Wellgistics Health, Inc. Income Taxes Disclosure

NOTE 14. INCOME TAXES

 

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes, and the enhanced disclosure requirements of ASU 2023-09, Income Taxes (Topic 740) — Improvements to Income Tax Disclosures, adopted for the fiscal year ended December 31, 2025. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

 

 

Components of Income Tax Expense

 

The Company’s operations are entirely domestic. For the years ended December 31, 2025 and 2024, the provision for income taxes was $0 as the Company incurred net losses in both periods and maintains a full valuation allowance against its net deferred tax assets.

 

SCHEDULE OF PROVISION FOR INCOME TAXES 

			2025				2024
			December 31,
			2025				2024
Current :
Federal		$	-			$	-
State and local			-				-
Total current			-				-
Deferred:
Federal			-				-
State and local			-				-
Total deferred			-				-
Total provision for income taxes		$	-			$	-

 

Effective Tax Rate Reconciliation

 

The following table presents a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate in accordance with ASU 2023-09:

 

SCHEDULE OF RECONCILIATION OF INCOME TAX EXPENSE 

		December 31,								December 31,
		2025				2025(%)				2024				2024(%)
Pre-tax loss		$	(101,274,530	)			100	%		$	(6,856,226	)			100	%
Tax benefit at statutory federal rate			(21,263,006	)			-21	%			(1,439,807	)			-21	%
State and local income taxes - federal			(5,568,882	)			-5.5	%			(377,092	)			-5.5	%
Non-deductible impairment charges			3,326,880				3.3	%			-				0	%
Non-deductible loss on debt extinguishment			791,799				0.8	%			-				0	%
Change in valuation allowance			22,719,071				22.4	%			1,816,900				26.5	%
Effective income tax rate		$	-				0	%		$	-				0	%

 

Deferred Tax Assets and Liabilities

 

SCHEDULE OF DEFERRED TAX ASSETS

		2025				2024
Deferred tax assets:
Net operating loss carry forwards		$	25,304,718			$	2,585,647
Accrued exp and other liabilities			1,331,849				946,190
Capitalized software			488,563				428,775
Total gross deferred tax assets			27,125,130				3,960,612
Deferred tax liabilities:
None			-				-
Total gross deferred tax liabilities			-				-
Net deferred tax asset before valuation allowance			27,119,268				3,960,612
Less : Valuation allowance			(27,125,130	)			(3,960,612	)
Net deferred tax asset		$	-			$	-

 

 

Net Operating Loss Carryforwards

 

As of December 31, 2025, the Company had estimated federal and state net operating loss carryforwards of approximately $85 million. These losses were generated in tax years ending after December 31, 2017 and carry forward indefinitely pursuant to the Tax Cuts and Jobs Act of 2017, subject to an annual utilization limitation of 80% of taxable income.

 

SCHEDULE OF NET OPERATING LOSS CARRYFORWARDS 

Tax Year		Book Loss				Permanent difference				Est. Tax NOL				Expiration
2022		$	5,250			$	-			$	5,250			Indefinite
2023			2,895,684				-				2,895,684			Indefinite
2024			6,856,226				-				6,856,226			Indefinite
2025			101,274,530				15,542,188				85,732,342			Indefinite
Total		$	111,031,690			$	15,542,188			$	95,489,502

 

Valuation Allowance

 

The Company has established a full valuation allowance against its net deferred tax assets as of December 31, 2025 and 2024, as management has determined that it is more likely than not that the net deferred tax assets will not be realized based on the Company’s history of operating losses and current financial position. The valuation allowance increased by $23,164,519 during the year ended December 31, 2025, primarily reflecting the increase in net operating loss carryforwards, impairment-related temporary differences, and accrued expenses arising during the period.

 

SCHEDULE OF NET DEFERRED TAX ASSETS 

		2025				2024
Balance, beginning of year		$	3,960,612			$	-
Increase:
Current year NOL generated			22,719,071				2,585,647
Accrued expenses and other current liabilities			385,660				946,190
Capitalized software			59,788				428,775
Balance, end of year		$	27,125,130			$	3,960,612

 

The Company has evaluated its tax positions in accordance with ASC 740-10 and has determined that there are no material unrecognized tax benefits as of December 31, 2025 and 2024.

 

In accordance with ASU 2023-09, the Company discloses that no income taxes were paid at the federal or state level during the years ended December 31, 2025 and 2024.