Scienture Holdings, Inc.

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 the date of these financial statements, the Company’s primary operating subsidiary is Scienture, LLC (f/k/a Scienture, Inc.) (“Scienture”). Scienture was acquired in July 2024.

Scienture is a New York based branded, specialty pharmaceutical research company focused on the commercialization and development of products for the treatment of Cardiovascular (CVS) and Central Nervous System (CNS) diseases. Scienture launched its first commercial product for hypertension and is in the process of commercializing its second product for the treatment of opioid overdose. Its development pipeline consists of a broad range of novel product candidates including new potential treatments for migraine, thrombosis, pain and other related disorders. Scienture’s mission is to 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.

Dispositions

SOSRx, LLC

SOSRx, LLC (“SOSRx”) was formed on February 15, 2022. The Company entered into a relationship with Exchange Health, LLC (“Exchange Health”), a technology company providing an online platform for manufacturers and suppliers to sell and purchase pharmaceuticals, pursuant to which SOSRx, a Delaware limited liability company, was formed, which was owned 51% by the Company and 49% by Exchange Health. SOSRx did not generate material revenue and in February 2023 the Company voluntarily withdrew from the joint venture agreement.

Community Specialty Pharmacy, LLC and Alliance Pharma Solutions, LLC

On January 20, 2023, the Company entered into Membership Interest Purchase Agreements to sell 100% of the outstanding membership interests of the Company’s former subsidiaries, Community Specialty Pharmacy, LLC and Alliance Pharma Solutions, LLC (d.b.a DelivMeds). The Company also agreed to enter into a Master Service Agreement to operate the businesses prior to closing. The transactions contemplated by the Membership Interest Purchase Agreements closed on August 22, 2023.

Superlatus Inc.

On July 14, 2023, the Company entered into an Amended and Restated Agreement and Plan of Merger (the “Superlatus Merger Agreement”) with Superlatus Inc., a diversified food technology company, and Foods Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”).

On July 31, 2023, the Company completed its acquisition of Superlatus in accordance with the terms and conditions of the Superlatus Merger Agreement (the “Superlatus Merger”), pursuant to which the Company acquired Superlatus by way of a merger of the Merger Sub with and into Superlatus, with Superlatus being a wholly owned subsidiary of the Company and the surviving entity in the Superlatus Merger.

Under the terms of the Superlatus Merger Agreement, at the closing of the Superlatus Merger (the “Closing”), shareholders of Superlatus received an aggregate of 136,441 shares of the Company’s common stock and 306,855 shares of the Company’s Series B Preferred Stock, par value $0.00001 per share (the “Series B Preferred Stock”), convertible into 100 shares of the Company’s common stock. At Closing, the value of the Company’s common stock was $7.30 per share, resulting in a total value of $225,000,169.

On October 13, 2023, the Company announced that Superlatus PD Holding Company, Inc., a purported subsidiary of Superlatus, entered into a supplier agreement with Rainforest Distribution Corp, a New York corporation (“Rainforest”), pursuant to which Superlatus allegedly appointed Rainforest as its exclusive distributor for Superlatus’ portfolio of consumer packaged goods brands in certain markets. The Company later learned and announced that neither the Company’s management nor the Company’s Board of Directors authorized or approved the organization of Superlatus PD Holding Company, Inc. or the entry into the supplier agreement. Instead, the Company’s management determined that certain representatives of a former subsidiary of the Company likely unilaterally took actions related to the supplier agreement.

On January 8, 2024, the Company entered into Amendment No. 1 to the Amended and Restated Agreement and Plan of Merger (the “Superlatus Amendment”) as not all of the closing conditions of the Superlatus Merger Agreement were met. Under the terms of the Superlatus Amendment, the merger consideration to the shareholders of Superlatus was adjusted to the aggregate of 136,441 shares of the Company’s common stock and 15,759 shares of the Company’s Series B Preferred Stock, resulting in a total value of $12,500,089. Additionally, the shareholders of Superlatus agreed to surrender back to the Company 291,096 shares of the Company’s Series B Preferred Stock.

On March 5, 2024, the Company entered in a Stock Purchase Agreement (“Superlatus SPA”) with Superlatus Foods Inc. (the “Buyer”). Pursuant to the Superlatus SPA, the Company sold all of the issued and outstanding stock of Superlatus to the Buyer. A $1.00 purchase price 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 is no longer a subsidiary of the Company, and the rights and assets of Superlatus together with various liabilities and obligations that were specific to Superlatus became rights and obligations of the Buyer.

Other Legacy Subsidiaries

The Company also previously owned 100% of Softell Inc. (f/k/a Trxade Inc.) (“Softell”), Integra Pharma Solutions, LLC (“IPS”), Bonum Health, Inc., and Bonum Health, LLC.

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, 100% of the membership interests of IPS. As a result, IPS became a wholly-owned subsidiary of Softell.

On April 8, 2025, the Company entered into a Membership Interest Purchase Agreement (the “IPS MIPA”) with Tollo Health, Inc. (“Tollo”), pursuant to which Tollo agreed to purchase and the Company agreed to sell all of the Company’s membership interests in IPS. Suren Ajjarapu, the Company’s former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer, each have a beneficial interest in Tollo.

On April 8, 2025, the Company also entered into a Stock Purchase Agreement (the “Softell SPA”) with Tollo, pursuant to which Tollo agreed to purchase and the Company agreed to sell all issued and outstanding shares of common stock of Softell.

On April 8, 2025, the Company also entered into a Stock Purchase Agreement (the “Bonum SPA”) 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.

The divestitures described above 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.

See Note 3 for further detail on the dispositions.

Basis of Presentation and Principles of Consolidation

The accompanying 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. All significant intercompany accounts and transactions have been eliminated.

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 years ended December 31, 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 error impacting additional paid-in capital, debt, and related other expense originally recorded in the first and second quarters of 2025. Specifically, $1.6 million of debt repayment proceeds were incorrectly netted against equity in the first quarter of 2025, resulting in an understatement of stockholders’ equity and an overstatement of liabilities. The related income statement impact included a $0.2 million understatement of net loss in the first quarter and a $0.4 million overstatement of net loss in YTD Q2. The cumulative correction to both the condensed consolidated balance sheets and statements of operations was recorded in the third quarter of 2025. As of December 31, 2025, the related debt was fully repaid.

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:

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.

See Note 9 for further detail.

Cash and Cash Equivalents

The Company’s cash equivalents include U.S. Treasury Bills with original maturities of three months or less from the date of purchase. These instruments are classified as held-to-maturity and are recorded at amortized cost, which includes the initial investment cost and the accretion of any purchase discounts. The Company recognizes interest income over the life of the Treasury Bills using the effective interest method. Due to the short-term nature of these investments, the carrying internal value approximates fair value, and no unrealized gains or losses are recognized in the consolidated statements of operations or within accumulated other comprehensive income.

As of December 31, 2025, the Company held U.S. Treasury Bills classified as cash equivalents with a total amortized cost of approximately $6,662,008, consisting of two active positions: a $1,500,000 face value T-Bill maturing January 15, 2026 and a $4,000,000 face value T-Bill maturing February 12, 2026. together with cash on deposit of approximately $1,182,000. These instruments were purchased at a discount and are being accreted to face value over their respective holding periods using the effective interest method. The weighted-average maturity of the T-Bill portfolio as of December 31, 2025 was approximately 40 days. Interest income accreted on these instruments is reported within interest income in the consolidated statements of operations.

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 years ended December 31, 2025 and 2024, two customers accounted for 89.97% of revenue.

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.

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 December 31, 2025, the Company has capitalized $47,384 in deferred offering costs. During the year ended December 31, 2025, $1,089,386 of deferred offering costs, including $534,800 capitalized as of December 31, 2024, were charged to additional paid-in capital upon the Company’s equity offering.

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 $76,400,000 and recognized goodwill of $21,372,960 pursuant to the Scienture acquisition (see Note 3). The acquired goodwill represents the value in excess of the net assets and liabilities acquired at the acquisition date.

During the year ended December 31, 2025, the Company performed its annual impairment assessment of goodwill and indefinite-lived intangible assets and recognized aggregate impairment charges of $26,346,050. See Note 9 – Goodwill and Intangible Assets for a full description of the impairment testing methodology, triggering events, valuation inputs, and results.

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.

During the year ended December 31, 2025, the Company performed its annual impairment assessment of goodwill and indefinite-lived intangible assets and recognized aggregate impairment charges of $26,346,050. See Note 9 – Goodwill and Intangible Assets for a full description of the impairment testing methodology, triggering events, valuation inputs, and results.

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.

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 15-20 years based on the patent lives). SCN-102 commenced amortization during the year ended December 31, 2025, upon the asset commercialization of the product commenced for its intended use. Amortization is recorded on a straight-line basis over an estimated useful life of 13 years; amortization expense recognized from the commencement date through December 31, 2025 was $453,846. Other three intangible assets are not amortized until commercialization.

See Note 9 – Goodwill and Intangible Assets for detail on impairment testing results.

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.

During the year ended December 31, 2025, the Company performed its annual impairment assessment of goodwill and indefinite-lived intangible assets and recognized aggregate impairment charges of $26,346,050. See Note 9 – Goodwill and Intangible Assets for a full description of the impairment testing methodology, triggering events, valuation inputs, and results.

As of December 31, 2025, SCN-102 passed the ASC 360 undiscounted cash flow recoverability test, therefore, no impairment was recorded. The three other intangible assets failed their annual ASC 350 fair value tests, fair values determined via discounted cash flow analysis were below carrying amounts, resulting in total impairment charges of $4,973,090 for the year ended December 31, 2025.

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 December 31, 2025, we had 177,536 outstanding warrants and 19,899 stock options, each exercisable for shares of common stock, as well as 15,759 shares of Series B Preferred Stock outstanding. As of December 31, 2024, we had 238,594 outstanding warrants and 23,930 stock options, each exercisable for shares of common stock, as well as 15,759 shares of Series B Preferred Stock outstanding.

The following table sets forth the computation of basic and diluted loss per share:

Income Taxes

The Company’s benefit / (provision) for income taxes was $1,994,878 and $534,396 for the years ended December 31, 2025 and 2024, respectively. 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.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances transparency of income tax disclosures by requiring: (i) a tabular rate reconciliation using both percentages and amounts, with specified categories disclosed separately; (ii) disaggregation of income taxes paid by federal, state, and foreign jurisdictions; and (iii) disclosure of income (loss) from continuing operations before income tax expense (benefit) disaggregated between domestic and foreign. The standard is effective for annual periods beginning after December 15, 2024. The Company adopted ASU 2023-09 effective January 1, 2025 on a prospective basis. The adoption resulted in enhanced income tax disclosures as reflected in Note 12, but did not have a material impact on the Company’s financial position, results of operations, or cash flows.

In November 2023, the FASB issued ASU No. 2023-07,Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments require disclosure of: (i) significant segment expenses regularly provided to the CODM and included within each reported measure of segment profit or loss; (ii) a description of other segment items; (iii) the title and position of the CODM; and (iv) an explanation of how the CODM uses the reported measure(s) of segment profit or loss. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-07 effective January 1, 2025. The adoption resulted in enhanced segment disclosures as reflected in Note 16, but did not have a material impact on the Company’s financial position, results of operations, or cash flows.

In November 2024, the FASB issued 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 included in specific income statement line items, including disaggregation by natural classification (inventory purchases, employee compensation, depreciation, intangible asset amortization, and other categories) and disclosure of total selling expenses. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard and anticipates it will result in additional footnote disclosures but does not expect a material impact on its financial position, results of operations, or cash flows.

Management does not believe that any other recently issued, but not yet effective, accounting standards will have a material effect on the accompanying consolidated 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 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 December 31, 2025, the Company had an accumulated deficit of $80,551,237 and cash and cash equivalents of $6,662,008.

As of December 31, 2025, the Company had cash and cash equivalents of $6,662,008 and current liabilities of approximately $2.7 million, resulting in positive working capital of approximately $5.2 million. Management believes that its existing cash on hand, combined with revenues generated from the commercialization of ARBLI™ (SCN-102) and its planned financing activities, will be sufficient to fund the Company’s operations and meet its obligations as they become due for at least twelve months from the date these financial statements are issued. In making this assessment, management considered the following: (i) cash on hand of $6.7 million as of December 31, 2025, which management believes is sufficient to fund current operating requirements over the next twelve months; (ii) the Company’s ability to modulate discretionary operating and development expenditures to align with available capital; (iii) ongoing and planned commercialization of ARBLI™ (SCN-102), which generated its initial revenues during the second half of 2025 and is expected to contribute increasing revenues in 2026; and (iv) management’s plans to access additional capital through equity or debt financing as needed to fund accelerated pipeline development activities. While management believes these factors are sufficient to alleviate substantial doubt about the Company’s ability to continue as a going concern, there can be no assurance that the Company’s operations will generate positive cash flows, or that additional financing will be available on favorable terms, or at all. If additional financing is not available, the Company may be required to delay, reduce, or eliminate certain development programs or commercialization activities. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 –ACQUISITIONS AND DISPOSITIONS

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 291,536 shares of common stock and 6,826,753 shares of Series X Preferred Stock at the closing. The aggregate fair value of the purchase price consideration was $78,646,184. The fair value was determined by the underlying stock price of the common stock on the date of the Scienture Merger, which was $11.63 per share, which was utilized for both the issuance of common and preferred stock after evaluating the terms of the Series X Preferred Stock. The Company also applied a discount for lack of marketability of 5% due to certain lock-up terms on the shares issued.

The following summarizes the purchase price consideration and the preliminary purchase price allocation as of the acquisition date:

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 pro forma financial information (unaudited) presents the Company’s financial results as if the Scienture Merger had occurred as of January 1, 2024. The 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 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:

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 $22,660,182. Because MMS received $1,600,000 or greater in certain collections from third parties resulting from any products or services sold, or provided, by the business assets and operations acquired from Softell during the period ending on the four-month anniversary of the closing date, the Company was due an additional $7,500,000 payment from MMS. The Company received the payment in May 2024.

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:

The gain on disposition of business of $29,685,946 was included in income from discontinued operations, net of tax in the consolidated statements of operations of the year ended December 31, 2024.

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 $1.00 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:

The loss of disposition of business of $2,083,742 was included in income from discontinued operations, net of tax in the consolidated statements of operations of the year ended December 31, 2024.

Disposition of Legacy Subsidiaries

See Notes 1 and 4 for detailed discussion.

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 years ended December 31, 2025 and 2024. The results of the discontinued operations for the years ended December 31, 2025 and 2024 consist of the following:

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.

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 $300,000. The Company prepaid $250,000 prior to the execution date. The Wellgistics Note did not accrue interest. As of December 31, 2023, the balance of the Wellgistics Note was $50,000. The Wellgistics Note was fully paid off in February 2024.

As of March 31, 2025, other receivables included a $3,828,769 receivable from Wellgistics and $215,000 receivable from Tollo. The receivables were unsecured, non-interest bearing and due on demand. The receivables were maintained by the Company’s former IPS subsidiary, which was sold to Tollo as of April 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 a $5,000,000 promissory note bearing interest at the prime rate and maturing on June 30, 2030. The note requires Tollo to repay 20% of any future equity financing proceeds toward the outstanding balance. In connection with the transaction, the Company recorded a $5,000,000 promissory note receivable, and derecognized subsidiaries’ accounts payable of $117,162, other receivables of $4,219,239, operating lease right-of-use assets of $142,138, operating lease liability of $158,687 and a related party note receivable of $1,300,000. As such, the Company recognized a loss on disposition of $385,528. On June 24, 2025, the promissory note was assigned by Tollo to Integral Health, Inc. In August 2025, Integral Health, including its subsidiary IPS, were acquired by third parties. Therefore, as of December 31, 2025, Integral Health and Tollo is no longer considered a related party. As of December 31, 2025, the note receivable was outstanding and the Company recognized $250,000 in interest income, which was reclassified from note receivable, related party to note receivable on the consolidated balance sheet.

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 December 31, 2025, Integral Health and Tollo was no longer considered a related party.

Scienture Management

In July 2024, the executives of Scienture issued short-term loans to Scienture for an aggregate amount of $265,000. The loans were unsecured, interest bearing at the minimum applicable federal rate per annum, and due on demand. The loans were fully repaid in October 2025. Consequently, there wereno amounts outstanding under these loan agreements as of December 31, 2025.

In November 2024, an executive of Scienture issued a short-term loan to Scienture for $150,000. The loan was unsecured, interest bearing at the minimum applicable federal rate per annum, and due on demand. The loan was fully repaid in October 2025. Consequently, there wereno amounts outstanding under these loan agreements as of December 31, 2025.

In February 2025, an executive of Scienture issued a short-term loan to Scienture for $100,000. The loan was unsecured, interest bearing at the minimum applicable federal rate per annum, and due on demand. The loans were fully repaid in October 2025. Consequently, there wereno amounts outstanding under these loan agreements as of December 31, 2025.

In February 2025, an executive of Scienture issued a short-term loan to Scienture for $16,000. The loan was unsecured, interest bearing at the minimum applicable federal rate per annum, and due on demand. The loan was fully repaid in October 2025. Consequently, there wereno amounts outstanding under these loan agreements as of December 31, 2025.

NOTE 5 –REVENUE RECOGNITION

The Company’s sole source of revenue is product revenue from the sale of pharmaceutical products through wholesale distribution channels. ARBLI™ (SCN-102, Losartan Potassium Oral Suspension) received FDA approval in March 2025 and commenced commercialization in the third quarter of 2025. Revenue is recognized when control transfers to the wholesale distributor, generally upon delivery.

Revenue is measured at the net transaction price equal to the gross invoice price reduced by estimated variable consideration. Gross-to-net adjustments include:

***Chargebacks.***The difference between the invoice price charged to wholesale distributors and the lower contract price distributors extend to end-customers (retail pharmacies, hospitals, clinics). Estimated based on expected sell-through and contractual terms.

***Wholesaler Rebates and Distribution Service Fees.***Fees and rebates paid to wholesale distributors and group purchasing organizations (“GPOs”) under contractual arrangements. Estimated based on contracted rates and expected sales volumes.

***Prompt Pay Discounts.***Discounts offered to wholesale distributors for timely payment, estimated based on contractual terms.

***Product Returns.***Returns accepted under limited conditions (generally damaged, expired, or defective product). Returns have not been material to date given the early stage of ARBLI™ commercialization.

Estimates of variable consideration are reassessed each reporting period. Changes in estimates are recorded as adjustments to revenue in the period identified. Accrued gross-to-net liabilities are included within accrued liabilities on the consolidated balance sheets.

Revenue disaggregated by product for the years ended December 31, 2025 and 2024 is as follows:

Revenue for the year ended December 31, 2024 reflected residual pharmaceutical wholesale activity prior to the IPS disposition on April 30, 2025, which is classified as discontinued operations.

NOTE 6 –NOTES RECEIVABLE – RELATED PARTY

On August 22, 2023, the Company received a Promissory Note (the “Wood Sage Note”) in the amount of $1,300,000 from Wood Sage, LLC. The Wood Sage Note bears no interest and is currently due and payable. As of December 31, 2025 and 2024, the outstanding balance of the Wood Sage Note was $0 and $1,300,000, respectively. The note was held by Softell, a former subsidiary of the Company.

On April 30, 2025, the Company completed the sale of its subsidiaries, IPS, Softell and Bonum Health, Inc., to Tollo in exchange for a $5,000,000 promissory note bearing interest at the prime rate and maturing on June 30, 2030 (see Notes 1 and 4). In August 2025, Integral Health, including its subsidiary IPS, were acquired by third parties. Therefore, at December 31, 2025, Integral Health and Tollo was no longer considered a related party, which was reclassified from note receivable, related party to note receivable on the consolidated balance sheet.

NOTE 7 –INVENTORY

Inventory value is determined using the weighted average cost method and is stated at the lower of cost or net realizable value. As of December 31, 2025 and 2024, inventory was comprised of the following:

NOTE 8 –GOODWILL AND INTANGIBLE ASSETS

In connection with the Scienture Merger on July 25, 2024, the Company recorded goodwill of $21,372,960 and intangible assets of $76,400,000. During the year ended December 31, 2025, the Company performed its annual impairment assessment of goodwill and intangible assets, resulting in total impairment charges of $26,346,050, comprised of $21,372,960 related to goodwill and $4,973,090 related to indefinite-lived intangible assets.

The purchase price allocation of intangible assets was evaluated under ASC 805 as of the acquisition date. The identified intangible assets were determined to be product technologies representing novel formulations and delivery methods targeting central nervous system and cardiovascular diseases. Each product technology was valued using the Multi-Period Excess Earnings Method (“MPEEM”) under the Income Approach, consistent with ASC 820. The fair values assigned at acquisition, by product candidate, were as follows:

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. Key assumptions include a 2% long-term revenue growth rate and 3% contributory asset charge rate. The Company discounted the expected future cash flows at a 53.0% rate of return, equal to the weighted-average cost of capital plus 10%, to reflect the risk of the cash flows related to the product technologies. The Company then summed the present values of the estimated future cash flows and included an amortization tax benefit to the value indication of each of the product technologies.

The fair value of each product technology was determined using the Multi-Period Excess Earnings Method (“MPEEM”), an income approach that isolates the cash flows attributable solely to the subject intangible asset by projecting revenues and operating costs, deducting contributory asset charges (working capital at 4.0%, property and equipment at 12.9%), and discounting the resulting excess earnings to present value using risk-adjusted discount rates. A tax amortization benefit is included in each fair value indication. Projections reflect each asset’s market size, projected penetration, and net pricing assumptions, with a long-term growth rate of 4.8% applied at terminal value, benchmarked to long-term U.S. nominal GDP expectations. Key valuation inputs included: a risk-free rate of 4.79% (20-year U.S. Treasury yield as of December 31, 2025); a market rate of return of 13.0% (10-year CAGR of S&P 500, 2016–2025); an unlevered beta of 0.98 (Damodaran pharmaceutical industry data); and an effective tax rate of 26.7% (combined U.S. federal rate of 21% and New York state rate of 7.3%).

Goodwill Impairment – ASC 350

In accordance with ASC 350-20, the Company performs its annual goodwill impairment test as of December 31. The Company operates as a single operating segment and, accordingly, goodwill is allocated to and tested at the consolidated entity level as a single reporting unit, consistent with ASC 280 and the manner in which the Company’s Chief Operating Decision Maker reviews operating results for purposes of resource allocation and performance evaluation.

As of December 31, 2025, management identified the following indicators of impairment: (i) continued operating losses from continuing operations; (ii) a significant decline in the Company’s market capitalization relative to the carrying value of its net assets; and (iii) challenging conditions within the specialty pharmaceutical sector. Based on the presence of these triggering events, the Company bypassed the qualitative assessment and proceeded directly to a quantitative impairment test.

The fair value of the reporting unit was estimated using the Market Capitalization Method, representing a Level 1 input under ASC 820, based on the Company’s quoted share price of $0.51 and 40,630,815 shares outstanding as of December 31, 2025, resulting in an estimated fair value of approximately $20.7 million. No control premium or marketability discount was applied, as the Company’s shares are actively traded and the quoted market price represents the most reliable indicator of fair value from a market participant perspective. The carrying amount of the reporting unit was approximately $82.7 million, resulting in a shortfall of approximately $62.0 million. As the shortfall exceeded the recorded goodwill balance, the entire goodwill balance was determined to be impaired in accordance with ASC 350-20-35-3C. The Company recognized a non-cash goodwill impairment charge of $21,372,960 for the year ended December 31, 2025, recorded within impairment loss in the consolidated statements of operations. As of December 31, 2025, no goodwill remains on the consolidated balance sheet.

Activity in the goodwill balance for the year ended December 31, 2025 is as follows (in thousands):

Intangible Assets – Classification and Annual Assessment

The Company’s intangible assets consist of four product technology assets acquired in connection with the Scienture Merger. SCN-102 (ARBLI™ – Losartan Oral Suspension) received FDA approval in March 2025 and commenced commercialization during the third quarter of 2025; accordingly, it is classified as a finite-lived intangible asset amortized on a straight-line basis over an estimated useful life of 13 years, reflecting remaining patent life. SCN-104 (DHE Mesylate Injection), SCN-106 (Cathflo Injection – Potential Biosimilar), and SCN-107 (Bupivacaine Long-Acting Injection) remain in pre-commercial development and are classified as indefinite-lived in-process research and development (“IPR&D”) assets subject to annual impairment testing under ASC 350-30.

Indefinite-Lived IPR&D – Annual Impairment Test (ASC 350-30)

The Company performs its annual impairment test of indefinite-lived IPR&D assets as of December 31 each year, and on an interim basis when triggering events are identified. The fair value of each IPR&D asset was estimated using MPEEM, as described above. The required return on asset applied to SCN-104, SCN-106, and SCN-107 was 49.9%, reflecting a base unlevered cost of capital of 12.9% plus a 37.0% development and commercialization risk premium to capture regulatory approval uncertainty, market adoption risk, and execution risk associated with pre-commercial pharmaceutical assets. Based on the annual impairment test, the carrying amounts of SCN-104, SCN-106, and SCN-107 exceeded their respective estimated fair values as of December 31, 2025. In accordance with ASC 350-30-35, each asset was written down to its estimated fair value, resulting in the following impairment charges for the year ended December 31, 2025 (in thousands):

Finite-Lived Intangible Asset – Recoverability Test (ASC 360)

SCN-102 (ARBLI™ – Losartan Oral Suspension) received FDA approval in March 2025 and commenced commercialization during the third quarter of 2025. Upon commencement, SCN-102 was reclassified from indefinite-lived IPR&D to a finite-lived intangible asset and amortization commenced on a straight-line basis over an estimated useful life of 13 years. Amortization expense recognized from commercialization through December 31, 2025 was $453,846, resulting in a carrying amount of $23,146,154 as of December 31, 2025.

Due to the presence of impairment indicators as of December 31, 2025, the Company evaluated SCN-102 for recoverability under ASC 360-10-35. The recoverability test compares the carrying amount of the asset to the sum of undiscounted future cash flows expected to result from its use and eventual disposition. The total undiscounted future cash flows attributable to SCN-102, based on management’s projections, were approximately $71.1 million, exceeding the carrying amount of $23.1 million by approximately $48.0 million. Accordingly, SCN-102 was determined to be recoverable and no impairment loss was recognized for this asset as of December 31, 2025.

The following table summarizes the carrying amounts of intangible assets as of December 31, 2025 and 2024 (in thousands):

The decrease in intangible assets from $76,400,000 as of December 31, 2024 to $70,973,064 as of December 31, 2025 reflects $4,973,090 of impairment charges recognized on SCN-104, SCN-106, and SCN-107, and $453,846 of amortization expense recognized on SCN-102 following its commercialization. Estimated future annual amortization expense for SCN-102 is approximately $1,780,474 per year through the remainder of its estimated useful life. The three IPR&D assets will be reclassified from indefinite-lived to finite-lived and commence amortization upon commercialization: SCN-104 is expected to launch in 2028, SCN-106 in 2029, and SCN-107 in 2029 or 2030.

NOTE 9 –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 10% original issue discount one or more secured convertible debentures (“Debentures”) in a total principal amount of up to $12,222,222, divided into up to three separate tranches that are each subject to certain closing conditions. The conversion price per share of each Debenture is equal to 92.5% of the lowest daily VWAP (as defined in the Debentures) of the Company’s shares of common stock during the five trading day period ending on the trading day immediately prior to delivery or deemed delivery of the applicable conversion notice, subject to adjustments related to the trading price of the Company’s common stock.

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 $3,333,333 (the “First Closing Debentures”). The First Closing Debentures were sold to the Arena Investors for a purchase price of $3,000,000, representing an original issue discount of ten percent (10%). The convertible debenture will mature eighteen months from the First Closing.

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 (2%) per annum and accelerate the full indebtedness under the First Closing Debentures, in an amount equal to 125% of the outstanding principal amount and accrued and unpaid interest. Subject to limited exceptions, the First Closing Debentures prohibit the Company and, as applicable, its subsidiaries from incurring any new indebtedness that is not subordinated to the First Closing Debentures and, as applicable, any subsidiary’s obligations in respect of the First Closing Debentures until the First Closing Debentures are paid in full.

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 55,000 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 $420,200, which was included as a debt discount as noted below.

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 accrued on the outstanding principal amount of this Debenture at a rate equal to 10.00% per annum paid in kind (the “PIK Interest”) unless there is an Event of Default (as defined in the Debenture), in which case Default Interest accrues and is payable instead of PIK Interest. Any PIK Interest is added to the outstanding principal amount of the Debenture on a monthly basis as additional principal obligations hereunder and shall automatically and thereafter constitute a part of the outstanding principal amount for all purposes hereof (including the accrual of interest thereon at the rates applicable to the principal amount generally). The Company will not issue additional debentures to satisfy and pay any PIK Interest. Interest is calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and accrues daily commencing on the Original Issue Date (as defined in the Debenture) until payment in full of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made.

During the year ended December 31, 2025 and 2024, the Company incurred $141,977 and $33,333, respectively, in interest expense pertaining to the First Closing Debentures.

As a result of the issuance of the First Closing Debentures, the Company recognized an aggregate debt discount of $3,333,333. Through December 31, 2024, $869,692 of the debt discount was amortized to interest expense. In February 2025, the Company repaid $1,642,143 of principal and accrued interest. In August and September 2025, the Company repaid aggregate of $1,866,501 of the remaining outstanding principal and accrued interest, including a 20% early redemption premium, resulting in the immediate amortization of all remaining unamortized debt discount of $2,721,058 to interest expense during the year ended December 31, 2025, respectively. The outstanding amount owed on the First Closing Debentures was converted during October 2025. As a result, the First Closing Debentures are no longer outstanding as of December 31, 2025 (see Note 15).

On October 3, 2025, the Company entered into a letter agreement with Arena Investors to amend the conversion terms of its First Closing Debentures. Pursuant to this agreement, the Company issued an aggregate of 224,998 shares of common stock in full satisfaction of all remaining outstanding obligations. The Company recognized the fair value of the shares issued, totaling $189,673, as interest expense during the period.

Upon issuance of the shares, all conditions of the conversion were satisfied, and all prior obligations, security interests, and liens under the transaction documents dated November 25, 2024, were irrevocably discharged and terminated. Consequently, the Company has no further payment or financial obligations under the First Closing Debentures.

The following is a summary of the First Closing Debentures:

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 $2,477,217, which is recorded as a debt discount and will be amortized over the life of the First Closing Debentures. Upon repayment of the debentures in 2025, the remaining unamortized debt discount was fully amortized to interest expense.

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:

The following is a summary of the derivative liability:

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 $2,000,000. The debt accrues interest at a per annum rate equal to the Prime Rate (as defined in the NVK Loan Agreement) plus 7% and the prime rate is adjusted quarterly. As of both on total repayment in 2025 and December 31, 2024, the interest rate was 15.50%. The debt is collateralized by all of Scienture’s receivables, cash and cash equivalents and its right, title and interest in, to and under its Intellectual Property (as defined in the NVK Loan Agreement) and all proceeds thereof. The principal is entirely repayable on the maturity date in September 2025 and interest is payable monthly following a Qualified Financing (as defined in the NVK Loan Agreement). The NVK debt is convertible into common stock of Scienture at a fully-diluted Scienture valuation of $60,000,000.

On October 10, 2025, the Company executed a second amendment to its loan agreement with NVK, extending the maturity date to December 8, 2025, and obtaining a waiver for all existing defaults. As consideration for this extension, the Company agreed to pay a maturity extension fee of $25,000 and issued 250,000 common shares with a fair value of $175,250. Both the cash fee and the fair value of the shares were recognized as interest expense during the year ended December 31, 2025.

As of October 15, 2025, the outstanding balance of the loan, comprising principal and accrued interest, was $2,656,250. Under the terms of the amendment, early repayment required the payment of this balance plus an additional interest charge of $791.67 per day for fourteen days. On October 15, 2025, the Company fully repaid the outstanding balance and all applicable fees, totaling $11,083 in additional interest, thereby satisfying all obligations under the NVK loan agreement.

The balance of the NVK debt at December 31, 2025 and 2024, was $0 and $2,000,000, respectively. An aggregate interest expense on the NVK debt was $462,316 and $231,639, for the years ended December 30, 2025 and 2024, respectively.

Streeterville Note

On October 14, 2025, the Company entered into a note purchase agreement with Streeterville Capital, LLC (the “Lender”), providing for the issuance of a senior secured promissory note in the aggregate principal amount of $3,911,111.11 (the “Streeterville Note”). The Streeterville Note carried an original issue discount of $391,111.11 and an interest rate of 9% per annum. After deducting the original issue discount and $20,000 in transaction costs, the Company received net proceeds of $3,500,000, which were utilized to repay the outstanding balance of the Scienture Convertible Debt and for general corporate purposes.

During the year ended December 31, 2025, the Streeterville Note was fully repaid. In connection with this repayment, the Company recognized interest expense of $13,981 representing accrued interest through the date of payoff. Additionally, the Company fully amortized the $391,111.11 original issue discount and the $20,000 in transaction costs, which were recognized as interest expense during the period. As of December 31, 2025, the Note had no outstanding balance, and there was no remaining unamortized debt discount or transaction costs associated with this obligation.

August 2024 Note

In August 2024, the Company issued a convertible note of $360,000, for which the Company received $314,000 in net proceeds. On the six-month anniversary of the issuance, the Company was required to make a payment of $360,000 to the noteholder and each month thereafter the Company was required to make a payment of $7,200 to the noteholder towards repayment of the note (each, an “Amortization Payment”). The note bears interest at 12% per annum and is deemed earned in full and guaranteed as of the note issuance date. If the Company fails to pay any Amortization Payment, the noteholder will have the right to convert the outstanding principal and accrued interest at a conversion price equal to the Conversion Price (as defined below and subject to a floor price of $1.50). The Conversion Price is the lesser of (i) $8.36 or (ii)85% of the lowest volume-weighted average prices of the preceding five trading days. The note matures on August 20, 2025.

In connection with the note, the Company issued 76,923 warrants to purchase common stock to the noteholder. The warrants have an exercise price of $9.36 per share, are immediately exercisable and have a term of 5 years. The fair value of the warrant was $71,332, which was recognized as a debt discount and will be amortized to interest expense over the life of the note.

Total debt discount recognized in connection with the note was $117,332, with $42,755 amortized through December 31, 2024, and an additional $28,931 amortized during the year ended December 31, 2025. The net carrying value of the note payable, after deducting the remaining unamortized discount of $45,646, was $357,554, including $43,200 of accrued interest. On March 31, 2025, the Company converted the outstanding note into equity by issuing 274,000 shares of common stock at a fair value of $411,000. As a result, it recognized a $53,446 loss on conversion, reported as a non-operating expense in the consolidated statements of operations.

Debt Summary

The following is a summary of the Company’s debt as of December 31, 2025 and 2024:

Superlatus Notes

On November 17, 2023, the Company issued a promissory note to Moku Foods, Inc. (the “Moku Foods November 2023 Note”) in the amount of $50,000. The promissory note accrues interest at 11.5% per annum, compounded monthly and is payable upon demand at any time after November 30, 2023. As of December 31, 2023, the balance of the Moku Foods November 2023 Note was $50,000. The Company has accrued interest of $945 as of December 31, 2023. On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in Superlatus to Superlatus Foods, Inc. thereby transferring all assets and liabilities.

On October 16, 2023, the Company issued a promissory note to Moku Foods, Inc. (the “Moku Foods October 2023 Note”) in the amount of $150,000. The promissory note accrues interest at 11.5% per annum, compounded monthly and is payable upon demand at any time after October 31, 2023. As of December 31, 2023, the balance of the Moku Foods October 2023 Note was $150,000. The Company has accrued interest of $4,300 as of December 31, 2023. On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in Superlatus to Superlatus Foods, Inc. thereby transferring all assets and liabilities.

On September 27, 2023, the Company issued a promissory note to Perfect Day, Inc. (the “Perfect Day Note”) in the amount of $4,400,000 as consideration for the TUC APA (see Note 3). The promissory notes do not accrue interest and are payable upon demand at any time after October 31, 2023. The entire aggregate, unpaid principal sum of the note is immediately due and payable upon the occurrence of a change in control, as defined in the agreement. On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in Superlatus to Superlatus Foods, Inc. thereby transferring all assets and liabilities.

On September 14, 2023, the Company issued a promissory note to Wellgisitcs (the “Wellgistics Note”) in the amount of $300,000. The Company received a deposit of $200,000 on September 14, 2023, and an additional deposit of $100,000 on October 13, 2023. The Wellgisitcs Note accrues interest at 0% per annum and is due and payable no later than 30 days after a change in control of borrower, as defined in the note agreement. As of December 31, 2023, the balance of the Wellgistics Note was $50,000. The Wellgistics Note was fully paid off in February 2024.

On June 16, 2023, the Company issued a secured debenture to Eat Well Investment Group, Inc. (the “Eat Well June 2023 Note”) in the amount of $1,150,000 for the purchase of Sapientia, a wholly-owned subsidiary of Superlatus. The Eat Well June 2023 Note is secured by 100% of the membership interests in Sapientia. The Eat Well June 2023 Note began accruing interest at 12% per annum, compounded monthly, as of October 31, 2023. The Eat Well June 2023 Note matured on December 31, 2023. As of December 31, 2023, the balance of the Eat Well June 2023 Note was $1,150,000. The Company has accrued interest of $23,063 as of December 31, 2023. On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in Superlatus to Superlatus Foods, Inc. thereby transferring all assets and liabilities.

On February 8, 2023, Sapientia, a wholly-owned subsidiary of Superlatus, entered into a Loan Agreement with Eat Well Investment Group, Inc. (the “Eat Well February 2023 Note”) in the amount of $25,000. The Eat Well February 2023 Note is unsecured, accrues interest at a rate of 1.87% per annum, and matures February 7, 2025. As of December 31, 2023, the balance of the Eat Well February 2023 Note was $25,000. The Company has accrued interest of $418 as of December 31, 2023. On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in Superlatus to Superlatus Foods, Inc. thereby transferring all assets and liabilities.

NOTE 10 –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 787,754 shares of the Company’s authorized and unissued preferred stock as convertible Series B Preferred Stock at a par value of $0.00001 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 100 shares of common stock for each share of Series B Preferred Stock upon stockholder approval of such conversion.

As of December 31, 2025 and 2024, there were 15,759 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 $0.00001 per share (the “Series A Preferred Stock”) and concurrently authorized the issuance of up to 9,211,246 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)291,536 shares of the Company’s common stock and (ii)6,826,753 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 6,826,753 shares of common stock. As such, there were no issued and outstanding shares of Series X Preferred Stock as of December 31, 2025.

Hudson Global Ventures Stock Purchase Agreement

On October 4, 2023, the Company entered into a Securities Purchase Agreement the “Hudson SPA”) with Hudson Global Ventures, LLC (“Hudson”). Under the terms of the Hudson SPA, the Company agreed to sell, and Hudson agreed to purchase, Two Hundred Ninety (290) shares of Series C Preferred Stock (the “Purchased Shares”) at a price of $1,000 per share and a Warrant to purchase up to 41,193 shares of Common Stock. Additionally, pursuant to the Agreement,40,000 shares of Common Stock were issued to Hudson upon closing for a commitment fee. The Company received $250,000 in exchange for the Purchased Shares, Common Stock, and Warrants, net of issuance costs.

On July 12, 2024, the Company converted 290 shares of Series C Preferred Stock into 52,158 shares of common stock at the election of the holder.

Common Stock

During the year ended December 31, 2025, the Company issued an aggregate of 7,103,614 shares of common stock for net proceeds of $9,008,199.

On October 3, 2025, the Company issued 224,998 shares of common stock to Arena Investors to fully satisfy the outstanding obligations under the First Closing Debentures. The Company recognized the fair value of these shares, totaling $189,673, as interest expense during the year ended December 31, 2025. This issuance resulted in the irrevocable discharge of all related security interests and financial obligations (see Note 9).

On October 10, 2025, the Company issued 250,000 shares of common stock toScienture convertible debt as consideration for a loan maturity extension and default waiver. The Company recognized the fair value of these shares, totaling $175,250, as interest expense during the year ended December 31, 2025 (see Note 9).

During the year ended December 31, 2025, the Company issued 3,760,150 shares of common stock for services. The fair value of shares issued for services was $4,310,090 and was included in general and administrative expenses in the consolidated statements of operations.

During the year ended December 31, 2025, a warrant holder exercised 279,402 warrants for 279,402 shares of commons stock on a cashless basis (see Note 10).

Effective as of September 17, 2025, an aggregate of 2,000,000 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 $0.86 per share and the remaining expense to be recognized under the original option grant. Accordingly, the incremental difference of $1,512,995 was recognized as stock-based compensation expense in accordance with ASC 718-20-35 during the year ended December 31, 2025.

During the year ended December 31, 2025, the Company issued 274,000 shares of common stock at a fair value of $411,000 pursuant to the conversion of the August 2024 convertible note of $357,554. Accordingly, the Company recognized a $53,446 loss on conversion.

During the year ended December 31, 2024, the Company issued 490,698 shares of common stock for services. The fair value of shares issued for services was $4,598,294 and was included in general and administrative expenses in the consolidated statements of operations.

During the year ended December 31, 2024, a warrant holder exercised a warrant and acquired 28,487 shares of common stock for $16,567 in proceeds (see Note 13).

During the year ended December 31, 2024, an options holder exercised an option and acquired 2,371 shares of common stock for $9,840 in proceeds (see Note 14).

On July 12, 2024, the Company converted 290 shares of Series C Preferred Stock into 52,158 shares of common stock at the election of the holder.

On July 25, 2024, the Company issued 291,536 shares of common stock and 6,826,753 shares of Series X Preferred Stock pursuant to the Scienture Merger Agreement. The aggregate fair value of the purchase price consideration was $78,646,184.

In August 2024, the Company issued 28,571 shares of common stock pursuant to the exercise of warrants.

On September 20, 2024, all previously issued shares of Series X Preferred Stock were converted into a total of 6,826,753 shares of common stock.

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 55,000 shares of the Company’s common stock. The fair value of shares issued was $420,200 was recognized as a debt discount, which was amortized to interest expense in full as commitment shares in connection with first closing was fully earned as of first closing date.

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 $50,000,000 in shares of the Company’s common stock (the “ELOC Shares”) upon satisfaction of certain terms and conditions contained in the ELOC Agreement. The term of the ELOC Agreement began on the date of execution and would end on the earlier of (i) the first day of the month following the 36-month anniversary of the execution date, (ii) the date on which the Investor had purchased the maximum amount of ELOC Shares, or (iii) the effective date of any written notice of termination delivered pursuant to the terms of the ELOC Agreement (the “Commitment Period”). The Company terminated the ELOC Agreement effective as of May 22, 2025.

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)70,000 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,500,000 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,500,000 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 $534,800 and was included in deferred offering costs in the consolidated balance sheets. In March 2025, the deferred offering costs previously capitalized were offset against the gross proceeds from the ELOC share issuances (see below).

In 2025, the Company issued to the Investor 450,437 Additional Commitment Fee Shares. The fair value of shares issued was $971,732 and was recognized as offering costs in connection with the related ELOC Agreement share issuances. Accordingly, the fair value of the shares issued were offset against the gross proceeds and there was no net effect to stockholders’ equity.

In March 2025, the Company issued an aggregate of 2,800,000 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 $4,333,609.

In April and May 2025, the Company issued to the Investor,614,075 shares of common stock as the final Additional Commitment Fee Shares owed to the Investor. The fair value of shares issued was $554,586 and was recognized as deferred offering costs in connection with the related ELOC Agreement share issuances. As mentioned above, the Company terminated the ELOC Agreement effective as of May 22, 2025.

Private Placements

In July 2025, the Company’s board of directors approved a capital raise in an aggregate amount of up to $3,000,000 pursuant to a form of Common Stock Purchase Agreement (the “Purchase Agreement”). During July 2025, the Company sold an aggregate of 1,078,614 shares of common stock for aggregate proceeds of $1,679,993, pursuant to Purchase Agreements with eight investors.

Registered Direct Offering

On August 15, 2025, the Company issued an aggregate of 3,225,000 shares of common stock for aggregate proceeds of $3,549,184, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) with several institutional investors as part of a registered direct offering made pursuant to a shelf registration statement on Form S-3 (File No. 333- 289198), which was originally filed by the Company with the Securities and Exchange Commission (the “Commission”) on August 1, 2025, and declared effective on August 8, 2025.

ATM Program

On September 19, 2025, the Company entered into an Equity Distribution Agreement (the “ATM Agreement”) with Maxim Group LLC (“Maxim”), acting as the sole sales agent for the offer and sale of the Company’s common stock, par value $0.00001 per share, through an “at-the-market” offering program (the “ATM Program”). These shares are issued pursuant to the Shelf Registration Statement on Form S-3 (File No. 333-289198), which was filed with the Securities and Exchange Commission on August 1, 2025, and declared effective on August 8, 2025. Under the terms of the ATM Agreement, the Company may sell shares having an aggregate gross sales price of up to $18,792,009, subject to a commission of 3.0% of the gross sales price payable to Maxim, along with the reimbursement of certain specified expenses.

As of December 31, 2025, the Company issued and sold an aggregate of 15,722,659 shares of common stock under the ATM Program. These transactions resulted in aggregate net proceeds to the Company of $14,871,106, after deducting the applicable sales commissions and offering expenses. This activity represents a significant increase from the 100 shares of common stock previously issued under the program as of December 31, 2025.

Special Cash Dividend

On March 6, 2024, the Company announced the declaration of a special cash dividend of eight dollars ($8.00) per share of common stock, payable to stockholders of record as of March 18, 2024, with the dividend being paid on March 22, 2024. The special dividend of $12,671,072 (in the aggregate) was paid using a portion of the proceeds from the closing of the sale of certain assets to MMS.

On July 9, 2024, the Company announced the declaration of a special cash dividend of one dollar and fifty cents ($1.50) per share of common stock, payable to stockholders of record as of July 19, 2024, with the dividend being paid on July 22, 2024. The special dividend of $2,187,759 was paid using a portion of the proceeds received in May 2024 in connection with the sale of certain assets to MMS.

Restricted Common Stock

As of December 31, 2025, the Company had 1,200,898 restricted shares of common stock outstanding under the option plans. As of December 31, 2025,185,898 shares were vested. The Company recorded stock-based compensation expense of $248,457 in the consolidated statements of operations for the year ended December 31, 2025. Unrecognized stock compensation outstanding on these grants was $738,993 as of December 31, 2025.

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 $55,000 in value on April 1st of each year (or such date thereafter as the awards are approved by the Board), and valued on such same date, based on the closing sales price on such date (or the first business day thereafter), which restricted stock awards will vest at the rate of 1/4th of such awards over the following four calendar quarters, subject to such directors continued service to the Company.

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 5,000,000 shares of the common stock.

NOTE 11 –WARRANTS

In connection with a note (see Note 10 – Convertible Debt and Notes Payable), in August 2024 the Company issued 76,923 warrants to purchase common stock. The warrants have an exercise price of $9.36 per share, are immediately exercisable and have a term of 5 years. In August 2024, the holder exercised 28,571 warrants for shares of common stock on a cashless basis. Pursuant to the adjustment provisions in Section 3(b) of the warrant agreement, the exercise price automatically adjusted following the Company’s issuance of shares at a dilutive price of $1.20 on or about August 14, 2025, resulting in an automatic increase in the aggregate warrant share amount. Accordingly, in August 2025, the holder exercised aggregate of 279,402 warrants for shares of common stock on a cashless basis, including 12,706 warrants issued on October 4, 2023.

As of December 31, 2025 and 2024, the Company remeasured the fair value of warrants outstanding at $10,914 and $919,935, respectively. In connection with the remeasurement of warrants, a loss of $909,020 and a gain of $182,982 was recognized during the years ended December 31, 2025 and 2024, respectively, as the change in fair value of warrant liability.

The Company’s outstanding and exercisable warrants, as of December 31, 2025 and 2024, are presented below:

NOTE 12 –OPTIONS

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 5,000,000.

The Board and stockholders approved an amendment to the Plan increasing the available shares under the Plan to 5,000,000 shares of the Common Stock as such common stock existed on July 24, 2024.

Total compensation cost related to stock options granted was $307,439 and $25,584 for the years ended December 31, 2025, and 2024, respectively.

On September 17, 2025, the Company cancelled 2,000,000 stock options and granted the related option holders 2,000,000 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 $1,512,995.

The following table represents stock option activity for the years ended December 31, 2025 and 2024:

NOTE 13 –COMMITMENTS AND CONTINGENCIES

Eat Well

In July 2023, 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 connection with the Superlatus Acquisition, former shareholders of Superlatus received 306,855 shares of the Company’s Series B Preferred Stock, par value $0.00001 per share (the “Series B Preferred Stock”). The Series B Preferred Stock are convertible into shares of the Company’s common stock at a conversion ratio of 100-1.

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 15,759 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 11,643.84 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 $8.5 million to be delivered in the form Company common stock, $1.15 million in unpaid principal and accrued interest under a legacy note made by Superlatus in favor of Eat Well, $350,000 in cash consideration owed by Superlatus to Eat Well, $755,000 in unpaid principal and accrued interest on ten promissory notes made by Sapientia, Inc., a subsidiary of Superlatus, in favor of Eat Well, and certain other damages. There can be no assurance that an amicable resolution will be obtained. The Company intends to vigorously defend itself in the litigation.

Kesin Pharma Corporation

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 $1,285,000 upon commercialization of product via a royalty arrangement. The royalty agreement requires that ifthe full $1,285,900 has not been repaid within two years of the earlier of (i) commercial launch or (ii) 120 days from FDA approval, then interest will accrue prospectively at a rate of 8% annually on the unpaid balance. Accordingly, Scienture recorded a $1,285,000 development agreement liability at inception. During the year ended December 31, 2025, the Company made aggregate payments of $489,848, consisting of $400,000 of principal and $89,848 of accrued interest. As of December 31, 2025, the remaining outstanding balance of $885,000 is presented on the consolidated balance sheet as $600,000 classified as current (Development agreement liability – current portion) and $285,000 classified as long-term (Development agreement liability).

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 $1.285 million. The case was voluntarily dismissed on October 1, 2025. The Company and Kesin entered into a Settlement Agreement and Release on October 27, 2025, whereby Kesin agreed to unconditionally release and discharge the Company from all actions related to the complaint in exchange for the Company paying $1.285 million plus 8% interest from March 13, 2025, and legal fees and costs related to the complaint according to a payment schedule through December 2026.

NOTE 14 –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 $313,301. The lease is classified as an operating lease. No incentives were included in the lease.

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 $142,138 and operating lease liability of $158,687 (see Note 1). As such, the Company recognized a gain of $16,548 on disposition of related IPS lease.

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 $61,578 and right of use liability of $61,886 on the acquisition date together with all the assets and liabilities of Scienture.

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 December 31, 2025.

Supplemental balance sheet information related to leases are as follows:

For the year ended December 31, 2025, total operating lease expense was $75,373 and for the year ended December 31, 2024, total operating lease expense was approximately $97,000, which is included in general and administrative expenses in the consolidated statements of operations.

NOTE 15 –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 (the “CODM”), 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 CODM for any planning, strategy and key decision-making regarding operations. Accordingly, as of December 31, 2025, the Company has a single reportable segment and operating segment structure. The Company operates entirely within the United States.

The key measures of segment profit or loss reviewed by the CODM are total revenues, gross profit, total operating expenses (including research and development expenses), and net loss from continuing operations. The CODM uses these measures to allocate resources, evaluate operational performance, and make strategic decisions regarding pipeline development and commercialization activities. The CODM does not evaluate performance based on asset information at the segment level. Significant segment expenses that are regularly provided to the CODM and included in the reported measure of segment profit or loss include: research and development expenses (SCN-102: $368K; SCN-104: $422K; SCN-106: $298K; SCN-107: $500K for the year ended December 31, 2025); wage and salary expense of $2,118,568; professional fees of $2,407,822; accounting and legal expense of $2,070,337; and non-cash impairment losses of $26,346,050. Other segment items not separately disclosed include technology expense of $97,261, general and administrative expense (including stock-based compensation) of $7,926,016, and depreciation and amortization of $491,781.

The following table presents key financial information for the Company’ssingle reportable segment for the years ended December 31, 2025 and 2024:

NOTE 16 –INCOME TAXES

Income (loss) from continuing operations before income taxes for the years ended December 31, 2025 and 2024 consisted entirely of domestic (U.S.) activity as follows:

The benefit (provision) for income taxes for the years ended December 31, 2025 and 2024 consisted of the following:

A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate for the years ended December 31, 2025 and 2024 is as follows:

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows:

The net deferred tax liability is presented on the consolidated balance sheet as a non-current deferred tax liability of $11,037,595 as of December 31, 2025 (December 31, 2024: $13,524,213), reflecting the netting of deferred tax assets and liabilities within the same jurisdiction pursuant to ASC 740-10-45.

As of December 31, 2025, the Company had federal net operating loss (“NOL”) carryforwards of approximately $13,962,000, which may be carried forward indefinitely under the Tax Cuts and Jobs Act of 2017, subject to an 80% taxable income limitation in any given year. The Company also has IRC Section 174 capitalized research and development costs of approximately $14,273,000, which are amortized for tax purposes over five years (domestic) or fifteen years (foreign-sourced), resulting in deferred tax assets that will reverse as those costs amortize through approximately 2030.

The Company evaluates the need for a valuation allowance against its deferred tax assets based on an assessment of whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2025, management determined that no valuation allowance was required, as the Company’s deferred tax assets are expected to be realizable against the existing deferred tax liability related to intangible assets within the same tax jurisdiction. The net deferred tax liability position provides an objective source of taxable income for realization of the deferred tax assets.

The Company files income tax returns in the U.S. federal and New York state jurisdictions. Tax years from 2021 onward remain open and subject to examination by the relevant tax authorities. The Company has no material unrecognized tax benefits as of December 31, 2025 or 2024, and does not anticipate any significant changes to unrecognized tax benefits within the next twelve months. No interest or penalties related to income taxes have been accrued for the years ended December 31, 2025 or 2024.