Note 2. LIQUIDITY AND GOING CONCERN

For the three and six months ended June 30, 2026, the Company had a net loss of $18,363,225 and $26,105,822, respectively, and had an accumulated deficit of $137,137,512 as of June 30, 2026. As of June 30, 2026, the Company had cash and cash equivalents of $2,456,373 and net cash used in operating activities of $6,307,328 for the six months then ended. In addition, the Company had a stockholders’ deficit of $19,504,231 as of June 30, 2026. These factors raise substantial doubt about the Company’s ability to continue as a going concern within twelve months from the date these unaudited condensed consolidated financial statements are issued.

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 $1.00 per share. On June 9, 2026, Nasdaq notified the Company that it had regained compliance with this requirement following the reverse stock split described below, and the matter was closed.

On April 13, 2026, the Company received a further notice from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires a minimum stockholders’ equity of $2.5 million. The Company was afforded 45 calendar days from the date of the notice, or until May 28, 2026, to submit a plan to regain compliance. The Company timely submitted such a plan. On June 9, 2026, Nasdaq granted the Company an extension until October 12, 2026 to evidence compliance with the stockholders’ equity requirement, either by furnishing a public report following completion of a transaction or event that satisfies the requirement, or by furnishing a public report including a pro forma balance sheet evidencing compliance. If the Company does not evidence compliance by the time it files its Annual Report on Form 10-K for the year ending December 31, 2026, the Company’s common stock may be subject to delisting from the Nasdaq Capital Market.

Management Plans

Management is actively pursuing multiple initiatives to address the Company’s liquidity position and going concern uncertainty:

On January 20, 2026, the Company issued secured convertible promissory notes to a group of investors in an aggregate principal amount of $8,125,000, reflecting a 20% original issue discount on net proceeds of $6,500,000. At closing, $2,070,000 of the proceeds was applied directly to repay in full the Company’s outstanding obligations to Agile Capital Funding LLC. As described below, these notes were subsequently extinguished and replaced in May 2026.

On April 1, 2026, the Company issued an additional convertible promissory note in the principal amount of $1,500,000, reflecting a 20% original issue discount on net proceeds of $1,200,000. This note was also subsequently extinguished and replaced in May 2026, as described below.

On May 20, 2026, the Company filed a Certificate of Amendment to effect a reverse stock split of its common stock at a ratio of 1-for-50, which had been approved by stockholders on April 2, 2026 at a ratio to be determined by the Board of Directors within a range of 1-for-25 to 1-for-200. The reverse stock split became effective on May 26, 2026.

On May 20, 2026, the Company entered into a Letter of Intent (the “Term Sheet”) with EOS Technology Holdings, Inc., Scilex Holding Company, Datavault AI, Inc., HealthBridge Advisors, LLC, and Fortitude Advisors, LLC with respect to a proposed transaction, as further described in Note 10. In connection with the proposed transaction, the Term Sheet contemplates a concurrent minimum investment of $2,000,000 from investors associated with the Company’s placement agent, the filing of an at-the-market offering facility, and additional financing support for the Company. The proposed transaction remains subject to negotiation and execution of definitive agreements, stockholder and other approvals, and other customary closing conditions, and there can be no assurance that any of the contemplated financing will be obtained.

On May 27, 2026, the Company entered into a new Note Purchase Agreement with substantially the same group of investors that held the notes issued in January and April 2026, together with certain additional investors. Pursuant to this agreement, the previously outstanding notes were extinguished and replaced with new convertible promissory notes in an aggregate principal amount comprised of $9,625,000 rolled over from the previously outstanding notes and $6,500,000 of new money from investors, before giving effect to the original issue discount. Additionally, $133,985 of the placement agent’s fee payable to Dawson James Securities, Inc. in connection with this financing was settled through the issuance of a note in lieu of cash, bringing the aggregate principal amount of notes issued to $20,323,732. In connection with this refinancing, the Company recognized a loss on extinguishment of debt of $8,378,189 for the three and six months ended June 30, 2026.

Wellgistics, LLC Distribution Business

Product revenue from distribution services declined significantly during the six months ended June 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, as described under “Results of Operations” in Item 2 of this Quarterly Report. Management has evaluated this decline and believes the Company has sufficient 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 June 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.