UNITED STATES
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WASHINGTON, D.C. 20549
FORM
(Mark One)
For the Quarterly Period Ended
OR
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| 33634 | ||
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Scienture Holdings, Inc. formerly TRxADE HEALTH, INC.
FORM 10-Q
For the Quarter Ended September 30, 2025
TABLE OF CONTENTS
| 2 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”), including without limitation, the section of this Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements, within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, regarding future events and the future results of Scienture Holdings, Inc. (f/k/a TRxADE Health, Inc.) (the “Company”) that are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the management of the Company. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. These factors include, but are not limited to:
| ● | Our limited amount of cash; | |
| ● | The negative effect on our business and our ability to raise capital that is created by the fact that there is a substantial doubt about our ability to continue as a going concern; | |
| ● | Our limited revenue generating operations, and risks of our operations not being profitable; | |
| ● | Claims relating to alleged violations of intellectual property rights of others; | |
| ● | Cybersecurity risks; | |
| ● | Risks relating to implementing our acquisition strategies, and, risks related to our ability to integrate the business operations of businesses that we acquire from time to time; | |
| ● | Negative effects on our operations associated with the opioid pain medication health crisis; | |
| ● | Regulatory and licensing requirement risks; | |
| ● | Risks related to changes in the U.S. healthcare environment; | |
| ● | The status of our information systems, facilities and distribution networks; | |
| ● | Risks associated with the operations of our more established competitors; | |
| ● | Healthcare fraud; | |
| ● | Inflation, interest rate volatility, governmental responses thereto and macro economic concerns, including our ability to respond to such concerns; | |
| ● | Changes in laws relating to our operations; | |
| ● | Privacy laws; | |
| ● | System errors; | |
| ● | Dependence on current management; | |
| ● | Our growth strategy and ability to effectively manage our growth; | |
| ● | Our ability to maintain compliance with the continued listing standards of Nasdaq and for our common stock to remain listed on Nasdaq; and | |
| ● | Other factors discussed in this Report and our Annual Form 10-K for the year ended December 31, 2024. |
While forward-looking statements reflect our good faith beliefs, assumptions and expectations, they are not guarantees of future performance. The forward-looking statements speak only as of the date of this Report on Form 10-Q. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Moreover, because we operate in a very competitive and rapidly changing environment, new risk factors are likely to emerge from time to time. We caution investors not to place undue reliance on these forward-looking statements and urge you to carefully review the disclosures we make concerning risks in this Report and in our Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission (“SEC”). Readers of this Report should also read our other periodic filings made with the SEC and other publicly filed documents for further discussion regarding such factors.
| 3 |
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Scienture Holdings, Inc. formerly TRxADE HEALTH, INC.
Condensed Consolidated Balance Sheets
As of September 30, 2025 and December 31, 2024
(Unaudited)
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Notes receivable - related party | ||||||||
| Other receivables | ||||||||
| Deferred offering costs | ||||||||
| Current assets of discontinued operations | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Deposits | ||||||||
| Notes receivable | ||||||||
| Interest receivable | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Operating lease right-of-use assets | ||||||||
| Deferred tax asset | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Other current liabilities | ||||||||
| Loan payable, related party | ||||||||
| Convertible note, net of debt discount - current portion | ||||||||
| Operating lease liability - current | ||||||||
| Warrant liability | ||||||||
| Current liabilities of discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Convertible notes, net of debt discount | ||||||||
| Derivative liability | ||||||||
| Operating lease liability - net of current portion | ||||||||
| Development agreement liability | ||||||||
| Deferred tax liability | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 15) | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Series A preferred stock, $ par value; and shares authorized; shares issued and outstanding as of both September 30, 2025 and December 31, 2024 | ||||||||
| Series B preferred stock, $ par value; shares authorized; shares issued and outstanding as of both September 30, 2025 and December 31, 2024 | ||||||||
| Series C preferred stock, $ par value; shares authorized; shares issued and outstanding as of both September 30, 2025 and December 31, 2024 | ||||||||
| Series X preferred stock, $ par value; shares authorized; shares issued and outstanding as of both September 30, 2025 and December 31, 2024 | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 4 |
Scienture Holdings, Inc. formerly TRxADE HEALTH, INC.
Condensed Consolidated Statements Of Operations
For the Three and Nine Months Ended September 30, 2025 and 2024
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Wage and salary expense | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Accounting and legal expense | ||||||||||||||||
| Technology expense | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Research and development | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non-operating income (expense): | ||||||||||||||||
| Change in fair value of warrant liability | ( | ) | ||||||||||||||
| Change in fair value of derivative liability | ||||||||||||||||
| Loss on conversion of note payable | ( | ) | ||||||||||||||
| Loss on disposition of subsidiaries | ( | ) | ||||||||||||||
| Interest income | ||||||||||||||||
| Loss on disposal of asset | ( | ) | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total non-operating expense | ( | ) | ( | ) | ||||||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Benefit / (provision) for income taxes | ||||||||||||||||
| Net loss from continuing operations, net of tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income from discontinued operations, net of tax | ||||||||||||||||
| Net (loss) income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Net loss per common share from continuing operations | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net (loss) income per common share from discontinued operations | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
| Net (loss) income per common share | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 5 |
Scienture Holdings, Inc. formerly TRxADE HEALTH, INC.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
| Series B | Series C | Series X | Common | Additional | Total | |||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Stock | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||||||||||||||
| Balances at December 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Options exercised for common shares | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Warrants exercised for cash | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Options expense | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Cash dividends paid ($ per share) | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2024 | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Options expense | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balances at June 30, 2024 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Cash dividends paid ($ per share) | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Conversion of Series C preferred stock into common stock | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Issuance of shares pursuant to Merger | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Conversion of Series X preferred stock into common stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Warrants issued with convertible note | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Warrants exercised for shares | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Options expense | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balances at September 30, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||
| Balances at December 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Common stock issued for cash pursuant to ELOC agreement, net of offering costs | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Equity line of commitment shares issued | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Conversion of note payable into common stock | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Options expense | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2025 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Equity line of commitment shares issued | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Options expense | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balances at June 30, 2025 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Common stock issued for cash, net of offering costs | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Cancellation of stock options and issuance of common stock | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Warrants exercised for shares | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Options expense | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balances at September 30, 2025 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements
| 6 |
Scienture Holdings, Inc. formerly TRxADE HEALTH, INC.
Condensed Consolidated Statements of Cash Flows
For The Nine Months Ended September 30, 2025 and 2024
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | ||||||||
| Change in fair value of warrant liability | ( | ) | ||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Loss on conversion of note payable | ||||||||
| Loss on disposition of subsidiaries | ||||||||
| Stock-based compensation | ||||||||
| Common stock issued for services | ||||||||
| Amortization of debt discount | ||||||||
| Amortization of right-of-use assets | ||||||||
| Interest income | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | ( | ) | ( | ) | ||||
| Prepaid expenses and deposits | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ( | ) | ||||
| Other receivables | ( | ) | ( | ) | ||||
| Lease liability | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Accrued liabilities | ( | ) | ( | ) | ||||
| Current liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities from continuing operations | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities from discontinued operations | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Cash received in acquisition | ||||||||
| Acquisition of property and equipment | ( | ) | ||||||
| Investment in securities | ( | ) | ||||||
| Net cash used in investing activities from continuing operations | ( | ) | ||||||
| Net cash provided by investing activities from discontinued operations | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Repayment of contingent liability | ( | ) | ||||||
| Proceeds from loan payable, related party | ||||||||
| Proceeds from convertible note | ||||||||
| Repayment of convertible notes | ( | ) | ||||||
| Gross proceeds from issuance of common stock | ||||||||
| Cash dividends paid | ( | ) | ||||||
| Proceeds from exercise of warrants | ||||||||
| Proceeds from exercise of options | ||||||||
| Net cash provided by (used in) financing activities from continuing operations | ( | ) | ||||||
| Net cash used in financing activities from discontinued operations | ( | ) | ||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net change in cash | ||||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Issuance of shares pursuant to Merger | $ | $ | ||||||
| Assets acquired in connection with Merger | $ | $ | ||||||
| Liabilities assumed in connection with Merger | $ | $ | ||||||
| Insurance premium financed | $ | $ | ||||||
| Deferred offering costs | $ | $ | ||||||
| Warrants issued with convertible note | $ | $ | ||||||
| Conversion of note payable into common stock | $ | $ | ||||||
| Equity line of commitment shares issued as offering costs | $ | $ | ||||||
| Issuance of note receivable in exchange for other receivables | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 7 |
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Overview
On September 20, 2024, changed its legal name from “TRxADE HEALTH, Inc.” to “Scienture Holdings, Inc.” As of September 30, 2025, the Company owned all equity interests of Bonum Health, LLC and Scienture, LLC (f/k/a Scienture, Inc.) (“Scienture”). Scienture was acquired in July 2024.
Bonum Health, LLC was formed to hold certain telehealth assets acquired in October 2019. The “Bonum Health Hub” was launched in February 2020; however, the Company does not anticipate installations moving forward. On April 30, 2025, the Company completed the sale of Bonum Health, LLC in the near future.
Scienture a New York based branded, specialty pharmaceutical research company which is engaged in the research and development of branded pharmaceutical products. The intellectual property application process was initiated in November 2019 and the product development activities commenced in January 2020. Scienture also plans to foray into commercialization of innovative and branded pharmaceutical products in the US market. Scienture’s assets in development are across therapeutics areas and indications and cater to different market segments. Scienture’s mission is to identify, develop and bring to market innovative technology-based products to address unmet medical needs. Its targeted portfolio consists of short term and long-term opportunities with efficient development, regulatory, and go to market strategies.
Disposition of Legacy Subsidiaries
The Company previously owned all equity interests in Softell Inc. (f/k/a Trxade Inc.) (“Softell”), Softell’s wholly owned subsidiary, Integra Pharma Solutions, LLC (“IPS”), and Bonum Health, Inc. As described below, these subsidiaries were disposed of during the three months ending June 30, 2025.
On October 4, 2024, the Company
and Softell entered into an Assignment and Assumption of Membership Interests (the “IPS Assignment Agreement”),
pursuant to which the Company transferred, and Softell accepted,
Bonum Health, Inc. was formed to provide an overall healthcare experience comparable to a primary care practitioner, and an online portal as a personal electronic medical record and scheduling system was available on a subscription basis, primarily as a stand-alone telehealth software application that could be licensed on a business-to-business (B2B) model to clients as an employment health benefit for the clients’ employees.
On April 8, 2025, Softell entered into a Membership Interest Purchase Agreement (the “IPS MIPA”) with Tollo Health, LLC (“Tollo”), pursuant to which Tollo agreed to purchase and the Company agreed to sell all of the Company’s membership interests in IPS.
On April 8, 2025, the Company also entered into a Stock Purchase Agreement (the “Bonum and Softell SPA” and together with the IPS MIPA, the “Agreements) with Tollo, pursuant to which Tollo agreed to purchase and the Company agreed to sell all issued and outstanding shares of common stock of Bonum Health, Inc. and Softell. Suren Ajjarapu, the Company’s former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer, each had a beneficial interest in Tollo at the time the Company entered into the each of the Agreements.
In connection with each of the Agreements, the Company agreed to retain certain excluded liabilities of IPS, Softell and Bonum Health, Inc. including all liabilities: (i) related to, in connection with or arising out of any claims, charges, complaints, actions, suits, settlements, hearings, investigations, proceedings, or governmental or regulatory inquiries with respect to IPS, Softell or Bonum Health, Inc., respectively, prior to the closing under the applicable Agreement; (ii) related to, in connection with or arising out of any breach by the Company of the applicable Agreement or any other agreements and documents required to be delivered by the Company; (iii) not disclosed by the Company in accordance with each Agreement; (iv) related to any actions threatened or initiated by a governmental entity against IPS, Softell, or Bonum Health, Inc., respectively; and (v) related to tax returns or tax matters of the Company, IPS , Softell, or Bonum Health, Inc., respectively, for any periods prior to closing under the applicable Agreement.
As consideration for acquiring IPS, Softell, and Bonum Health, Inc., Tollo paid the Company $5 million, and delivered the consideration in the form of a promissory note bearing interest at the prime rate. The promissory note matures on June 30, 2030, and a balloon payment is due on or before that date. However, Tollo is required to pay 20% of the proceeds of a future equity financing toward repayment of the principal and accrued but unpaid interest owed under the promissory note. On June 24, 2025, the promissory note was assigned by Tollo to Integral Health, Inc., which (at the time of the assignment) was owned by Suren Ajjarapu, the Company’s former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer as of September 30, 2025.
On April 30, 2025, the Company
completed the sale of its subsidiaries, IPS, Softell and Bonum Health, Inc., to Tollo in exchange for the $
The divestitures are part of a broader strategic realignment at the Company designed to sharpen operational focus and unlock long-term value. It is aligned with the Company’s commitment to streamline its core operations, optimize its portfolio, and accelerate growth in the Branded and Specialty Pharma markets. The Company intends to use the proceeds obtained from the divestment to facilitate the high-growth commercial and strategic product development activities at its Scienture subsidiary.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules of the SEC and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 26, 2025.
| 8 |
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. All significant intercompany balances and transactions have been eliminated in consolidation. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the year ended December 31, 2024, as reported in the Company’s Annual Report on Form 10-K have been omitted.
Use of Estimates
The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from its estimates. Significant estimates for the nine months ended September 30, 2025 and 2024 include the valuation of intangible assets, including goodwill, and gain (losses) on dispositions.
Revision of Previously Issued Financial Statements for Correction of Immaterial Errors
During
the three months ended September 30, 2025, the Company identified and corrected an immaterial error impacting additional paid-in
capital, debt, and related other expense originally recorded in the first and second quarters of 2025. Specifically, $
Management assessed the materiality of the error on both a quantitative and qualitative basis, in accordance with SEC Staff Accounting Bulletin No. 99, Materiality, codified in ASC Topic 250, Accounting Changes and Error Corrections. Management concluded that the error and related impacts did not result in a material misstatement of the Company’s previously issued interim financial statements for the three months ended March 31, 2025, or the three and six months ended June 30, 2025.
Fair Value of Financial Instruments
Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
| ● | Level 1—Quoted prices in active markets for identical assets or liabilities. | |
| ● | Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. | |
| ● | Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. |
The carrying amounts for cash, accounts receivable, accounts payable, accrued liabilities, and other current liabilities approximate their fair value because of their short-term maturity. The Company’s notes payables approximate the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.
The Company’s derivative liability is a Level 3 liability measured at fair value on a recurring basis (see Note 8).
Concentration of Credit Risks and Major Customers
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 Corporation limits. During the
three and nine months ended September 30, 2025 and 2024, two customers accounted for
Accounts Receivable, net
Accounts receivable represent amounts due from wholesale distributors for the sale of pharmaceutical products. These receivables are recorded at the invoiced amount, net of estimated variable consideration including rebates, chargebacks, discounts, and other gross-to-net sales adjustments, consistent with the Company’s revenue recognition policy.
Payment terms are generally net 90 days from the date of invoice. The Company monitors the creditworthiness of its customers and evaluates the collectability of outstanding receivables on an ongoing basis. The Company estimates expected credit losses on trade receivables in accordance with ASC 326 using an allowance for credit losses (“ACL”). The ACL reflects management’s estimate of lifetime expected credit losses based on historical loss experience, current conditions, and reasonable and supportable forecasts. Trade receivables are pooled by similar risk characteristics. Balances are written off when deemed uncollectible, and recoveries are recorded when received. The Company monitors credit risk primarily through aging and customer-specific evaluations.
| 9 |
Inventory
Inventory is stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method and includes the purchase price, inbound freight, and other costs directly attributable to the acquisition of finished goods.
Inventories primarily consist of finished pharmaceutical products held for sale. The Company regularly evaluates inventory for obsolescence and slow-moving items and records a reserve, if necessary, to write down inventories to their estimated net realizable value. Factors considered in the valuation include current market conditions, historical sales trends, product expiration dates, and projected demand.
Inventory write-downs are recorded as a component of cost of goods sold and are not reversed if the market value of the inventory subsequently increases.
Deferred Offering Costs
The Company complies with
the requirements of Accounting Standards Codification (“ASC”) 340-10-S99-1 with regards to offering costs.
Prior to the completion of an offering, offering costs are capitalized. The deferred offering costs are charged to additional paid-in
capital or as a discount to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed. As
of September 30, 2025, the Company has capitalized $ in deferred offering costs. During the nine months ended September 30, 2025, $
Acquisitions
The Company accounts for acquisitions and investments in businesses as business combinations if the target meets the definition of a business and (a) the target is a variable interest entity and the Company is the target’s primary beneficiary, and therefore the Company must consolidate its financial statements, or (b) the Company acquires more than 50% of the voting interest of the target and it was not previously consolidated. The Company records business combinations using the acquisition method of accounting, which requires all the assets acquired and liabilities assumed to be recorded at fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of the net tangible and intangible assets acquired is recorded as goodwill.
The application of the acquisition method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration between assets that are depreciated and amortized from goodwill. The fair value assigned to tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Significant assumptions and estimates include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset, if applicable.
If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the Company’s financial statements may be exposed to potential impairment of the intangible assets and goodwill.
If the Company’s investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalizing transaction costs, and does not result in the recognition of goodwill.
On July 25, 2024, the Company
acquired intangible assets of $
Goodwill
Goodwill is an asset representing the excess 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 annually for impairment or on an interim basis when indicators of potential impairment exist. Goodwill is tested for impairment at the reporting unit level. The Company’s reporting units discrete financial information is available and management regularly reviews the operating results. For purposes of impairment testing, goodwill is allocated to the applicable reporting units based on the 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.
The Company also has the option to proceed directly to the quantitative test. Under the quantitative impairment 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 would be recognized, up to a maximum amount of goodwill allocated to that reporting unit. Management can resume the qualitative assessment in any subsequent period for any reporting unit.
As of September 30, 2025, management performed a qualitative impairment assessment of our reporting units, of which there were no indications that it was more likely than not that the fair value of our reporting units were less than their respective carrying values. As such, a quantitative goodwill test was not required, and no goodwill impairment was recognized during the three and nine months ended September 30, 2025 and 2024.
Intangible Assets
In connection with the Scienture acquisition, the Company identified product technologies assets. The product technologies represent a broad range of novel product candidates including new potential treatments for hypertension, migraine, pain and thrombosis and other related disorders. Each of the product technologies are in various phases of development and had not achieved regulatory approval as of the valuation date.
| 10 |
The product technologies
are 505(b)(2) products and represent modifications and new delivery methods of already approved drugs (rather than novel drug compounds/formulations/treatments
which require significant regulatory approvals and testing). These assets should be amortized over their expected remaining economic
life. The product technology assets will remain unamortized, subject to potential impairment testing, until the assets are placed in
service, which is when commercialization of the product commences. At that point, the assets will be amortized over their expected remaining
life (likely a period of
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. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
The Company did not record an impairment charge for the three and nine months ended September 30, 2025 and 2024.
Stock-Based Compensation
The Company accounts for stock-based compensation to employees in accordance with ASC 718, “Compensation-Stock Compensation.” ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. Stock option forfeitures are recognized at the date of employee termination. Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2018-07 for the accounting of share-based payments granted to non-employees for goods and services.
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 to combine lease and non-lease components. 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.
Research & Development Expenses
Research and development costs are expensed in the period incurred in accordance with ASC 730, “Research and Development.” These expenses consist of independent contractor costs, costs for outsourced analytical research and development activities, batch manufacturing cost and, advisory costs as a part of research, market research costs and other regulatory consulting costs.
Income (loss) Per Common Share
Basic net income per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted net income per common share is computed similar to basic net income per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The dilutive effect of the Company’s options and warrants is computed using the treasury stock method. As of September 30, 2025, we had outstanding warrants and stock options, each exercisable for shares of common stock, as well as shares of Series B Preferred Stock outstanding.
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net income on discontinued operations | ||||||||||||||||
| Net (loss) income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Denominator: | ||||||||||||||||
| Denominator for EPS – weighted average shares | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Net loss per common share from continuing operations | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net income per common share from discontinued operations | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
| Net (loss) income | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
Income Taxes
The Company’s provision for income taxes was $ for the three and nine months ended September 30, 2025 and 2024. The income tax provisions for these periods are based upon estimates of annual income (loss), annual permanent differences and statutory tax rates in the various jurisdictions in which the Company operates. For all periods presented, the Company utilized net operating loss carryforwards to offset the impact of any taxable income. The Company’s tax rate differs from the applicable statutory rates due primarily to the establishment of a valuation allowance, utilization of deferred and the effect of permanent differences and adjustments.
| 11 |
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, Income Statement — Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose in tabular format the nature of certain expenses that are included in specific income statement line items. The objective of the standard is to provide greater transparency into the types of costs incurred by an entity, particularly in areas such as cost of revenue and selling, general, and administrative expenses. The ASU requires disaggregation of relevant expense captions by natural classification, including amounts for inventory purchases, employee compensation, depreciation and intangible asset amortization. are also required to disclose total selling expenses and define what is included in that category.
The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The standard must be applied on a prospective basis, with retrospective application permitted as an option.
The Company is currently evaluating the impact of this standard on its disclosures and anticipates it will result in additional footnote disclosures, but does not expect the adoption to have a material impact on its consolidated financial position, results of operations, or cash flows.
Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.
NOTE 2 – GOING CONCERN
The accompanying interim consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update No. 2014-15, “Presentation of Financial Statements - Going Concern” (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued.
As of September 30, 2025,
the Company had an accumulated deficit of $
The Company will need to raise additional capital or secure debt funding to support on-going operations, and to fund the operations of any businesses or assets we acquire. The sources of this capital are expected to be the sale of equity and debt, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders. If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate future revenues, our financial position, and liquidity. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Unless management is able to obtain additional financing, it is unlikely that the Company will be able to meet its funding requirements during the next 12 months. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| 12 |
NOTE 3 – ACQUISITIONS AND DISPOSITIONS
Acquisitions
Scienture, Inc.
The Company evaluated the Agreement and Plan of Merger, dated July 25, 2024, by and among the Company, MEDS Merger Sub I, Inc., MEDS Merger Sub II, LLC, and Scienture (the “Scienture Merger Agreement”) pursuant to ASC 805 and ASU 2017-01, Topic 805, “Business Combinations.” The Company first determined that Scienture met the definition of a business as it includes inputs and a substantive process that together significantly contribute to the ability to create outputs. Scienture’s results of operations are included in the Company’s consolidated financial statements from the date of acquisition. The acquisition method of accounting requires, among other things, that the assets acquired and liabilities assumed in a business combination be measured at their estimated respective fair values as of the closing date of the acquisition. Goodwill recognized in connection with this transaction represents primarily the potential economic benefits that the Company believes may arise from the acquisition. The purchase price allocation is preliminary and could be significantly revised as a result of additional information obtained regarding assets acquired and liabilities assumed and revisions of estimates of fair values of tangible assets and related deferred tax assets and liabilities. The Company will finalize its valuation and the allocation of the purchase price, along with required retrospective adjustments, if any, within a year following the acquisition date.
On July 25, 2024, the parties
consummated the mergers contemplated by the Scienture Merger Agreement (together, the “Scienture Merger”) and the Company
issued shares of common stock and shares of Series X Preferred Stock at the closing. The aggregate fair value of the
purchase price consideration was $
The following summarizes the purchase price consideration and the preliminary purchase price allocation as of the acquisition date:
| July 25, 2024 | ||||
| Purchase consideration: | ||||
| Common stock | $ | |||
| Series X preferred stock | ||||
| Total purchase consideration | $ | |||
| Purchase price allocation: | ||||
| Cash | $ | |||
| Operating lease right-of-use assets | ||||
| Goodwill | ||||
| Intangible assets - product technologies | ||||
| Accounts payable | ( | ) | ||
| Accrued liabilities | ( | ) | ||
| Loan payable, related party | ( | ) | ||
| Lease liability | ( | ) | ||
| Development agreement liability | ( | ) | ||
| Long-term convertible notes | ( | ) | ||
| Deferred tax liability | ( | ) | ||
| Net assets acquired | $ | |||
Goodwill is primarily attributable to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible assets that do not qualify for separate recognition. The goodwill is not deductible for tax purposes.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information presents the Company’s financial results as if the Scienture Merger had occurred as of January 1, 2024. The unaudited pro forma financial information is not necessarily indicative of what the financial results actually would have been had the acquisitions been completed on this date. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project, the Company’s future financial results. The pro forma information does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisition:
| Three Months | Nine Months | |||||||
| Ended | Ended | |||||||
| September 30, | September 30, | |||||||
| 2024 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Net loss from continuing operations per share | $ | ( | ) | $ | ( | ) | ||
| 13 |
Dispositions and Divestitures
Refer to Note 1 for further detail on the disposition of the Company’s legacy subsidiaries.
MMS APA
On February 16, 2024, the
Company, together with Softell and Micro Merchant Systems, Inc. (“MMS”), entered into an asset purchase agreement
(the “MMS APA”) under which MMS agreed to purchase for cash substantially all of the assets of Softell. On
February 16, 2024, the parties consummated the closing of the transactions contemplated by the MMS APA. The purchase price paid at closing
was $
The MMS APA was accounted for a business disposition in accordance with ASC 810-40-40-3A. As of February 16, 2024, the Company no longer consolidated the assets, liabilities, revenues and expenses of Softell. The components of the disposition are as follows:
| Cash received from MMS | $ | |||
| Other receivable from MMS | ||||
| Total fair value of consideration received | $ | |||
| Carrying amount of assets and liabilities | ||||
| Cash | $ | |||
| Accounts receivable, net | ||||
| Prepaid expenses | ||||
| Property, plant and equipment, net | ||||
| Operating lease right-of-use assets | ||||
| Accounts payable | ( | ) | ||
| Accrued liabilities | ( | ) | ||
| Other current liabilities | ( | ) | ||
| Lease liability, current | ( | ) | ||
| Notes payable, current portion | ( | ) | ||
| Lease liability, net of current portion | ( | ) | ||
| Total carrying amount of assets and liabilities | ||||
| Gain on disposition of business | $ |
The gain on disposition of
business of $
Superlatus SPA
On March 5, 2024, the Company entered into a Stock Purchase Agreement with Superlatus Inc. (the “Superlatus SPA”). Pursuant to the Superlatus SPA, the Company sold all of the issued and outstanding stock of Superlatus Inc. to Superlatus Foods Inc. (the “Buyer”). The $ purchase price for the stock was delivered to the Company at the closing, which occurred simultaneously with the execution of the Superlatus SPA. As a result of the transaction, Superlatus Inc. ceased to be a subsidiary of the Company, and the rights and assets of Superlatus together with various liabilities and obligations that were specific to Superlatus Inc. became rights and obligations of the Buyer.
The transaction was accounted for a business disposition in accordance with ASC 810-40-40-3A. As of March 5, 2024, the Company no longer consolidated the assets, liabilities, revenues and expenses of Superlatus Inc. The components of the disposition are as follows:
| Fair value of consideration received | $ | |||
| Total fair value of consideration received | $ | |||
| Carrying amount of assets and liabilities | ||||
| Cash | $ | |||
| Property, plant and equipment, net | ||||
| Intangible assets, net | ||||
| Operating lease right-of-use assets | ||||
| Purchase price payable | ( | ) | ||
| Accounts payable | ( | ) | ||
| Accrued liabilities | ( | ) | ||
| Notes payable, current portion | ( | ) | ||
| Lease liability - current | ( | ) | ||
| Lease liability - net of current portion | ( | ) | ||
| Notes payable | ( | ) | ||
| Total carrying amount of assets and liabilities | ||||
| Loss on disposition of business | $ | ( | ) |
The loss of disposition of
business of $
Disposition of Legacy Subsidiaries
See Notes 1 and 4 for detailed discussion.
| 14 |
Discontinued Operations
In accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2025 and 2024. The results of the discontinued operations for the three and nine months ended September 30, 2025 and 2024 consist of the following:
| TRX | Bonum | Superlatus | Total | |||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||||||||||||||
| Gross profit (loss) | ||||||||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||
| Wage and salary expense | ||||||||||||||||||||||||||||||||
| Professional fees | ||||||||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||||||||||
| Operating income (loss) | ||||||||||||||||||||||||||||||||
| Net income on discontinued operations | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| TRX | Bonum | Superlatus | Total | |||||||||||||||||||||||||||||
| Nine Months Ended | Nine Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||
| Wage and salary expense | ||||||||||||||||||||||||||||||||
| Professional fees | ||||||||||||||||||||||||||||||||
| Technology expense | ||||||||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||||||||||
| Operating income | ( | ) | ||||||||||||||||||||||||||||||
| Non-operating income (expense): | ||||||||||||||||||||||||||||||||
| Gain on dispositions | ( | ) | ||||||||||||||||||||||||||||||
| Total non-operating income (expense) | ( | ) | ||||||||||||||||||||||||||||||
| Net income on discontinued operations | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
In the second quarter of 2024, the Company determined to dissolve Bonum Health, Inc. and Bonum Health, LLC, and have presented the results of operations in net income (loss) from discontinued operations.
| 15 |
NOTE 4- RELATED PARTY TRANSACTIONS
Wellgistics Health and Tollo Health
On November 21, 2023, but
effective September 14, 2023, the Company issued a promissory note (the “Wellgistics Note”) to Wellgistics
Health, Inc. (f/k/a Danam Health Inc.) (“Wellgistics”) in the amount of $
As of March 31, 2025, other
receivables included a $
On April 30, 2025, the Company
completed the sale of its subsidiaries, IPS, Softell, and Bonum Health, Inc. to Tollo in exchange for a $
See Note 6 for detail on the note receivable from Wood Sage, LLC.
Suren Ajjarapu, the Company’s former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer, each had a beneficial interest in Tollo as of June 30, 2025. In August 2025, Integral Health, including its subsidiary IPS, were acquired by third parties. Therefore, at September 30, 2025, Integral Health and Tollo was no longer considered a related party.
Scienture
In July 2024, the executives
of Scienture issued short-term loans to Scienture for an aggregate amount of $
In November 2024, an
executive of Scienture issued a short-term loan to Scienture for $
In February 2025, an
executive of Scienture issued a short-term loan to Scienture for $
In February 2025, an
executive of Scienture issued a short-term loan to Scienture for $
NOTE 5 – REVENUE RECOGNITION
The Company derives revenue from one primary source—product revenue. Product revenue consists of pharmaceutical products sold via wholesale distribution channels. The Company recognizes revenue when control of the pharmaceutical products is transferred to wholesale distributors, which generally occurs upon delivery to the customer. Revenue is measured based on the transaction price specified in the contract, net of estimated gross-to-net adjustments, including rebates, chargebacks, discounts, and other sales allowances.
These estimates are based on historical experience, current contractual terms, and other relevant factors, and are updated at each reporting period to reflect changes in circumstances. Any adjustments to these estimates are recognized in the period in which such changes become known.
Revenues for the three months
ended June 30, 2025 and 2024 were $
NOTE 6 – NOTES RECEIVABLE – RELATED PARTY
On August 22, 2023, the Company
received a Promissory Note (the “Wood Sage Note”) in the amount of $
On April 30, 2025, the Company
completed the sale of its subsidiaries, IPS, Softell and Bonum Health, Inc., to Tollo in exchange for a $
| 16 |
NOTE 7 – GOODWILL AND INTANGIBLE ASSETS
In connection with the Scienture
Merger on July 25, 2024, the Company recorded goodwill of $
The purchase price allocation of intangible assets was evaluated under ASC 805. The identified intangible assets were determined to be product technologies, and were valued accordingly by each product candidate:
| Product Candidate | Fair Value | |||
| SCN-102(a) | $ | |||
| SCN-104(b) | ||||
| SCN-106(c) | ||||
| SCN-107(d) | ||||
| $ | ||||
| (a) | ||
| (b) | ||
| (c) | ||
| (d) |
The fair value of the product
technologies was determined by the Income Approach: Multi-Period Excess Earnings Methods (“MPEEM”). The MPEEM
measures economic benefits by calculating the cash flows attributable to an asset after deducting appropriate returns for contributory
assets used by the business in generating the asset’s revenue and earnings. The MPEEM utilized revenue and cash flow projections
through 2030 based on each product candidate’s phase of development.
As of September 30, 2025, the Company has not begun amortizing any of the product technology intangible assets.
| 17 |
NOTE 8 – CONVERTIBLE DEBT AND NOTES PAYABLE
Convertible Debenture – Arena
On November 22, 2024,
the Company entered into a Securities Purchase Agreement (the “Arena SPA”)
with the Arena Finance Markets, LP (“Arena Finance”), Arena Special Opportunities Partners III, LP
(together with Arena Finance, the “Arena Investors”). Under the Securities Purchase Agreement, the Company
will issue
The closing of the first
tranche was consummated on November 25, 2024 (the “First Closing”) and the Company issued to the Arena Investors
Debentures in an aggregate principal amount of $
The First Closing Debentures
contain customary events of default. If an event of default occurs, until it is cured, the holder may increase the interest rate applicable
to the First Closing Debentures to two percent (
As consideration for the
Arena Investors’ consummation of the First Closing, concurrently with the First Closing, the Company issued to each Arena Investor
participating in the First Closing its pro rata portion of the shares of common stock (the “SPA Commitment Fee Shares”)
issued to the Arena Investors as a commitment fee upon the execution of the Securities Purchase Agreement. Furthermore, as consideration
for the Arena Investors’ consummation of subsequent closings, the Company shall issue to the Arena Investors participating in such
closing a certain number of Company common stock as agreed upon among the Company and the Arena Investors participating. The fair value
of the shares of common stock issued was $
Pursuant to a Security Agreement, dated November 25, 2024, the Company granted to the Arena Investors a security interest in all of its assets to secure the prompt payment, performance, and discharge in full of all of the Company’s obligations under the Debentures. In addition, the Company’s wholly-owned subsidiary, Scienture, entered into a Guarantee Agreement, dated November 25, 2024, with the Arena Investors, pursuant to which it agreed to guarantee the prompt payment.
Interest accrues on the outstanding
principal amount of this Debenture at a rate equal to
During the three and nine
months ended September 30, 2025, the Company accrued $
| 18 |
As a result of the issuance
of the First Closing Debentures, the Company recognized an aggregate debt discount of $
The following is a summary of the First Closing Debentures:
| Arena Note | ||||
| Convertible debenture - Arena Principal | $ | |||
| Original issuance discount | ( | ) | ||
| Other issuance costs | ( | ) | ||
| Fair value of shares issued | ( | ) | ||
| Derivative liability recognized as debt discount | ( | ) | ||
| Excess debt discount amortization at issuance date | ||||
| Amortization of debt discount | ||||
| Arena note, net of unamortized debt discount, at September 30, 2025 | $ | |||
Derivative Liability
The Company evaluated the
terms of the conversion features of the First Closing Debentures as noted above in accordance with ASC Topic No. 815 - 40, “Derivatives
and Hedging - Contracts in Entity’s Own Stock,” and determined they are not indexed to the Company’s common stock
and that the conversion feature, which is akin to a redemption feature, meet the definition of a liability. The First Closing Debentures
contain an indeterminate number of shares to settle with conversion options outside of the Company’s control. Therefore, the Company
bifurcated the conversion feature and accounted for it as a separate derivative liability. Upon issuance of the First Closing Debentures,
the Company recognized a derivative liability at a fair value of $
The Company measured the derivative liability at fair value based on significant inputs not observable in the market, which causes it to be classified as a Level 3 measurement within the fair value hierarchy. The valuation of the derivative liability uses assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained. Changes in the fair value of the contingent consideration liability related to updated assumptions and estimates are recognized within the statements of operations.
The Company valued the derivative liability using a Black-Scholes method using following assumptions:
| September 30, 2025 | December 31, 2024 | |||||||
| Risk-free interest rate | % | |||||||
| Expected term (in years) | - | |||||||
| Expected volatility+A13 | % | |||||||
| Expected dividend yield | % | |||||||
| 19 |
The following is a summary of the derivative liability:
| Derivative | ||||
| Liability | ||||
| Outstanding as of December 31, 2024 | $ | |||
| Change in fair value | ( | ) | ||
| Outstanding as of September 30, 2025 | $ | |||
Scienture Convertible Debt
In September 2023, Scienture
entered into a Loan and Security Agreement (the “NVK Loan Agreement”) with NVK Finance, LLC, a Nebraska Limited
Liability Company (“NVK”) for $
On October 10, 2025, the
parties executed a Second Amendment extending the loan’s maturity to December 8, 2025, and waiving any existing defaults. As of
September 30, 2025, the outstanding balance (principal + interest) was $
The balance of the NVK debt
upon the Scienture Merger, and at September 30, 2025, was $
August 2024 Note
In August 2024, the Company
issued a convertible note of $
In connection with the note,
the Company issued
Total debt discount recognized
in connection with the note was $
Debt Summary
The following is a summary of the Company’s debt as of September 30, 2025 and December 31, 2024:
| As of September 30, 2025 | ||||||||||||
| Principal outstanding | Unamortized debt discount | Debt, net of unamortized debt discount | ||||||||||
| Convertible debenture - Arena | $ | $ | $ | |||||||||
| Scienture convertible debt | ||||||||||||
| Total debt | ||||||||||||
| Current maturity of debt | ||||||||||||
| Total long-term debt | $ | $ | $ | |||||||||
| As of December 31, 2024 | ||||||||||||
| Principal outstanding | Unamortized debt discount | Debt, net of unamortized debt discount | ||||||||||
| Convertible debenture - Arena | $ | $ | ( | ) | $ | |||||||
| August 2024 note | ( | ) | ||||||||||
| Scienture convertible debt | ||||||||||||
| Total debt | ( | ) | ||||||||||
| Current maturity of debt | ( | ) | ||||||||||
| Total long-term debt | $ | $ | ( | ) | $ | |||||||
NOTE 9 – STOCKHOLDERS’ EQUITY
Designation of Series B Preferred Stock
Effective June 26, 2023, the Company filed a Certificate of Designation, Preferences, Rights and Limitations of the Series B Preferred Stock (the “Series B Preferred Stock”) with the Secretary of the State of Delaware that designated shares of the Company’s authorized and unissued preferred stock as convertible Series B Preferred Stock at a par value of $ per share.
Holders
of the Series B Preferred Stock are not entitled to receive dividends and do not have redemption or voting rights. Furthermore, the Series
B Preferred Stock does not have a liquidation preference. Shares of Series B Preferred Stock are automatically convertible into shares
of the Company’s common stock at a ratio of
As of September 30, 2025, there were issued and outstanding shares of Series B Preferred Stock.
Designation of Series X Preferred Stock
On July 25, 2024, the Company revoked the authorization to issue shares of the Company’s Series A Preferred Stock, par value $ per share (the “Series A Preferred Stock”) and concurrently authorized the issuance of up to shares of the Series X Preferred Stock, a then new class of preferred stock.
Holders of the Series X Preferred Stock are entitled to receive dividends on shares of the Series X Preferred Stock on an as-if-converted-to-Common-Stock basis, without regard to any beneficial ownership limitation described in a letter of transmittal, equal to and in the same form and manner as dividends are paid to holders of the shares of Common Stock. Subject to any requirements of the General Corporation Law of the State of Delaware, the Series X Preferred Stock has no voting rights. The Series X Preferred Stock ranks on parity with shares of Common Stock as to distributions of assets upon liquidation, dissolution, or winding up of the Company.
As consideration for the Scienture Merger, the shares of Scienture common stock issued and outstanding immediately prior to the “Effective Time” of the mergers were converted into the right to receive, in the aggregate, (i) shares of the Company’s common stock and (ii) shares of the Company’s Series X Preferred Stock, each share of which was convertible into one share of common stock.
In September 20, 2024, all previously issued shares of Series X Preferred Stock were converted into a total of shares of common stock. As such, there were no issued and outstanding shares of Series X Preferred Stock as of September 30, 2025.
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Common Stock
During
the nine months ended September 30, 2025, the Company issued an aggregate of shares of common stock for net proceeds of $
During the three months ended
September 30, 2025, the Company issued shares of common stock for services. The fair value of shares issued for services was
$
During the three months ended September 30, 2025, a warrant holder exercised warrants for shares of commons stock on a cashless basis (see Note 10).
Effective as of September 17, 2025, an aggregate of shares of common stock were issued to employees and consultants pursuant to the cancellation of stock options issued to such holders. The Company revaluated the cancelled options using the Black-Scholes options model immediately prior to modification and compared to the fair value of the shares issued at $ per share and the remaining expense to be recognized under the original option grant. Accordingly, the incremental difference of $ was recognized as stock-based compensation expense in accordance with ASC 718-20-35 during the nine months ended September 30, 2025.
During the three months ended
June 30, 2025, the Company issued shares of common stock for services. The fair value of shares issued for services was $
During the three months ended
March 31, 2025, the Company issued shares of common stock for services. The fair value of shares issued for services was $
During the three months ended
March 31, 2025, the Company issued shares of common stock at a fair value of $
Arena Note Commitment Shares
As additional consideration for the Arena Investors execution and delivery of the Arena SPA with the Arena Investors, the Company issued the Arena Investors the SPA Commitment Fee Shares as described in Note 8 above.
In connection with any Closing following the First Closing, the Company agreed to issue to the Arena Investors participating in such Closing or their designee(s) a certain number of “Commitment Shares.” The aggregate number of Commitment Shares owing to each of the Arena Investors, or their designee(s), in connection with any Closing following the First Closing will be agreed among the Company and the Arena Investors participating in such Closing. For the avoidance of doubt, all of the Commitment Shares issued in connection with the First Closing on the First Closing Date were earned as of the First Closing Date regardless of whether a subsequent Closing occurs (see Note 8).
The Company issued to each
Arena Investor participating in the First Closing its pro rata portion of shares of the Company’s common stock. The fair
value of shares issued was $
Equity Line of Credit
On November 25, 2024, the
Company entered into a purchase agreement (“ELOC Agreement”) with Arena Business Solutions Global SPC II, Ltd
(the “Investor”). Under the ELOC Agreement, the Company had the right, but not the obligation, to direct the
Investor to purchase up to $
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In consideration for the Investor’s execution and delivery of the ELOC Agreement, the Company agreed to issue to the Investor, as a commitment fee: (i) shares of the Company’s Common Stock (the “Initial Commitment Fee Shares”) and (ii) in two separate tranches, a number of additional shares of common stock (the “Additional Commitment Fee Shares” and, together with the Initial Commitment Fee Shares, the “Commitment Fee Shares”) equal to (a) with respect to the first tranche, divided by the simple average of the daily VWAP of our common stock during the five (5) trading days immediately preceding the effectiveness of the initial registration statement on which the resale of the Commitment Fee Shares are registered (the “Effectiveness Date”) and (b) with respect to the second tranche, divided by the simple average of the daily VWAP of our common stock during the five (5) trading days immediately preceding the two (2) month anniversary of the Effectiveness Date. The Additional Commitment Fee Shares were subject to a true-up after each issuance pursuant to the terms of the ELOC Agreement.
The Company issued the Initial
Commitment Fee Shares on November 25, 2024. The fair value of the shares issued was $
In 2025, the Company issued
to the Investor Additional Commitment Fee Shares. The fair value of shares issued was $
In March 2025, the Company issued an aggregate of shares of its common stock pursuant to the terms of the ELOC Agreement. The issuance generated total gross proceeds, which after deducting applicable offering costs, resulted in net proceeds of $.
In April and May 2025,
the Company issued to the Investor,
shares of common stock as the final Additional Commitment Fee Shares owed to the Investor. The fair value of shares issued was
$
Private Placements
In July 2025, the
Company’s board of directors approved a capital raise in an aggregate amount of up to $
Registered Direct Offering
On August 15, 2025, the
Company issued an aggregate of
shares of common stock for aggregate proceeds of $
ATM Program
On
September 19, 2025, the Company entered into an Equity Distribution Agreement (the “ATM Agreement”) with
Maxim Group LLC (“Maxim”). Pursuant to the ATM Agreement, Maxim will act as the Company’s sole sales
agent with respect to the offer and sale from time-to-time of shares of the Company’s common stock, par value $ per
share, having an aggregate gross sales price of up to $
The
Company has agreed to pay Maxim a commission of
Equity Compensation Awards
Each independent member of
the Company’s board of directors (the “Board”) is to receive an annual grant of restricted common stock
of the Company equal to $
The Board and the Company’s stockholders approved an amendment to the Second Amended and Restated 2019 Equity Incentive Plan (the “Plan”), which increased the available shares under the Plan to shares of the common stock.
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NOTE 10 – WARRANTS
In connection with a note
(see Note 8), in August 2024 the Company issued
As of September 30, 2025,
the Company remeasured the fair value of warrants outstanding at $
The Company’s outstanding and exercisable warrants, as of September 30, 2025, are presented below:
| Number Outstanding | Weighted Average Exercise Price | Contractual Life
In Years | Intrinsic Value | |||||||||||||
| Warrants outstanding as of December 31, 2024 | $ | $ | ||||||||||||||
| Warrants exercisable as of December 31, 2024 | ||||||||||||||||
| Warrants granted | - | - | ||||||||||||||
| Warrants forfeited, expired, cancelled | - | - | ||||||||||||||
| Warrants exercised | ( | ) | - | - | ||||||||||||
| Warrants outstanding as of September 30, 2025 | $ | |||||||||||||||
| Warrants exercisable as of September 30, 2025 | $ | |||||||||||||||
The Plan allows for and the Company maintains stock option award agreements under which certain employees may be awarded option grants based on a combination of performance and tenure. The number of shares available to grant to employees under the Plan is .
The Board and stockholders approved an amendment to the Plan increasing the available shares under the Plan to shares of the Common Stock as such common stock existed on July 24, 2024.
Total compensation cost related
to stock options granted was $
Total compensation cost related
to stock options granted was $
On September 17, 2025, the Company cancelled stock options and granted the related option holders shares of common stock. This modification resulted in the Company recognizing the remaining expense under the original option and an additional incremental consideration as a result of the modification. Total stock-based compensation cost as a result of this transaction was $.
| Number Outstanding | Weighted-Average Exercise Price | Weighted-Average Contractual Life in Years | Intrinsic Value | |||||||||||||
| Options outstanding as of December 31, 2024 | $ | $ | ||||||||||||||
| Options exercisable as of December 31, 2024 | ||||||||||||||||
| Options granted | ||||||||||||||||
| Options cancelled | ( | ) | - | - | ||||||||||||
| Forfeited/expired | ( | ) | - | - | ||||||||||||
| Options exercised | - | - | ||||||||||||||
| Options outstanding as of September 30, 2025 | $ | $ | ||||||||||||||
| Options exercisable as of September 30, 2025 | $ | |||||||||||||||
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NOTE 12 – COMMITMENTS AND CONTINGENCIES
Eat Well
As previously disclosed
in the Company’s Annual Report on Form 10-K filed with the SEC on March 26, 2025, and the Quarterly Report on Form 10-Q filed
with the SEC on August 12, 2025, the Company entered into, and closed on the transactions contemplated by, an Amended and Restated
Agreement and Plan of Merger with Superlatus, whereby the Company acquired Superlatus (the “Superlatus
Acquisition”) in July 2023. In connection with the Superlatus Acquisition, former shareholders of Superlatus received
shares of the Company’s Series B Preferred Stock, par value $
per share (the “Series B Preferred Stock”). The Series B Preferred Stock are convertible into shares of
the Company’s
In January 2024, shareholders holding shares of Series B Preferred Stock surrendered shares of the Series B Preferred Stock back to the Company as a result of Superlatus failing to meet certain post-closing conditions associated with the Superlatus Acquisition, such that only shares of Series B Preferred Stock remained outstanding.
On March 5, 2024, the Company sold all of the issued and outstanding stock of Superlatus Inc. to Superlatus Foods Inc. pursuant to the Superlatus SPA. As a result of the transaction, Superlatus Inc. ceased to be a subsidiary of the Company, and the rights and assets of Superlatus together with various liabilities and obligations that were specific to Superlatus Inc. became rights and obligations of the Buyer. The shares of Series B Preferred Stock issued in connection with the Superlatus Acquisition remain outstanding.
In January 2025, Eat Well
Investment Group, Inc., a Canadian company (“Eat Well”) holding shares of the Series B Preferred
Stock, filed a complaint against the Company in the United States District Court for the Middle District of Florida alleging, among other
things, that the Company is responsible for paying certain consideration to Eat Well in connection with Superlatus’ acquisition
of Eat Well in June 2023 prior to the Company’s acquisition of Superlatus. Ultimately, Eat Well is seeking $
Kesin Pharma Corporation
As previously disclosed in the Company’s Annual Report on Form 10-K filed with the SEC on March 26, 2025, and the Quarterly Reports on Form 10-Q filed with the SEC on May 12, 2025, and August 12, 2025, Scienture entered into an exclusive license and commercial agreement (the “Kesin Agreement”) with Kesin Pharma Corporation (“Kesin”) whereby Scienture granted the exclusive license rights to commercialize SCN-102 in 2022 and SCN-104 in 2023 to Kesin for use in the United States of America.
In March 2024, the parties
terminated the Kesin Agreement, and the parties agreed that Scienture would pay Kesin a total gross amount of $
In August 2024, Kesin demanded immediate payment of the full amount under the Kesin Termination Agreement, alleging the full amount is payable in connection with the consummation Scienture’s business combination with the Company. Scienture disputed that the amount is payable, and the parties entered into discussions to resolve the issue.
On March 11, 2025, Kesin
filed a complaint against Scienture in the United States District Court for the Eastern District of New York seeking payment of the
disputed $
| 24 |
NOTE 13 – LEASES
The
Company entered into a lease agreement for the period of October 2018 to November 2023. At inception, management had included the renewal
period from November 2023 to November 2028 within the initial recognition of the related right of use assets and lease liabilities, as
it was reasonably expected, at the time, that the renewal option would be exercised. The Company determined that the new lease required
measurement and recognition of the lease liability and right-of-use assets of $
On
April 30, 2025, the Company completed the sale of its subsidiaries, IPS, Softell and Bonum Health, Inc., to Tollo. In connection with
the transaction, the Company derecognized subsidiary’s operating lease right-of-use assets of $
On
July 25, 2024, the Company entered into and closed the Scienture Merger. Pursuant to the Scienture Merger Agreement, the Company acquired
right of use asset value of $
The table below reconciles the fixed component of the undiscounted cash flows for and the total remaining years to the lease liabilities recorded in the consolidated balance sheet as of September 30, 2025.
Supplemental balance sheet information related to leases are as follows:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
| Future lease obligations | ||||
| 2025 remaining | $ | |||
| 2026 | ||||
| Total minimum lease payments | ||||
| Less: effect of discounting | ( | ) | ||
| Present value of future minimum lease payments | ||||
| Less: current obligation under lease | ||||
| Long-term lease obligations | $ | |||
For
the three months ended September 30, 2025, and 2024, total operating lease expense was $
For
the nine months ended September 30, 2025, and 2024, total operating lease expense was $
NOTE 14 – SEGMENT REPORTING
Factors used to identify the Company’s reportable segments include the organizational structure of the Company and the financial information available for evaluation by the chief operating decision-maker (the “CODM”) in making decisions about how to allocate resources and assess performance. The Company’s operating segments have been broken out based on similar economic and other qualitative criteria. The Company operates all reporting segments in one geographical area (the United States).
The Company’s chief operating decision-makers are its co-Chief Executive Officers, who make resource allocation decisions and assess performance based on financial information presented on an aggregate basis. There are no segment managers who are held accountable by the chief operating decision-maker, or anyone else, for any planning, strategy and key decision-making regarding operations. Accordingly, as of September 30, 2025, the Company has a single reportable segment and operating segment structure.
The key measures of segment profit or loss reviewed by our CODM are 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.
| 25 |
NOTE 15 – SUBSEQUENT EVENTS
Equity Compensation Awards
On October 1, 2025, the Company issued an aggregate of shares of common stock to its officers and directors under the Plan as compensation.
Convertible Debenture – Arena
On October 3, 2025, the Company entered into a letter agreement (the “Arena Agreement”) with the Arena Investors whereby the Company and the Arena Investors agreed to amend Section 4(b) of the First Closing Debentures. Specifically, the Company and the Arena Investors agreed to revise the conversion price of the First Closing Debentures to $2.4861 per share. In addition, each of the Arena Investors agreed to convert the remaining amounts owed by the Company under the First Closing Debentures into shares of the Company’s common stock in accordance with the revised terms of the Debentures (the “Full Conversion”).
All conditions to the Full Conversion were subsequently met and, therefore, all Obligations (as defined in the Security Agreement dated November 25, 2024, by and among the Company and the Arena Investors) under the Transaction Documents (as defined in the Arena SPA) have been deemed paid and automatically and irrevocably released, satisfied and discharged in full (except those obligations of the Company under Section 5.10 of the Arena SPA and Section 7 of the Registration Rights Agreement dated November 25, 2024, by and among the Company and the Arena Investors). Furthermore, the First Closing Debentures, all other Transaction Documents, and all security interests, pledges and other liens of every type at any time granted to or held by the Arena Investors were terminated and automatically and irrevocably released without further action by the Arena Investors. As a result, neither of the Arena Investors will have any obligation to make any credit extensions or financial accommodations to the Company or any other obligations, duties, or responsibilities in connection therewith. The Company issued an aggregate of shares to the Arena Investors in connection with the Full Conversion and no longer has any outstanding payment or other obligations under the First Closing Debentures.
Scienture Convertible Debt
On
October 10, 2025, the Company and Scienture, LLC entered into a Second Amendment of Loan and Security Agreement (the
“Second Amendment”) to the NVK Loan. Pursuant to the Second Amendment, the parties agreed to extend the maturity
date of the loan until December 8, 2025 (the “New Maturity Date”) and NVK agreed to waive any existing
Events of Default (as defined in the NVK Loan). The parties acknowledged that as of September 30, 2025, the total outstanding
balance of the NVK Loan, inclusive of principal and interest, was $
As
consideration for NVK executing the Second Amendment, the Company agreed to (i) pay NVK a fee in the amount of $
As of October 15, 2025, the Company has fully repaid all amounts due under the NVK Loan and satisfied all obligations under the Second Amendment.
Streeterville Note
On
October 14, 2025, the Company entered into and closed on a note purchase agreement (the “Purchase Agreement”)
with Streeterville Capital, LLC, (the “Lender”), which provided for the issuance of a senior secured promissory
note in the principal amount of $
The Streeterville Note was to mature on the seven month anniversary of closing; however, the Company fully repaid all outstanding balances and fulfilled all obligations under the Streeterville Note as of November 7, 2025.
ATM Program Increase
On September 19, 2025, the Company
entered into an Equity Distribution Agreement (the “ATM Agreement”) with Maxim Group LLC
(“Maxim”). Pursuant to the ATM Agreement, Maxim will act as the Company’s sole sales agent with
respect to the offer and sale from time-to-time of shares of the Company’s common stock, par value $ per share, having
an aggregate gross sales price of up to $
Employment Agreement
On October 20, 2025, Scienture, LLC, a wholly owned subsidiary of Scienture Holdings, Inc. (the “Company”), entered into (i) an amendment to that certain Employment Agreement by and between Scienture, LLC and Dr. Narasimhan Mani, the Company’s President and Co-Chief Executive Officer (the “Mani Employment Amendment”); and (ii) an amendment to that certain Employment Agreement by and between Scienture, LLC and Dr. Shankar Hariharan, the Company’s Executive Chairman and Co-Chief Executive Officer (collectively, the “Employment Amendments”). The Employment Amendments became effective on October 1, 2025, and were previously approved by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”).
Pursuant
to the Employment Amendments, Dr. Mani’s annual base salary increased from $
Kesin Pharma Corporation
On
March 11, 2025, Kesin filed a complaint against Scienture in the United States District Court for the Eastern District of New York seeking
payment of the disputed $
| 26 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General Information
This information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this Report, and the audited financial statements and notes thereto and “Part II. Other Information – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contained in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 26, 2025 (the “Annual Report”).
Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited consolidated financial statements included above under “Part I – Financial Information – Item 1. Financial Statements.”
Unless the context requires otherwise, references to the “Company,” “we,” “us,” and “our” refer specifically to Scienture Holdings, Inc., formerly TRxADE HEALTH, INC., and its consolidated subsidiaries. References to “Q1”, “Q2”, “Q3”, and “Q4” refer to the first, second, third, and fourth quarter, respectively, of the applicable year. Unless otherwise stated or the context otherwise requires, comparisons from one period to another are to the same period of the prior fiscal year.
In addition, unless the context otherwise requires and for the purposes of this Report only:
| ● | “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; and | |
| ● | “Securities Act” refers to the Securities Act of 1933, as amended. |
Summary of The Information Contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:
| ● | Company Overview. Discussion of our business and overall analysis of financial and other highlights affecting us, to provide context for the remainder of MD&A. | |
| ● | Liquidity and Capital Resources. An analysis of changes in our consolidated balance sheets and cash flows and discussion of our financial condition. | |
| ● | Results of Operations. An analysis of our financial results comparing the three and nine months ended September 30, 2025, and 2024. | |
| ● | Critical Accounting Policies. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. |
Company Overview
On July 25, 2024, we acquired a wholly-owned subsidiary, Scienture, which is a specialty pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system and cardiovascular diseases. Scienture LLC is developing a broad range of novel product candidates including new potential treatments for hypertension, migraine, pain and thrombosis and other related disorders. Scienture’s assets in development are across therapeutics areas and indications and cater to different market segments. Scienture’s mission is to identify, develop and bring to market innovative technology-based products to address unmet medical needs. Its targeted portfolio consists of short term and long-term opportunities with efficient development, regulatory, and go to market strategies.
After our acquisition of Scienture, we existed as a holding company owning all equity interests of Softell Inc. (f/k/a Trxade Inc.) (“Softell”), Integra Pharma Solutions, LLC d.b.a. Trxade Prime (“IPS”), Bonum Health, LLC, Bonum Health Inc., and Scienture.
On October 4, 2024, the Company and Softell entered into IPS Assignment Agreement, pursuant to which the Company transferred, and Softell accepted, 100% of the membership interests of IPS. As a result, IPS became a wholly-owned subsidiary of Softell. During the year ended December 31, 2023 and a portion of the quarter ended March 31, 2024, Softell, operated a web-based market platform that enabled commerce among healthcare buyers and sellers of pharmaceuticals, accessories and services. Softell’s current primary operations are conducted through IPS. IPS is a licensed pharmaceutical wholesaler and sells brand, generic and non-drug products to customers. IPS’ customers include all healthcare markets including government organizations, hospitals, clinics and independent pharmacies nationwide.
On September 20, 2024, the Company fil changed its legal name from “TRxADE HEALTH, Inc.” to “Scienture Holdings, Inc.”
| 27 |
Bonum Health, LLC was formed to hold certain telehealth assets acquired in October 2019. The “Bonum Health Hub” was launched in February 2020; however, the Company does not anticipate installations moving forward. On April 30, 2025, the Company completed the sale of Bonum Health, Inc. and Bonum Health, LLC.
Disposition of Legacy Subsidiaries
On April 8, 2025, the Company entered into a Membership Interest Purchase Agreement (the “IPS MIPA”) with Tollo Health, LLC (“Tollo”), pursuant to which Tollo agreed to purchase and the Company agreed to sell all of the Company’s membership interests in IPS.
On April 8, 2025, the Company also entered into a Stock Purchase Agreement (the “Bonum and Softell SPA” and together with the IPS MIPA, the “Agreements”) with Tollo, pursuant to which Tollo agreed to purchase and the Company agreed to sell all issued and outstanding shares of common stock of Bonum Health, Inc. and Softell. Suren Ajjarapu, the Company’s former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer, each had a beneficial interest in Tollo at the time the Company entered into the each of the Agreements.
In connection with each of the Agreements, the Company agreed to retain certain excluded liabilities of IPS, Softell and Bonum Health, Inc. including all liabilities: (i) related to, in connection with or arising out of any claims, charges, complaints, actions, suits, settlements, hearings, investigations, proceedings, or governmental or regulatory inquiries with respect to IPS, Softell or Bonum Health, Inc., respectively, prior to the closing under the applicable Agreement; (ii) related to, in connection with or arising out of any breach by the Company of the applicable Agreement or any other agreements and documents required to be delivered by the Company; (iii) not disclosed by the Company in accordance with each Agreement; (iv) related to any actions threatened or initiated by a governmental entity against IPS, Softell, or Bonum Health, Inc., respectively; and (v) related to tax returns or tax matters of the Company, IPS, Softell, or Bonum Health, Inc., respectively, for any periods prior to closing under the applicable Agreement.
The Company and Tollo consummated the closing of each of the Agreements on April 30, 2025. As consideration for acquiring IPS, Softell, and Bonum Health, Inc., Tollo agreed to pay the Company $5 million, with that consideration delivered in the form of a promissory note bearing interest at the prime rate. The promissory note matures on June 30, 2030. However, Tollo is required to pay 20% of the proceeds of a future equity financing toward repayment of the principal and accrued but unpaid interest owed under the promissory note. On June 24, 2025, the promissory note was assigned to Integral Health, Inc., which (at the time of the assignment) was owned by Suren Ajjarapu, the Company’s former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer.
The divestitures are part of a broader strategic realignment at the Company designed to sharpen operational focus and unlock long-term value. It is aligned with the Company’s commitment to streamline its core operations, optimize its portfolio, and accelerate growth in the Branded and Specialty Pharma markets. The Company intends to use the proceeds obtained from the divestment to facilitate the high-growth commercial and strategic product development activities at its Scienture subsidiary.
The Company believes that the key benefits of the divestitures include:
| ● | Increased Operational Efficiency: Streamlining the Company’s structure aimed at strengthening its balance sheet, providing for leaner operations and a more agile decision-making framework. | |
| ● | Realize Synergies: Consolidating overlapping functions and eliminating redundancies intended to cause annualized cost savings. | |
| ● | Dedicated Focus: Affording the full focus and deployment of resources to the commercial products and the high value product pipeline in development at its Scienture subsidiary. |
Existing Business
Subsequent to the disposition of IPS, Softell, and Bonum Health, Inc. we now exist as a holding company for existing and planned pharmaceutical operating companies focused on providing enhanced value to patients, physicians and caregivers through developing, bringing to market, and distributing novel specialty pharmaceutical products to satisfy unmet market needs. We are in the process of winding down our Bonum Health, LLC subsidiary.
Operating since 2019, Scienture, located in Commack, New York, is a specialty pharmaceutical company focused providing enhanced value to patients, physicians and caregivers by offering novel specialty products to satisfy unmet market needs. In this regard, Scienture is in the process of developing and commercializing products for the treatment of central nervous system (“CNS”) and cardiovascular (“CVS”) diseases as well as a broad range of novel product candidates including new potential treatments for hypertension, migraine, pain and thrombosis and other related disorders.
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Scienture’s vision is to be a leader in the industry by developing and commercializing new medicines for the treatment of CNS and CVS diseases and across other therapeutic areas. Key elements of Scienture’s strategy to achieve this vision include:
| ● | Advance product candidates through clinical studies and toward commercialization. Scienture is in various stages of clinical development for the product candidates in its pipeline, and it intends to move these programs efficiently toward being commercially available to patients, subject to approval by the U.S. Food and Drug Administration (the “FDA”). | |
| ● | Drive growth and profitability. Using dedicated sales and marketing resources in the U.S., which Scienture is in the process of building, Scienture will seek to begin to generate revenues and then drive the revenue growth of its product candidates approved for marketing by the FDA. | |
| ● | Continue to grow pipeline. Scienture will continue to evaluate and seek to develop additional product candidates that it believes have significant commercial potential through Scienture’s internal research and development efforts. | |
| ● | Target strategic business development opportunities. Scienture is exploring a broad range of strategic opportunities. This may include in-licensing products and entering into co-promotion and co-development partnerships for Scienture’s product candidates, although no agreements have been reached. |
Scienture currently has four primary product candidates in its development pipeline, summarized below, and is engaged in a variety of research and development efforts to develop novel product candidates for the treatment of various disease conditions. To date, Scienture has generated limited revenue from product sales and will not generate meaningful revenues until it fully commercializes its approved product candidates and successfully obtains regulatory approval for, and commercializes, its other product candidates. The progress of Scienture products its development pipeline to date is represented by the green bars shown below.
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Scienture has devoted and will continue to devote significant resources to research and development activities, and expects to incur significant expenses as Scienture continues advancing its product candidates towards FDA approval and expanding product indications for approved products and its intellectual property portfolio. Scienture’s expectations regarding its research and development programs are subject to risks, including the risk that Scienture’s financial condition and results of operations may be materially and adversely affected by delays and failures in the completion of clinical development of its product candidates, which could increase its costs or delay or limit our ability to generate revenues.
Scienture currently depends on third-party commercial manufacturing organizations (“CMOs”) for its manufacturing operations, including the production of raw materials, finished dosage form product, and product packaging for both its planned product commercialization and for use in its preclinical and clinical research. Scienture does not own or operate manufacturing facilities for the production of any of its product candidates nor does Scienture have plans to develop its own manufacturing operations in the foreseeable future to support clinical trials or commercial production. Scienture currently employs internal resources to manage its manufacturing contractors.
Scienture is in discussion with CMOs headquartered in North America, Europe and Asia for its pipeline product candidates. These CMOs offer a comprehensive range of commercial contract manufacturing and packaging services.
If Scienture fails to produce its products and product candidates in the volumes that it requires on a timely basis, or fails to comply with stringent regulations applicable to pharmaceutical drug manufacturers, Scienture may face delays in the development and commercialization of its products and product candidates or be required to withdraw its products from the market for risks associated with manufacturing and supply of its products and product candidates.
SCN-102 (ARBLITM - Losartan Oral Suspension)
SCN-102, with the brand name ArbliTM, is an oral liquid formulation of losartan potassium for (i) treatment of hypertension, to lower blood pressure in adults and children greater than 6 years old, (ii) reduction of the risk of stroke in patients with hypertension and left ventricular hypertrophy, and (iii) treatment of diabetic nephropathy with an elevated serum creatinine and proteinuria in patients with type 2 diabetes and a history of hypertension. SCN-102 was approved by the FDA in March 2025, making SCN-102 the first and only FDA-approved ready-to-use oral liquid losartan in the U.S. market.
Losartan is classified as an angiotensin receptor blocker (ARB) for treating hypertension and is one of the highest prescribed molecules for this indication. Current products in the market containing losartan are available only as oral solids, which can be further compounded to a liquid formulation. ArbliTM is the first liquid formulation of losartan on the U.S. market that does not require compounding and has reduced dosing volume and long-term shelf life at room temperature storage.
SCN-102 has two formulation composition and method of use patents listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the “orange book”: (i) Patent #: 11,890,273, Issue Date: February 6, 2024, titled “LOSARTAN LIQUID FORMULATIONS AND METHODS OF USE”, Expiration Date: October 7, 2041 and (ii) Patent # 12,156,869; Issue Date: December 3, 2024, titled “LOSARTAN LIQUID FORMULATIONS AND METHODS OF USE”.
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SCN-104 (Multi-dose Dihydroergotamine Mesylate (“DHE”) injection pen)
The SCN-104 injection pen is a disposable, multiple fixed dose, single entity combination product comprised of a small molecule drug that is administered using a customized injection pen. SCN-104 is a drug product containing DHE as the active ingredient. The mechanism of action of SCN-104 is mediated through DHE and is the same as that of DHE. DHE is available in the market as a single dose nasal spray, which has a high degree of variability in clinical outcomes. While DHE is also available in the market as single dose ampoules for injection, we believe that the process of dose withdrawal from the ampoule followed by self-injection at the time of intense need is cumbersome and difficult for the patient. We believe that the SCN-104 multi-dose self-injection pen is easy to use, provides enhanced patient convenience, and provides for consistent and accurate delivery of doses. The SCN-104 injection pen is being developed via the 505(b)(2) regulatory pathway for the acute treatment of migraine headaches with or without aura and the acute treatment of cluster headache episodes.
As shown in third party studies of DHE, SCN-104’s mechanism of action for its antimigraine effect is due to its potential action as an agonist at the serotonin 5-HT1D receptors. SCN-104 is intended for subcutaneous administration. SCN-104 is also intended for acute use and is not intended for chronic administration. Scienture has conducted two preclinical studies of SCN-104 and the SCN-104 injection pen: (i) a 30-day repeated dose toxicity study of dimethyl sulfoxide and caffeine following thrice daily, 3 times per week subcutaneous administration in Sprague-Dawley rats and (ii) a 30-day repeated dose toxicity study of dimethyl sulfoxide and caffeine following thrice daily, 3 times per week subcutaneous administration in Göttingen minipigs. Both studies support a conclusion that SCN-104 is considered to have no toxicological significance across hematology, coagulation parameters, clinical chemistry and urinalysis.
Scienture has had discussions with the FDA regarding its development program for SCN-104, with the FDA indicating that the reference product selected for a comparative regulatory study and proposed plan for manufacturing New Drug Application registration batches are acceptable. The FDA also provided Scienture with feedback on nonclinical safety studies and stability testing. Scienture is working to scale the formulation to enable future commercial scale production and the pen has been optimized for commercial use. Currently, Scienture is focused on planning bioequivalence studies and increasing manufacturing activities for the SCN-104 injection pen. Scienture plans to initiate a Phase 1 single dose study in healthy adults in 2026, following submission of an Investigational New Drug application (an “IND”), if the IND is cleared by the FDA.
SCN-104 has a formulation composition and method of use application pending in the U.S. (Appl. No. 17/757,924; Filing Date: June 23, 2022; Expiration Date: June 15, 2035).
SCN-106 (Potential Biosimilar)
Scienture is developing a potential biosimilar, SCN-106, based on Cathflo Activase, a reference product that is a thrombolytic agent that binds to fibrin in clots and converts entrapped plasminogen to plasmin. SCN-106 is a sterile, purified glycoprotein that is synthesized using the complementary DNA for natural human tPA obtained from a Chinese hamster ovary cell-line.
Scienture is working with Anthem Biosciences Pvt, Ltd. to develop a biosimilar product that utilizes the same mechanism(s) of action for the proposed condition of use, and has the same route of administration, dosage form, and strength as the reference product. The development program is focused on establishing the analytical similarity of SCN-106 to the reference product. Multiple clones of CHO cells have been produced to synthesize lots of SCN-106 which were screened for similarity to the reference product for several key biochemical quality attributes as well as overall protein yield and finalization of a lead clone.
Scienture completed a Biosimilar Initial Advisory meeting with the FDA in June 2023 to discuss the CMC, non-clinical, and clinical studies required for regulatory approval. As a result of this meeting, Scienture learned that its analytical strategy for initiating analytical similarity studies between SCN-106 and a proposed biosimilar product is acceptable. Scienture also learned that SCN-106 is suitable for further development and received guidance from the FDA on a comparable clinical study needed to demonstrate biosimilarity of SCN-106 and the reference product. In this regard, Scienture was informed that no additional safety, PK, toxicology or dose range finding studies will be required due to the method of use (very limited exposure) and the availability of an extensive amount of data on the original brand product. The only clinical requirement is a comparative phase 3 clinical study in the sensitive population to demonstrate that there are no clinically meaningful differences between SCN-106 and the currently marketed product.
SCN-106 is a potential biosimilar and considered by the Company to be part of its product development portfolio, however the Company is not pursuing patent protection for this product.
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SCN-107 (Bupivacaine Long-Acting Injection)
SCN-107 is a long-acting injection suspension formulation of a non-opioid analgesic that is indicated for postsurgical local and regional analgesia. Scienture’s long-acting formulation, SCN-107, is a novel microsphere-based formulation of bupivacaine that comprises the drug in polymer-based microspheres and is intended to provide pain management over a period of 5-7 days. The product candidate is designed to potentially provide longer term post-surgical pain relief compared to the currently available products in the market.
Based on initial discussions with FDA regarding this program, Scienture believes this product candidate would require at least one Phase 3 clinical trial to support submission of a marketing application. Scienture anticipates submitting an IND and, if cleared by the FDA, initiating a Phase 1 single dose study in healthy adults in 2025 to conduct an initial assessment of safety and tolerability of SCN-107.
Scienture has entered into Feasibility Study and Animal Trial Material Manufacturing Agreement with Innocore Technologies, B.V. (“Innocore”), as amended on December 2, 2022 (the “Innocore License”), for certain intellectual property rights associated with SCN-107. Under the Innocore License, Innocore granted Scienture a worldwide exclusive, milestone, royalty-bearing and sublicensable license to certain patent rights for the research and development of SCN-107 in postsurgical local and regional analgesia. Pursuant to the Innocore License, Scienture is required to make low single-digit percentage royalty payments based on annual net sales of licensed products for the first three years of sales on a country-by-country basis, subject to a low single digit increase as of the fourth year of sales on a country-by-country basis.
SCN-107 has a formulation composition and method of use application pending in the U.S. (Appl. No. 17/996,995; Filing Date: October 24, 2022; Expiration Date: on or after April 22, 2041). Applications in Canada and Europe are currently pending. As described above, the Company licenses certain patent rights from Innocore for the research and development of SCN-107.
Liquidity and Capital Resources
Cash
Cash was $355,692 as of September 30, 2025, compared to $308,096 as of December 31, 2024. We expect that our future available capital resources will consist primarily of cash generated from Scienture’s operations, remaining cash balances, borrowings, and additional funds raised through sales of debt and/or equity securities.
Liquidity
Cash, current assets, current liabilities, short term debt and working capital at the end of each period were as follows:
| September 30, | December 31, | Percent | ||||||||||||||
| 2025 | 2024 | Change | Change | |||||||||||||
| Cash | $ | 355,692 | $ | 308,096 | $ | 47,596 | 15 | % | ||||||||
| Current assets (excluding cash) | $ | 1,065,382 | $ | 5,997,381 | $ | (4,931,999 | ) | -82 | % | |||||||
| Current liabilities | $ | 7,351,446 | $ | 7,906,893 | $ | (555,447 | ) | -7 | % | |||||||
| Working capital | $ | (5,930,372 | ) | $ | (1,601,416 | ) | $ | (4,328,956 | ) | 270 | % | |||||
Our principal sources of liquidity have historically been cash provided by operations, sales of business assets and operations from time to time, sales of equity, and borrowings under various debt arrangements. Our principal uses of cash have been for operating expenses, technology development, and acquisitions. We anticipate these uses will continue to be our principal sources of, and uses of, cash in the future.
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Liquidity Outlook Cash Explanation
Cash Requirements
Our primary objectives for the remainder of 2025 are expected to be the continued implementation of Scienture business plan, and to complete potential strategic transactions of our business-to-consumer subsidiaries, which may include a potential sale, spin-off, fund raising, combination or other strategic transaction. There can be no assurance that our operations will generate significant positive cash flow, or that additional funds will be available to us, through borrowings or otherwise, on favorable terms if required in the future, or at all. We may also raise additional funding in the future through the sale of equity securities.
We may require additional funding in the future to implement on our business plan and potentially to expand or complete acquisitions. The sources of this capital are expected to be equity investments and notes payable. Our plan for the next twelve months is to continue exploring strategic transactions or relationships with counterparties in industries that we deem synergistic or complimentary to those of the Company, while also seeking to expand our Scienture operations organically or through acquisitions, as funding and opportunities arise. In the event we require additional funding, we plan to raise that through the sale of debt or equity, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders. If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate future revenues.
Going Concern
The accompanying interim consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued. In accordance with Financial Accounting Standards Board, or the FASB, Accounting Standards Update No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued.
As of September 30, 2025, the Company had an accumulated deficit of $52,430,904. As of September 30, 2025, the Company had $355,692 in cash.
We will need to raise additional capital or secure debt funding to support on-going operations, and to fund the assets and operations of any businesses or assets we acquire. The sources of this capital are expected to be the sale of equity and debt, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders. If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate future revenues, our financial position, and liquidity. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Unless management is able to obtain additional financing, it is unlikely that the Company will be able to meet its funding requirements during the next 12 months. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Cash Flows
The following table summarizes our Consolidated Statements of Cash Flows for the following periods:
| Nine Months Ended | ||||||||||||||||
| September 30, | Percent | |||||||||||||||
| 2025 | 2024 | Change | Change | |||||||||||||
| Net cash used in operating activities from continuing operations | (8,207,188 | ) | (10,585,173 | ) | 2,377,985 | -22 | % | |||||||||
| Net cash provided by (used in) operating activities from discontinued operations | 2,799 | (770,653 | ) | 773,452 | -100 | % | ||||||||||
| Operating Activities | (8,204,389 | ) | (11,355,826 | ) | 3,151,437 | -28 | % | |||||||||
| Net cash used in investing activities from continuing operations | - | (2,379,024 | ) | 2,379,024 | -100 | % | ||||||||||
| Net cash provided by investing activities from discontinued operations | - | 29,931,815 | (29,931,815 | ) | -100 | % | ||||||||||
| Investing Activities | - | 27,552,791 | (27,552,791 | ) | -100 | % | ||||||||||
| Net cash provided by (used in) financing activities from continuing operations | 8,251,985 | (15,764,770 | ) | 24,016,755 | -152 | % | ||||||||||
| Net cash used in financing activities from discontinued operations | - | (5,000 | ) | 5,000 | -100 | % | ||||||||||
| Financing Activities | 8,251,985 | (15,769,770 | ) | 24,021,755 | -152 | % | ||||||||||
| Net change in cash | $ | 47,596 | $ | 427,195 | $ | (379,599 | ) | -89 | % | |||||||
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Cash used in operating activities for the nine months ended September 30, 2025, was $8,204,389, compared to cash used in operations for the nine months ended September 30, 2024, of $11,355,826. The decrease in cash used in operations for the nine months ended September 30, 2025 compared to 2024 was primarily due to decreases in various expenses, charges and liabilities during the 2025 period.
Cash provided by (used in) investing activities for the nine months ended September 30, 2025, was $0 and cash provided by investing activities was $27,552,791 for the nine months ended September 30, 2024. The cash provided by investing activities in the 2024 period was primarily due to the disposition of various assets to Micro Merchant Systems, Inc. in the first quarter of 2024 related to our former web-based market platform, partially offset by the investment in securities of $2,500,000.
Cash provided by financing activities for the nine months ended September 30, 2025, was $8,251,985 compared to $15,769,770 of cash used in financing activities for the nine months ended September 30, 2024. Cash provided by financing activities in the 2025 period was due to proceeds from issuance of common stock pursuant to ELOC Agreement. The change was primarily due to the payment of dividends of $12,671,072 and repayment of contingent liability of $1,246,346 in 2024.
Results of Operations
The following selected consolidated financial data should be read in conjunction with the unaudited consolidated financial statements and the notes to these statements included above.
Three Month Period Ended September 30, 2025, compared to Three Month Period Ended September 30, 2024
| Three Months Ended | ||||||||||||||||
| September 30, | Percent | |||||||||||||||
| 2025 | 2024 | Change | Change | |||||||||||||
| Revenues | $ | 590,050 | $ | 64,861 | 525,189 | 810 | % | |||||||||
| Cost of goods sold | 15,429 | 60,978 | (45,549 | ) | -75 | % | ||||||||||
| Gross profit | 574,621 | 3,883 | 570,738 | 14698 | % | |||||||||||
| Operating expenses: | ||||||||||||||||
| Wage and salary expense | 251,747 | 708,977 | (457,230 | ) | -64 | % | ||||||||||
| Professional fees | 1,320,845 | 593,364 | 727,481 | 123 | % | |||||||||||
| Accounting and legal expense | 1,018,737 | 619,227 | 399,510 | 65 | % | |||||||||||
| Technology expense | 9,756 | 157,474 | (147,718 | ) | -94 | % | ||||||||||
| General and administrative (including stock-based compensation expense) | 2,165,398 | 168,649 | 1,996,749 | 1184 | % | |||||||||||
| Research and development | 169,344 | 1,253,983 | (1,084,639 | ) | -86 | % | ||||||||||
| Total operating expenses | 4,935,827 | 3,501,674 | 1,434,153 | 41 | % | |||||||||||
| Change in fair value of warrant liability | 59,203 | 502,178 | (442,975 | ) | -88 | % | ||||||||||
| Change in fair value of derivative liability | 2,356,428 | - | 2,356,428 | 100 | % | |||||||||||
| Loss on conversion of note payable | 43,200 | - | 43,200 | 100 | % | |||||||||||
| Loss on disposition of subsidiaries | 97,324 | - | 97,324 | 100 | % | |||||||||||
| Interest income | 1,120 | 29,445 | (28,325 | ) | -96 | % | ||||||||||
| Interest expense | (1,803,430 | ) | (217,433 | ) | (1,585,997 | ) | 729 | % | ||||||||
| Net loss from operations | (3,607,361 | ) | (3,183,601 | ) | (423,760 | ) | 13 | % | ||||||||
| Income (loss) on discontinued operations | - | - | - | 0 | % | |||||||||||
| Net loss | $ | (3,607,361 | ) | $ | (3,183,601 | ) | $ | (423,760 | ) | 13 | % | |||||
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There are $590,050 in revenues for the three months ended September 30, 2025. Revenues increased by $525,189 compared to the same period ended September 30, 2024 primarily because of the initial batch of pharmaceutical products (SCN – 102) sold via wholesale distribution channels during the quarter ended September 30, 2025 as compared to lower such revenue in same period of 2024 because of a) the disposition of the assets and operations of Softell completed in February 2024 and b) the IPS disposition in April 2025. The assets and operations of IPS that we retained generated limited revenues in the 2024 period but did not generate revenues between April 1, 2025 and the time our disposition of IPS later in April.
For the three-month period ended September 30, 2025, cost of goods sold and gross profit were $15,429 and $574,621, and $60,978 and $3,883, all respectively for the same period in 2024. There was a 97.39% gross profit as a percentage of sales for the three months ended September 30, 2025, compared to 5.99% for the three months ended September 30, 2024.
Wages and salary expense decreased by $457,230 for the three months ended September 30, 2025 to $251,747 compared to $708,977 for the comparable period in 2024. The decrease is primarily due to a decrease in salaries for existing executives and personnel as compared to the same period of 2024 due to the addition of personnel as part of the Scienture Merger in July 2024, which increased the headcount of the Company’s operations.
Professional fees increased by $727,481 to $1,320,845 compared to $593,364 for the comparable period in 2024. The increase was primarily due to increase in external consulting fees expense in 2025.
Accounting and legal expenses increased by $399,510 for the three months ended September 30, 2025 to $1,018,737 compared to $619,227 for the comparable period in 2024. The increase is primarily due to more SEC filings and corporate actions and contemplated transactions requiring additional accounting and legal services.
General and administrative expenses (including stock-based compensation expense) increased by $1,996,749 for the three months ended September 30, 2025, to $2,165,398 compared to $168,649 for the comparable period in 2024. The increase from 2024 was mainly due to shares issued in the third quarter of 2025 and stock-based compensation expense due to options modifications.
Technology expense decreased by $147,718 for the three months ended September 30, 2025 to $9,756 compared to $157,474 for the comparable period in 2024. The decrease was mainly due to a less of software expense and software support expense after the disposition of IPS.
Research and development expense pertain to Scienture LLC’s operations after its acquisition in July 2024. Research and development expenses was mainly due to contract research organization costs of Scienture LLC. Total expenses by program were as follows:
| Three Months Ended | ||||||
| September 30, | ||||||
| Project Codes | Product Name | 2025 | ||||
| SCN-102 | Losartan | $ | 157,817 | |||
| SCN-104 | DHE | - | ||||
| SCN-106 | Alteplase | 11,527 | ||||
| SCN-107 | Bupivacaine | - | ||||
| Total research and development expense | $ | 169,343 | ||||
We had interest expense of $1,803,430 for the three months ended September 30, 2025, compared to interest expense of $217,433 for the three months ended September 30, 2024. The increase is due to the interest expense on Scienture LLC’s convertible debt, the convertible notes issued in November 2024, and related debt discount amortization on these notes.
We recognized a gain on the change in the fair value of the warrant liability of $59,203 for the three months ended September 30, 2025, compared to a gain of $502,178 during the three months ended September 30, 2024, based on the underlying valuation inputs.
We recognized a gain on the change in the fair value of the derivative liability of $2,356,428 for the three months ended September 30, 2025, based on the underlying valuation inputs and the conversion features and derecognition of derivative liability on full repayment of the Debenture issued to Arena.
During the three months ended September 30, 2025, the Company incurred a net loss from continuing operations of $3,607,361 compared to a net loss from continuing operations of $3,183,601 for the three months ended September 30, 2024. The change was due to the increase in operating expense and other income (expense).
Nine Month Period Ended September 30, 2025, compared to Nine Month Period Ended September 30, 2024
| Nine Months Ended | ||||||||||||||||
| September 30, | Percent | |||||||||||||||
| 2025 | 2024 | Change | Change | |||||||||||||
| Revenues | $ | 600,308 | $ | 83,560 | 516,748 | 618 | % | |||||||||
| Cost of goods sold | 25,014 | 80,380 | (55,366 | ) | -69 | % | ||||||||||
| Gross profit | 575,294 | 3,180 | 572,114 | 17991 | % | |||||||||||
| Operating expenses: | ||||||||||||||||
| Wage and salary expense | 1,721,554 | 1,243,621 | 477,933 | 38 | % | |||||||||||
| Professional fees | 1,943,458 | 1,282,053 | 661,405 | 52 | % | |||||||||||
| Accounting and legal expense | 1,871,245 | 1,129,982 | 741,263 | 66 | % | |||||||||||
| Technology expense | 92,784 | 295,763 | (202,979 | ) | -69 | % | ||||||||||
| General and administrative (including stock-based compensation expense) | 6,449,110 | 5,284,231 | 1,164,879 | 22 | % | |||||||||||
| Research and development | 1,587,572 | 1,253,983 | 333,589 | 27 | % | |||||||||||
| Total operating expenses | 13,665,723 | 10,489,633 | 3,176,090 | 30 | % | |||||||||||
| Change in fair value of warrant liability | 781,311 | (392,843 | ) | 1,174,154 | -299 | % | ||||||||||
| Change in fair value of derivative liability | 2,296,834 | - | 2,296,834 | 100 | % | |||||||||||
| Loss on conversion of note payable | (53,446 | ) | - | (53,446 | ) | 100 | % | |||||||||
| Loss on disposition of subsidiaries | (288,204 | ) | - | (288,204 | ) | 100 | % | |||||||||
| Interest income | 89,710 | 133,397 | (43,687 | ) | -33 | % | ||||||||||
| Loss on disposal of asset | - | (374,968 | ) | 374,968 | -100 | % | ||||||||||
| Interest expense | (3,127,707 | ) | (320,897 | ) | (2,806,810 | ) | 875 | % | ||||||||
| Net loss from operations | (13,391,931 | ) | (11,441,764 | ) | (1,950,167 | ) | 17 | % | ||||||||
| Income from discontinued operations, net of tax | - | 27,670,294 | (27,670,294 | ) | -100 | % | ||||||||||
| Net (loss) income | $ | (13,391,931 | ) | $ | 16,228,530 | $ | (29,620,461 | ) | -183 | % | ||||||
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There are $600,308 in revenues for the nine months ended September 30, 2025. Revenues increased by $516,748 compared to the same period ended September 30, 2024 primarily because of the initial batch of pharmaceutical products (SCN – 102) sold via wholesale distribution channels during quarter ended September 30, 2025 as compared to lower such revenue in same period of 2024 because of a) the disposition of the assets and operations of Softell completed in February 2024 and b) the IPS disposition in April 2025. The assets and operations of IPS that we retained generated limited revenues in the 2024 period but did not generate revenues between April 1, 2025 and the time our disposition of IPS later in April.
For the nine-month period ended September 30, 2025, cost of goods sold and gross profit were $25,014 and $575,294, and $80,380 and $3,180, all respectively for the same period in 2024. Gross profit as a percentage of sales was 95.83% for the nine months ended September 30, 2025, compared to 3.81% for the nine months ended September 30, 2024.
Wages and salary expense increased by $477,933 for the nine months ended September 30, 2025 to $1,721,554 compared to $1,243,621 for the comparable period in 2024. The increase is primarily due to an increase in salaries for executives during the first and second quarters of 2025, as well as the Scienture Merger in July 2024, as compared to the same period in 2024, which increased the headcount of the Company’s operations.
Professional fees increased by $661,405 to $1,943,458 compared to $1,282,053 for the comparable period in 2024. The increase was primarily due to increase in external consulting fees expense in 2025.
Accounting and legal expenses increased by $741,263 for the nine months ended September 30, 2025 to $1,871,245 compared to $1,129,982 for the comparable period in 2024. The increase is primarily due to more SEC filings and corporate actions requiring additional accounting and legal services.
General and administrative expenses (including stock-based compensation expense) increased by $1,164,879 for the nine months ended September 30, 2025, to $6,449,110 compared to $5,284,231 for the comparable period in 2024. The increase from 2024 was mainly due to shares issued in 2025 and stock-based compensation expense due to options modifications.
Technology expense decreased by $202,979 for the nine months ended September 30, 2025 to $92,784 compared to $295,763 for the comparable period in 2024. The decrease was mainly due to decreased software expense and software support expense.
Research and development expense pertain to Scienture LLC’s operations post-acquisition. Research and development expenses was mainly due to contract research organization costs of Scienture LLC. Total expenses by program were as follows:
| Nine Months Ended | ||||||
| September 30, | ||||||
| Project Codes | Product Name | 2025 | ||||
| SCN-102 | Losartan | $ | 367,527 | |||
| SCN-104 | DHE | 422,165 | ||||
| SCN-106 | Alteplase | 297,880 | ||||
| SCN-107 | Bupivacaine | 500,000 | ||||
| Total research and development expense | $ | 1,587,572 | ||||
We had interest expense of $3,127,707 for the nine months ended September 30, 2025, compared to interest expense of $320,897 for the nine months ended September 30, 2024. The increase is due to the interest expense on Scienture LLC’s convertible debt, the convertible notes issued in November 2024, and related debt discount amortization on these notes.
We recognized a gain on the change in the fair value of the warrant liability of $781,311 for the nine months ended September 30, 2025, compared to a loss of $392,843 during the nine months ended September 30, 2024, based on the underlying valuation inputs.
We recognized a gain on the change in the fair value of the derivative liability of $2,296,834 for the nine months ended September 30, 2025, based on the underlying valuation inputs and the conversion features and derecognition of derivative liability on full repayment of the Debenture issued to Arena.
During the nine months ended September 30, 2025, the Company incurred a net loss from continuing operations of $13,391,931 compared to a net loss from continuing operations of $11,441,764 for the nine months ended September 30, 2024. The change was due to change in operating expense, other income (expense).
Net income from discontinued operations was $27,670,294 for the nine months ended September 30, 2024. The income was primarily due to the disposal of Softell assets, partially offset by loss on disposal of Superlatus Inc. during the nine months ended September 30, 2024.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of net sales and expenses for each period. The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.
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Acquisitions
The Company accounts for acquisitions and investments in businesses as business combinations if the target meets the definition of a business and (a) the target is a variable interest entity and the Company is the target’s primary beneficiary, and therefore the Company must consolidate its financial statements, or (b) the Company acquires more than 50% of the voting interest of the target and it was not previously consolidated. The Company records business combinations using the acquisition method of accounting, which requires all the assets acquired and liabilities assumed to be recorded at fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of the net tangible and intangible assets acquired is recorded as goodwill.
The application of the acquisition method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in order to properly
Stock-Based Compensation
The Company accounts for stock-based compensation to employees in accordance with ASC 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. Stock option forfeitures are recognized at the date of employee termination. Effective January 1, 2019, the Company adopted ASU 2018-07 for the accounting of share-based payments granted to non-employees for goods and services.
Recently Issued Accounting Standards
For more information on recently issued accounting standards, see “NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION,” to the Notes to Consolidated Financial Statements included herein under “PART I. - ITEM 1. FINANCIAL STATEMENTS”.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, as appropriate, in order to allow timely decisions in connection with required disclosure.
Under the supervision and with the participation of our management, including our co-Chief Executive Officers and our Chief Financial Officer (our principal executive officers and principal accounting/financial officer), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Report. Based on this evaluation, our co-Chief Executive Officers and our Chief Financial Officer concluded that as of September 30, 2025, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports filed with the SEC pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our co-CEOs and CFO, as appropriate, to allow timely decisions regarding required disclosures.
Limitations on the Effectiveness of Controls
Management of the Company, including its co-Chief Executive Officers and its Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Furthermore, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons or by the collusion of two or more persons. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Changes in Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial reporting during the quarter ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of business, we may become a party to lawsuits involving various matters. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We believe the ultimate resolution of any such current proceeding will not have a material adverse effect on our continued financial position, results of operations or cash flows.
Such current litigation or other legal proceedings are described in, and incorporated by reference in, this “ITEM 1. LEGAL PROCEEDINGS” of this Report from, “PART I – ITEM 1. FINANCIAL STATEMENTS” in the Notes to Consolidated Financial Statements in “NOTE 12 – COMMITMENTS AND CONTINGENCIES”. The Company believes that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on our financial condition or results of operations. However, assessment of the current litigation or other legal claims could change in light of the discovery of facts not presently known to the Company or by judges, juries or other finders of fact, which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims.
Additionally, the outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
ITEM 1A. RISK FACTORS
Other than the following risk factor, there have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Annual Report on Form 10-K filed on March 26, 2025. Investors should review the risks disclosed in the Form 10-K and in this Report, prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Form 10-K,this Report, and other reports we have filed with the SEC, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.
Disruptions at the FDA, the SEC and other government agencies, including from government shutdowns, or funding changes, or other disruptions to these agencies’ operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
Beginning on October 1, 2025, the U.S. government shut down and remains shut down as of the date of this filing, during which time certain regulatory agencies, such as the FDA and the SEC, have furloughed certain employees and stopped certain activities. Additionally, on October 10, 2025, the U.S. government implemented substantial layoffs and workforce reductions in connection with the ongoing federal government shutdown, which has resulted in the suspension or delay of various government-funded programs. While we continue to monitor developments, there is no assurance that affected government employees or contractors will be reinstated and that government-funded programs will resume. The ability of the FDA to review and approve new products, to provide feedback on clinical trials and development programs, to meet with sponsors and to otherwise review regulatory submissions can be affected by a variety of factors, including government budget and funding levels, reductions in workforce, ability to hire and retain key personnel and accept the payment of user fees, substantial changes in leadership and shifting policy priorities as a result of changes in the presidential administration and its appointees tasked to oversee the agency, and statutory, regulatory, and policy changes. In the past, average review times at the agency have fluctuated, and this may continue in the future. In addition, government funding of other agencies on which our operations may rely is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies, including as a result of reductions in force, significant organizational changes, substantial leadership departures, and policy changes, may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. With the change in presidential administrations in 2025, there is substantial uncertainty as to how the current U.S. administration will continue to modify or revise the requirements and policies of the FDA and other regulatory agencies with jurisdiction over our product candidates. For example, the current U.S. administration has discussed several changes to the reach and oversight of the FDA, which could affect its relationship with the pharmaceutical industry, transparency in decision making and ultimately the cost and availability of prescription drugs. The impending uncertainty could present new challenges or potential opportunities as we navigate the clinical development and approval process for our product candidates. Additionally, over the last several years, including for 35 days beginning on December 22, 2018, the U.S. government has shut down several times, and certain regulatory agencies, such as the FDA , have had to furlough critical employees and stop certain critical activities. The current U.S. administration also recently announced plans to reduce the number of federal employees by establishing voluntary termination programs, by position eliminations or by involuntary terminations. If funding for the FDA is reduced, if the FDA workforce is reduced, or if the current government shutdown continues, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. If we or our collaborators experience delays in obtaining approval or if we or they fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenue will be materially impaired.
Further, a prolonged or future shutdown of the U.S. federal government could materially impact the operations of the SEC. For example, the SEC announced that during the current U.S. federal government shutdown, it will not declare registration statements effective. In the event of an extended shutdown, the SEC may operate with limited staff or suspend certain functions altogether, which could delay the review or effectiveness of our filings, including registration statements or other financing-related disclosures. Such delays could adversely affect our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue to fund our operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
During the three months ended September 30, 2025, the Company issued and sold an aggregate of 1,078,614 shares of common stock at a price per share of $1.59 pursuant to Purchase Agreements with eight accredited investors. We received approximately $1.7 million in aggregate proceeds from these sales. The Company relied on the exemption from registration set forth in Section 4(a)(2) and/or Rule 506 of Regulation D, of the Securities Act for these issuances.
During the three months ended September 30, 2025, the Company issued 100,000 shares of common stock to a consultant for services. The Company relied on the exemption from registration set forth in Section 4(a)(2) of the Securities Act for this issuance and/or Rule 506 of Regulation D, of the Securities Act for this issuance.
During the three months ended September 30, 2025, the Company issued 316,617 shares of common stock pursuant to a consulting agreement with its former Chief Executive Officer for consulting services. The Company relied on the exemption from registration set forth in Section 4(a)(2) of the Securities Act for this issuance and/or Rule 506 of Regulation D, of the Securities Act for this issuance.
During the three months ended September 30, 2025, the Company issued 101,347 shares of common stock to a director as compensation for services provided. The Company relied on the exemption from registration set forth in Section 4(a)(2) of the Securities Act for this issuance and/or Rule 506 of Regulation D, of the Securities Act for this issuance.
During the three months ended September 30, 2025, the Company issued 76,923 shares of common stock in connection with the cashless exercise of certain outstanding warrants previously held by Hudson Global Ventures, LLC. The Company relied on the exemption from registration set forth in Section 4(a)(2) of the Securities Act for this issuance and/or Rule 506 of Regulation D, of the Securities Act for this issuance.
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In each issuance described above, the issuance did not involve a public offering and was made without general solicitation or general advertising, and the recipient of the shares was an accredited investor and represented they acquired the shares for investment purposes and not with a view to distribution.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The Company did not repurchase shares of common stock during the nine months ended September 30, 2025.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
(a) During the quarter ended September 30, 2025, there was no information required to be disclosed in a report on Form 8-K which was not disclosed in a report on Form 8-K.
(b) During the quarter ended September 30, 2025, there were no material changes to the procedures by which stockholders may recommend nominees to our Board.
(c)
During the quarter ended September 30, 2025, no officer or director
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ITEM 6. EXHIBITS
# Exhibits and/or schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplementally copies of any of the omitted exhibits and schedules upon request by the SEC; provided, however, that the registrant may request confidential treatment pursuant to Rule 24b-2 under the Exchange Act for any exhibits or schedules so furnished.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SCIENTURE HOLDINGS, INC. | ||
| By: | /s/ Dr. Narasimhan Mani | |
| Dr. Narasimhan Mani | ||
Co-Chief Executive Officer and President
(Principal Executive Officer) | ||
| By: | /s/ Dr. Shankar Hariharan | |
| Dr. Shankar Hariharan | ||
Co-Chief Executive Officer and Executive Chairman
(Principal Executive Officer) | ||
| By: | /s/ Eric Sherb | |
| Eric Sherb | ||
Chief Financial Officer
(Principal Accounting/Financial Officer) | ||
| Date: | November 12, 2025 |
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