Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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.

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.

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.

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.

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.

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.

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	)

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.

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.

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.

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.

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.

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.