes the company's operating expenses, including sales and marketing, general and administrative, and their drivers - Sales and marketing expenses are expected to increase due to expanded promotional activities, marketing initiatives, and additional personnel hires[180] - General and administrative expenses include personnel costs, professional fees (audit, tax, legal, consulting), and public company compliance costs, which are expected to increase following the Company's public registration[181][182] - The Company maintains a valuation allowance against its U.S. federal and state net deferred tax assets due to uncertainty regarding their recoverability[183] Results of Operations This section provides a comparative analysis of the company's financial performance for the reported periods For the Three Months Ended June 30, 2025 and 2024 This section analyzes the company's financial performance for the three-month period ended June 30, 2025, compared to the prior year Financial Performance (Three Months Ended June 30) | Metric | 2025 | 2024 | | :-------------------------- | :------------ | :------------ | | Net revenues | $7,790,865 | $44,540 | | Cost of revenues | $7,285,113 | $47,148 | | Gross profit (loss) | $505,752 | $(2,608) | | General and administrative | $4,859,949 | $570,408 | | Sales and marketing | $343,383 | $- | | Depreciation and amortization | $802,796 | $- | | Loss from operations | $(5,500,376) | $(573,016) | | Net loss | $(6,672,464) | $(574,325) | - Net revenues increased significantly to $7,790,865 in Q2 2025 from $44,540 in Q2 2024, primarily due to the Wood Sage and Wellgistics acquisitions[186] - Gross profit was $505,752 (6.5% gross margin) in Q2 2025, compared to a gross loss of $2,608 in Q2 2024[186] - General and administrative expenses rose to $4,859,949 in Q2 2025 from $570,408 in Q2 2024, including $870,005 in non-cash stock-based compensation[189] - Sales and marketing expenses increased to $343,383 in Q2 2025 (from $0 in Q2 2024), reflecting expanded promotional activities and including $65,217 in non-cash stock-based compensation[190] - Depreciation and amortization was $802,796 in Q2 2025 (from $0 in Q2 2024), mainly from intangible assets acquired in the Wood Sage and Wellgistics acquisitions[191] - Interest expense increased substantially to $1,184,040 in Q2 2025 from $1,309 in Q2 2024, due to outstanding loans, promissory notes, and credit agreements[192] For the Six Months Ended June 30, 2025 and 2024 This section analyzes the company's financial performance for the six-month period ended June 30, 2025, compared to the prior year Financial Performance (Six Months Ended June 30) | Metric | 2025 | 2024 | | :-------------------------- | :------------ | :------------ | | Net revenues | $18,654,308 | $44,540 | | Cost of revenues | $17,455,915 | $47,148 | | Gross profit (loss) | $1,198,393 | $(2,608) | | General and administrative | $36,032,869 | $650,172 | | Sales and marketing | $408,600 | $- | | Depreciation and amortization | $1,605,668 | $- | | Loss from operations | $(36,848,744) | $(652,780) | | Net loss | $(39,103,367) | $(657,447) | - Net revenues for the six months ended June 30, 2025, surged to $18,654,308 from $44,540 in the prior year, driven by the Wood Sage and Wellgistics acquisitions[194] - Gross profit was $1,198,393 (6.4% gross margin) in H1 2025, compared to a gross loss of $2,608 in H1 2024[194] - General and administrative expenses increased to $36,032,869 in H1 2025 from $650,172 in H1 2024, including $28,308,643 in non-cash stock-based compensation[197] - Sales and marketing expenses increased to $408,600 in H1 2025 (from $0 in H1 2024), including $400,000 in non-cash stock-based compensation[198] - Depreciation and amortization was $1,605,668 in H1 2025 (from $0 in H1 2024), primarily from acquired intangible assets[199] - Interest expense increased to $2,278,530 in H1 2025 from $4,667 in H1 2024, due to various debt obligations[200] Liquidity and Capital Resources This section discusses the company's ability to generate and manage cash, its capital structure, and future funding needs - The Company expects future cash needs for operating activities, working capital, property and equipment purchases, strategic investments, and facility expansion[201] - Funding will primarily come from operating cash flows, debt issuance, and equity sales, with potential dilution for stockholders if additional capital is raised through equity[201] - Short-term liquidity requirements include expanding facilities, hiring employees, upgrading IT, and meeting public company compliance costs[202] - Long-term liquidity requirements involve strategic acquisitions (e.g., EHR systems), expanding micro-distribution centers, investing in AI/machine learning, and integrating with third-party partners[202] Outstanding Debt (June 30, 2025 vs. December 31, 2024) | Debt Type | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :------------------ | | Merchant cash advance, net of debt discount | $1,548,657 | $1,259,415 | | Loan payable | $703,366 | $- | | Note payable - sellers of Wellgistics | $5,000,000 | $5,000,000 | | Note payable, net of debt discount | $648,411 | $- | | Note payable – Integral Health | $1,300,000 | $- | | Revolving line of credit | $3,979,766 | $5,531,260 | | Seller promissory note | $- | $137,141 | | Current portion of debt obligations | $13,180,200 | $11,927,816 | | Long-term debt | $10,100,000 | $11,455,085 | | Total debt | $23,280,200 | $23,382,901 | Annual Principal Payments of Outstanding Debt | December 31, | Amount | | :------------- | :------------- | | 2025 | $14,060,801 | | 2026 | $5,100,000 | | 2027 | $5,000,000 | | Total | $24,160,801 | Cash Flows This section provides a detailed analysis of the company's cash inflows and outflows from operating, investing, and financing activities Summary of Cash Flows (Six Months Ended June 30) | Activity | 2025 | 2024 | | :--------------------------------------- | :------------ | :------------ | | Net cash (used in) provided by operating activities | $(3,426,447) | $361,193 | | Net cash used in investing activities | $(405,059) | $(17,545) | | Net cash provided by financing activities | $3,223,112 | $(278,037) | | Net change in cash and cash equivalents | $(608,394) | $65,611 | - Net cash used in operating activities for H1 2025 was $3,426,447, primarily due to a net loss of $39,103,367, partially offset by $28,708,643 in non-cash stock-based compensation and a $3,141,895 increase in accounts payable[225] - Net cash used in investing activities for H1 2025 was $405,059, mainly for capitalized software expenditures[227] - Net cash provided by financing activities for H1 2025 was $3,223,112, driven by $4,000,000 from the IPO, $567,722 from equity purchase agreements, and $615,000 from promissory notes, partially offset by $1,208,498 in offering costs[228] Off-Balance Sheet Arrangements This section discloses any material off-balance sheet transactions, arrangements, or obligations - The Company did not have any off-balance sheet arrangements during the periods presented and currently has none[230] Critical Accounting Policies and Estimates This section highlights the accounting policies and estimates that require significant judgment and can materially impact financial reporting - The Company's critical accounting policies include revenue recognition (following ASC 606's five-step model) and business combinations[231][232][240] - Revenue from distribution and third-party logistics services is recognized when goods are delivered, subject to deductions for chargebacks, rebates, and returns[235] - Pharmacy retail sales revenue is recognized when the patient confirms delivery of the prescription, with the transaction price reflecting expected reimbursements from third-party payors[236][238][239] - Business combinations are accounted for by allocating the purchase price to acquired assets and assumed liabilities at fair value, with any excess recognized as goodwill[240] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a 'smaller reporting company,' Wellgistics Health, Inc. is exempt from providing the quantitative and qualitative disclosures about market risk typically required by Item 3 - The Company is a 'smaller reporting company' and is not required to provide disclosures about market risk[241] Item 4. Controls and Procedures Management concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2025, due to identified material weaknesses, with a remediation plan in place to address these weaknesses and no other material changes to internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures This section assesses the effectiveness of the company's disclosure controls and procedures as of the reporting date - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2025[242] Material Weakness This section identifies and describes significant deficiencies in the company's internal control over financial reporting - Material weaknesses were identified in the control environment, risk assessment, control activities, information and communication, and monitoring[243] - Specific weaknesses include a lack of formally documented policies and procedures for review and supervision, insufficient evidence for control performance, and limited accounting personnel and supervisory resources[243] Plan for Remediation This section outlines management's strategy and actions to address identified material weaknesses in internal controls - Management's remediation plan includes hiring additional accounting personnel with technical expertise, enhancing internal review procedures for complex transactions, providing targeted training, and upgrading to NetSuite's enterprise resource program[244][245] - These remediation efforts are expected to be completed during fiscal year 2025[245] Changes in Internal Control Over Financial Reporting This section reports any material changes in the company's internal control over financial reporting during the period - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025, other than the described remediation measures[246] PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is not currently a party to any legal proceedings that would individually or in aggregate have a material adverse effect on its operations, cash flows, or financial position - The Company is not currently involved in any legal proceedings that would have a material adverse effect on its results of operations, cash flows, or financial position[135] Item 1A. Risk Factors There were no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K, except for the Company's ongoing liquidity needs - No material changes to risk factors were disclosed, except for the Company's ongoing liquidity needs[249] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the Company's unregistered sales of equity securities during the six months ended June 30, 2025, including shares issued to a former CEO and under an equity purchase agreement, all in reliance on Section 4(a)(2) of the Securities Act Unregistered Sales of Equity Securities This section details the company's sales of equity securities that were not registered under the Securities Act - On June 26, 2025, the Company issued 750,000 shares of restricted common stock to former CEO Timothy Canning as a sign-on bonus, vesting on December 26, 2025[251] - As of June 30, 2025, 1,155,030 shares of common stock were issued under the Hudson EPA, generating net proceeds of $1,149,417[251] - These issuances were unregistered, relying on the exemption from registration provided by Section 4(a)(2) of the Securities Act, offered to a limited number of persons with pre-existing relationships[252] Repurchases This section reports on any repurchases of the company's equity securities during the period - The Company did not repurchase any equity securities during the period[253] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the quarter ended June 30, 2025 - There were no defaults upon senior securities during the quarter ended June 30, 2025[254] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[255] Item 5. Other Information During the quarter ended June 30, 2025, no directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted, modified, or terminated a 'Rule 10b5-1 trading arrangement' or a 'non-Rule 10b5-1 trading arrangement' during the quarter ended June 30, 2025[256] Item 6. Exhibits This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including merger agreements, equity purchase agreements, loan agreements, and certifications - Key exhibits include the Agreement and Plan of Merger dated April 8, 2025, the Eighth Amendment to Membership Interest Purchase Agreement dated July 24, 2025, and the Equity Purchase Agreement with Hudson Global Ventures, LLC[258] - Also included are various loan and security agreements, and certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[258] Signatures The Quarterly Report was duly signed on behalf of Wellgistics Health, Inc. by Mark DiSiena, Chief Financial Officer, on August 19, 2025 - The report was signed by Mark DiSiena, Chief Financial Officer (Principal Financial Officer and Accounting Officer) on August 19, 2025[261]