Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Wellgistics Health, Inc. (the “Company,” “we,” “us,” or “our”) is a Delaware corporation headquartered in Tampa, Florida. The Company was initially organized as Ayan Sponsors LLC on September 6, 2022, and subsequently incorporated as Danam Health, Inc. on November 15, 2022. On October 4, 2024, the Company changed its corporate name to Wellgistics Health, Inc. by filing a duly authorized Certificate of Amendment to its Certificate of Incorporation.

The Company operates as a holding company with Wood Sage LLC (“Wood Sage”) as a directly held intermediate holding company subsidiary, Wellgistics Tech & Hub, LLC and Wellgistics Pharmacy, LLC as indirect operating subsidiaries, and Wellgistics, LLC as a direct operating subsidiary.

In June 2024, the Company closed on the acquisition of Wood Sage (the “Wood Sage Acquisition”), acquiring two operating subsidiaries: Wellgistics Tech & Hub, LLC (f/k/a Alliance Pharma Solutions LLC d/b/a DelivMeds), a pharmaceutical technology hub, and Wellgistics Pharmacy, LLC (f/k/a Community Specialty Pharmacy, LLC), a retail community specialty pharmacy. On August 30, 2024, the Company closed on the acquisition of Wellgistics, LLC (the “Wellgistics Acquisition”), a wholesale pharmaceutical distributor serving a network of independent pharmacies.

Summary of Significant Accounting Policies

A description of the Company’s significant accounting policies and other financial information is included in the Company’s audited consolidated financial statements filed on March 20, 2026, with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”). These policies have been applied consistently in these unaudited condensed consolidated interim financial statements.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of March 31, 2025 and for the three months then ended.

The accompanying unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2025 included in the Form 10-K filed with the SEC on March 20, 2026.

Basis of Presentation and Principles of Consolidation

The Company’s fiscal year ends on December 31.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.GAAP”) in all material respects and have been consistently applied in preparing the accompanying unaudited condensed consolidated financial statements.

The condensed consolidated financial statements include the consolidated financial statements of Wood Sage since the acquisition on June 16, 2024 and financial statements of Wellgistics, LLC since the acquisition on August 30, 2024. All inter-company balances and transactions are eliminated on consolidation.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Descriptions of significant accounting policies are included in the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. Actual results could differ from those estimates.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. For the three months ended March 31, 2026 and 2025, there was no difference between net loss and comprehensive loss.

Segment Reporting

In accordance with Accounting Standards Codification (“ASC”) 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. ASC 280 establishes standards for companies to report financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker (“CODM”), or group, in deciding how to allocate resources and assess performance.

The CODM has been identified as the Chief Executive Officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has one operating and reportable segment.

The key measures of segment profit or loss reviewed by our CODM are revenue and operating costs. These metrics are reviewed and monitored by the CODM to manage and forecast cash. The CODM also reviews operating costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget.

See Note 12 for further details.

Concentration of Credit Risks, Major Customers and Vendors

Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and receivables. The Company places its cash and cash equivalents with financial institutions. Deposits are insured to Federal Deposit Insurance Corp limits.

For the three months ended March 31, 2026, no single customer accounted for more than 10% of the Company’s total revenues. For the three months ended March 31, 2025, one customer accounted for approximately 24.6% of total revenues.

As of March 31, 2026, two customers accounted for approximately 25.4% and 11.1%, respectively, of gross accounts receivable. As of March 31, 2025, two customers accounted for approximately 20.2% and 13.0%, respectively, of gross accounts receivable.

The Company’s revenues and accounts receivable are subject to concentration risk due to its reliance on a limited number of significant customers. The loss of any one of these customers, or a material reduction in their purchase volumes, could have a material adverse effect on the Company’s business, financial condition, and results of operations. Management continues to actively pursue opportunities to broaden and diversify the Company’s customer base in order to reduce its exposure to this concentration risk.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The financial and nonfinancial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The hierarchy is presented down into three levels based on the reliability of the inputs.

The carrying amounts of cash, accounts receivable, deposits, accounts payable, accrued liabilities and short-term debt approximate their fair value because of the short-term nature of these instruments. The carrying amount of long-term debt approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar maturities.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are recorded at the net invoiced amount, net of allowance for credit losses, and do not bear interest. Expected credit losses include losses expected based on known credit issues with specific customers as well as a general expected credit loss allowance based on relevant information, including historical loss rates, current conditions, and reasonable economic forecasts that affect collectability. The Company reserves for any accounts receivable balances that are determined to be uncollectible in the allowance for credit losses. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance.

The Company uses a loss rate method to estimate its allowance for credit losses. The determination of the current expected credit loss rate begins with our review of historical loss experience as a percentage of accounts receivable. To determine the current allowance for credit losses, we combine the historical and expected credit loss rates and apply them to our period end accounts receivable.

The Company provides for a 95% - 100% loss rate of the accounts receivable which are due over the period of 90 days. For the three months ended March 31, 2026 and 2025, the Company recognized a provision for credit losses of $93,698 and $76,154, respectively, within general and administrative expenses.

Inventories, Net

Inventories are stated at the lower of cost and net realizable value. Cost is determined on a first in first out (“FIFO”) basis. Cost of inventory is determined as the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. On a quarterly basis, we evaluate inventory for net realizable value using estimates based on historical experience, current or projected pricing trends, specific categories of inventory, age and expiration dates of on-hand inventory and manufacturer return policies. If actual conditions are less favorable than our assumptions, additional inventory write-downs may be required, and no reserve is maintained as obsolete or expired inventories are written off and are presented in cost of net revenues in the accompanying consolidated statements of operations and comprehensive loss. We believe that the inventory valuation provides a reasonable approximation of the current value of inventory.

Capitalized Software

The Company complies with the guidance of ASC 350-40, “Intangibles—Goodwill and Other—Internal Use Software”, in accounting for our internally developed system projects that it utilizes to provide our services to customers. These system projects generally relate to software of the Company that is not intended for sale or otherwise marketed. Internal and external costs incurred during the preliminary project stage are expensed as they are incurred. Once a project has reached the development stage, the Company capitalizes direct internal and external costs until the software is substantially complete and ready for our intended use. Costs for upgrades and enhancements are capitalized, whereas costs incurred for maintenance are expensed as incurred. These capitalized software costs are amortized on a project-by-project basis over the expected economic life of the underlying software on a straight-line basis, which is generally three to five years. Amortization commences when the software is available for our intended use.

As of March 31, 2026 and December 31, 2025, the Company capitalized $2,704,641 and $2,499,553, respectively, in software development pertaining to the Delivmeds platform via its DelivMeds subsidiary.

The platform has not yet been placed in service and accordingly, amortization has not commenced.

Property, Plant and Equipment, Net

Property, plant and equipment, net (“PP&E”) is stated at cost less accumulated depreciation and amortization and any accumulated impairment losses. Depreciation and amortization are computed using the straight-line method over the assets’ estimated useful lives. The estimated useful lives of PP&E are as follows:

Equipment – 5 – 10 years

Furniture and Fixtures – 7 years

Software – 3 – 5 years

Leasehold improvements – Shorter of the estimate useful life or remaining lease term

Major renewals and improvements are capitalized. Replacements, maintenance, and repairs, which do not significantly improve or extend the useful life of the assets, are expensed when incurred.

Upon the sale or retirement of assets, costs and the related accumulated depreciation and amortization are removed from the accounts and any gain or loss is included in the results of operations.

The Company evaluates its long-lived assets or asset groups for indicators of possible impairment by determining whether there were any triggering events that could impact the Company’s assets. If events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable the Company performs a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by such asset or asset group. Should an impairment exist, the impairment loss is measured based on the excess carrying value of the asset over the asset’s fair value generally determined by estimates of future discounted cash flows.

The Company has not identified any such impairment losses for the three months ended March 31, 2026 and 2025.

Goodwill

Goodwill represents the excess of the cost over the fair market value of net assets acquired in business combinations. In accordance with Intangibles – Goodwill and Other (Topic 350), goodwill is not amortized but is tested for impairment at least annually, or more frequently if indicators of potential impairment exist. Goodwill is tested for impairment at the reporting unit level. The Company’s reporting units have discrete financial information available, and management regularly reviews the operating results. For purposes of impairment testing, goodwill is allocated to the applicable reporting units based on the Company’s reporting structure.

The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors assessed for each of the applicable reporting units include, but are not limited to, changes in macroeconomic conditions, industry and market considerations, cost factors, discount rates, competitive environments, and financial performance of the reporting units. If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, a quantitative test is required.

Alternatively, the Company may proceed directly to the quantitative test. Under the quantitative test, the estimated fair value of each reporting unit is compared to its carrying value, including goodwill. If the carrying value of the reporting unit, including goodwill, exceeds its fair value, an impairment charge equal to the excess is recognized, up to the maximum amount of goodwill allocated to that reporting unit.

No goodwill impairment was identified during the three months ended March 31, 2026 and 2025.

Impairment of Long-Lived Assets

The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets.

The Company evaluates its intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. In accordance with ASC 350, “Intangibles—Goodwill and Other,” intangible assets with finite lives, such as trademarks and customer relationships, are amortized over their estimated useful lives. The Company compares the carrying value of the intangible asset to its fair value, which is determined based on projected future cash flows. If the carrying value of the asset exceeds its fair value, an impairment loss is recognized, and the asset is written down to its fair value.

No impairment of long-lived assets was identified during the three months ended March 31, 2026 and 2025.

Leases

The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred.

In calculating the right of use asset and lease liability, the Company has elected not to combine lease and non-lease components. The non-lease components are accounted for separately and recognized as expenses when incurred. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.

Revenue Recognition

The Company recognizes revenue from contracts with customers under ASC 606, Revenue from Contracts with Customers (“ASC 606”).

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract was determined to be within the scope of ASC 606, the Company assessed the goods or services promised within each contract and determined those that were performance obligations, and assessed whether each promised good or service was distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. The Company recognizes revenue at the point of sale. The majority of orders are placed via the Company’s website. Customers generally pay by credit card at the time they place their order. The Company does have larger customers to whom they have extended terms for payment. Generally, payments from these customers are due within 30 days of their order being shipped. However, a few customers have been given terms extending out to 45 days.

Distribution

Wellgistics, LLC provides distribution and third party logistics services to both pharmaceutical manufacturers and independent retail pharmacies. The Company recognizes revenue when goods are delivered to the customer. The gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, rebates, sales allowances and sales returns. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are considered when estimating the impact of these revenue deductions on gross sales for a reporting period. All revenue for the Company is recognized at the point-in-time when delivered to customer based on contractual obligations. Any amount collected from customers for goods not yet delivered is recorded as a contract liability.

Pharmacy

The Company is in the retail pharmacy business. and fills prescriptions for drugs written by a doctor and recognizes revenue at the time the patient confirms delivery of the prescription. Customer returns are not material. The following are the steps taken to recognize revenue.

Step One: Identify the contract with the customer — The prescription is written by a doctor for a customer and delivered to the Company. The prescription identifies the performance obligations in the contract. The Company fills the prescription and delivers to the Customer the prescription, fulfilling the contract. The collection is probable because there is confirmation that the customer has insurance for the reimbursement to the Company prior to filling of the prescription.

Step Two: Identify the performance obligations in the contract — Each prescription is distinct to the Customer.

Step Three: Determine the transaction price — The consideration is not variable. The transaction price is determined to be the price of the prescription at the time of delivery which considers the expected reimbursements from third party payors (e.g., pharmacy benefit managers, insurance companies and government agencies).

Step Four: Allocate the transaction price — The price of the prescription invoiced represents the expected amount of reimbursement from third party payors. There is no difference between contract price and “stand-alone selling price”.

Step Five: Recognize revenue when or as the entity satisfies a performance obligation — Revenue is recognized upon the delivery of the prescription.

Disaggregation of Revenue

The following is a summary of the disaggregation of revenue for the three months ended March 31, 2026 and 2025:

 SCHEDULE OF DISAGGREGATION OF REVENUE

All revenue for the three months ended March 31, 2026, and 2025, were within the United States.

Contract Assets and Liabilities

Contract assets would include costs and services incurred on contracts with open performance obligations. These amounts would be included in contract assets on the consolidated balance sheets. Contract liabilities include payment received for incomplete performance obligations and are included in Unearned revenue on the unaudited condensed consolidated balance sheets

At March 31, 2026, and December 31, 2025, the Company had unearned revenue of $26,000 and $488,229, respectively, included in accrued expenses and other current liabilities.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. The Company measures all stock-based awards granted to employees, directors and non-employee consultants based on the fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. For awards with service-based vesting conditions, the Company records the expense for using the straight-line method. For awards with performance-based vesting conditions, the Company records the expense if and when the Company concludes that it is probable that the performance condition will be achieved.

The Company classifies stock-based compensation expenses in its statement of operations in the same manner in which the award recipient’s costs are classified. See Note 9 for further details.

Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share reflects the weighted-average number of common shares outstanding adjusted for the effect of potentially dilutive securities. For periods in which a net loss is reported, all potentially dilutive securities are excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive. Accordingly, basic and diluted net loss per share are the same for the three months ended March 31, 2026 and 2025.

The following potentially dilutive securities were excluded from the computation of diluted net loss per share for the three months ended March 31, 2026 and 2025:

 SCHEDULE OF POTENTIALLY DILUTIVE ITEMS OUTSTANDING