What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-30 compared with 2025-03-26 · 1259 added, 1036 removed, 600 unchanged (79% of the section changed)

2 unchanged sentences

the Board of Directors and

Stockholders of Scienture Holdings, Inc.

of Scienture Holdings, Inc.

on the Financial Statements

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(the Company) as of December 31, 2025 and 2024,

and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the years

then ended, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements

present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of

its operations and its cash flows for the each of the years ended then ended, in conformity with accounting principles generally

accepted in the United States of America.

and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years then ended,

and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and

its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audit.

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

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laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit,

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

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Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides

a reasonable basis for our opinion.

We believe that our audits

provide a reasonable basis for our opinion.

of a matter – Going Concern

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matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

combination - Fair value of acquired intangible assets

of the matter

discussed in Note 1 and Note 3 to the consolidated financial statements, on July 25, 2024, the Company acquired Scienture, Inc.

transaction accounted for as a business combination.

As a result of the transaction, the Company recognized acquired technology associated

with the generation of future income.

The acquisition-date fair value of the acquired technology was $76.4 million.

identified the determination of the fair values of the identifiable intangible assets as a critical audit matter.

The Company’s

estimation of the acquisition date fair values of certain identifiable intangible assets is complex, requires management’s judgment

and involves the use of significant estimates and assumptions, including selection of the appropriate valuation methodology, revenue

growth rates, forecasted expenses, royalty rates, and discount rates.

Auditing these elements involved especially challenging and subjective

auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized

skill or knowledge needed.

We Addressed the Matter in our Audit

following are the primary procedures we performed to address this critical audit matter:

the reasonableness of projected revenue growth rates and forecasted expenses through:

evaluating historical performance of the acquired entity, and (ii) assessing financial projections

against market trends, industry metrics and peer-group/guideline companies.

personnel with specialized knowledge and skill with valuation to assist in:

(i) assessing

the reasonableness of royalty rates and discount rates incorporated into the various valuation

models, and (ii) assessing the appropriateness of various valuation models utilized by management

to determine the fair values of the intangible assets.

Audit Matter — Impairment assessment of goodwill and indefinite-lived intangible assets

identified the impairment assessment of goodwill and indefinite-lived intangible assets as a critical audit matter.

Auditing management’s

judgments regarding forecasts of future revenue and operating margin, and the discount rate to be applied involved a high degree of subjectivity

and significant judgment.

the Critical Audit Matter Was Addressed in Our Audit:

an understanding of management’s process for determining goodwill and intangible asset impairment

management’s impairment analysis, including the determination of fair value

actual sales to prior forecasts to assess forecasting accuracy

valuation specialists to evaluate methodologies used by management

have served as the Company’s auditor since 2023

Diego, California

March 26, 2025

Holdings, Inc.

formerly TRxADE HEALTH, INC.

Balance Sheets

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Current assets:

Accounts receivable,

Cash and cash equivalents

Accounts receivable, net

Prepaid expenses

Notes receivable - related

Notes receivable - related party

Other receivables

Deferred offering costs

assets of discontinued operations

Current assets of discontinued operations

Total current assets

Property, plant and equipment, net

Notes receivable

Interest receivable

Intangible assets, net

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Deferred tax asset

Noncurrent assets of discontinued

$ 104,853,805

LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

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Loan payable, related party

Convertible note, net of

debt discount - current portion

Contingent funding liabilities

Convertible note, net of debt discount - current portion

Operating lease liability - current

Warrant liability

liabilities of discontinued operations

Development agreement liability - current portion

Current liabilities of discontinued operations

Total current liabilities

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Deferred tax liability

Noncurrent liabilities

of discontinued operations

Total liabilities

Commitments and contingencies (Note 15)

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0 and 9,211,246 shares authorized;

0 shares issued and outstanding as of December 31, 2024 and 2023, all respectively

0 shares issued and outstanding as of both December 31, 2025 and 2024

Series B preferred stock, $ 0.00001 par value;

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1,000 shares authorized;

0 and 290 shares issued and outstanding as of December 31, 2024 and 2023, respectively

0 shares issued and outstanding as of both December 31, 2025 and 2024

Series X preferred stock, $ 0.00001 par value;

9,211,246 shares authorized;

0 and 0 shares issued and outstanding as of December 31, 2024 and 2023, respectively

Preferred stock, value

0 shares issued and outstanding as of both December 31, 2025 and 2024

Preferred stock

Common stock, $ 0.00001 par value;

100,000,000 shares authorized;

8,750,582 and 905,008 shares issued and outstanding as of December 31, 2024 and 2023, respectively

40,630,815 and 8,750,582 shares issued and outstanding as of December 31, 2025 and 2024, respectively 1,015,000 and 0 shares unvested as of December 31, 2025 and 2024, respectively

Additional paid-in capital

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( 39,038,973 )

stockholders’ equity

liabilities and stockholders’ equity

Total stockholders’ equity

Total liabilities and stockholders’ equity

$ 104,853,805

accompanying notes are an integral part of the unaudited consolidated financial statements.

accompanying notes are an integral part of the consolidated financial statements.

Holdings, Inc.

formerly TRxADE HEALTH, INC.

Statements Of Operations

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Research and development

operating expenses

Impairment loss

Total operating expenses

Operating loss

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Non-operating income (expense):

Change in fair value of

warrant liability

Change in fair value of

derivative liability

Change in fair value of warrant liability

Change in fair value of derivative liability

Impairment of investment

( 2,500,000 )

Loss on conversion of note payable

Loss on disposition of subsidiaries

Interest income

Loss on disposal of asset

( 2,798,968 )

Interest expense

( 4,083,206 )

2 unchanged sentences

( 4,077,861 )

( 4,086,413 )

Net loss from continuing operations

1 unchanged sentence

( 18,778,876 )

Benefit / (provision)

for income taxes

Benefit / (provision) for income taxes

Net loss from continuing operations, net of tax

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( 18,244,480 )

Net income (loss) from

discontinued operations, net of tax

( 9,360,710 )

Net income (loss)

Net income from discontinued operations, net of tax

Net (loss) income

$ ( 41,512,264 )

Net loss per common share from continuing operations

Net income (loss) per common share from discontinued

Net income (loss) per common share

Net income per common share from discontinued operations

Net (loss) income per common share

Weighted average common shares outstanding

accompanying notes are an integral part of the unaudited consolidated financial statements.

accompanying notes are an integral part of the consolidated financial statements.

Holdings, Inc.

formerly TRxADE HEALTH, INC.

Statements of Changes in Stockholders’ Equity

Non-controlling

Preferred Stock

Stockholders’

at December 31, 2022

Balances at December 31, 2023

$ ( 33,245,940 )

Common stock issued for services

Conversion of Series C preferred stock into common stock

Issuance of shares pursuant to Merger

Conversion of Series X preferred stock into common stock

( 6,826,753 )

stock issued for services

exercised for cash

Equity line of commitment shares issued

Issuance of common shares in connection with convertible note

Warrants issued with convertible note

Options exercised for common shares

Warrants exercised for cash

Options expense

split rounding adjustment

issued pursuant to merger agreement

issued pursuant to securities purchase

Cash dividends paid ($ 8 per share)

( 12,671,072 )

at December 31, 2023

Cash dividends paid ($ 1.50 per share)

( 2,187,759 )

stock issued for services

of Series C preferred stock into common stock

of shares pursuant to Merger

of Series X preferred stock into common stock

Balances at December 31, 2024

( 39,038,973 )

line of commitment shares issued

of common shares in connection with convertible note

issued with convertible note

exercised for common shares

exercised for cash

dividends paid ($ 8 per share)

( 39,038,973 )

Common stock issued for services

Common stock issued for cash, net of offering costs

Cancellation of stock options and issuance of common stock

Equity line of commitment shares issued

Conversion of note payable into common stock

Common stock issued for convertible note settlement

Common stock issued for convertible note extension

Warrants exercised for shares

Restricted shares issued for services

Stock-based compensation expense

( 41,512,264 )

dividends paid ($ 1.50 per share)

( 41,512,264 )

Net income (loss)

( 41,512,264 )

income (loss)

at December 31, 2024

( 41,512,264 )

Balances at December 31, 2025

$ 150,671,215

1 unchanged sentence

$ 150,671,215

accompanying notes are an integral part of the unaudited consolidated financial statements.

$ ( 80,551,237 )

accompanying notes are an integral part of the consolidated financial statements.

Holdings, Inc.

formerly TRxADE HEALTH, INC.

Statements of Cash Flows

Ended December 31, 2025 and 2024

Cash flows from operating

Cash flows from operating activities:

Net loss from continuing operations

1 unchanged sentence

$ ( 18,778,876 )

Adjustments to reconcile net loss to net cash

used in operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation expense

Change in fair value of

warrant liability

Change in fair value of

derivative liability

Options expense

Common stock issued for

Amortization of intangible assets

Change in fair value of warrant liability

Change in fair value of derivative liability

( 2,296,834 )

Loss on conversion of note payable

Loss on disposition of subsidiaries

Stock-based compensation

Common stock issued for services

Goodwill impairment

Impairment of investment

Amortization of debt discount

Amortization of right-of-use

Amortization of intangible

Goodwill impairment

Amortization of right-of-use assets

Interest income

Changes in operating assets and liabilities:

5 unchanged sentences

Accounts payable

( 1,567,215 )

Accrued liabilities

Purchase price payable

cash (used in) provided by operating activities from continuing operations

Current liabilities

Net cash used in operating activities from continuing operations

( 13,382,482 )

cash used in operating activities from discontinued operations

( 13,286,163 )

cash used in operating activities

Net cash provided by (used in) operating activities from discontinued operations

Net cash used in operating activities

( 13,379,683 )

( 14,265,239 )

Cash flows from investing

Cash flows from investing activities:

Cash received in acquisition

2 unchanged sentences

( 2,500,000 )

Funds acquired through

Net cash used in investing

activities from continuing operations

Net cash used in investing activities from continuing operations

( 2,379,024 )

Net cash provided by investing

activities from discontinued operations

cash provided by (used in) investing activities

Cash flows from financing

Net cash provided by investing activities from discontinued operations

Net cash provided by investing activities

Cash flows from financing activities:

Repayment of contingent liability

( 1,246,346 )

( 1,043,107 )

Proceeds from issuance from debt

Repayment of debt

Proceeds from loan payable, related party

Proceeds from issuance of convertible notes,

net of issuance costs

Repayment of loan payable, related party

Proceeds from issuance of convertible notes, net of issuance costs

Proceeds from convertible notes

Repayment of convertible notes

( 9,244,444 )

Gross proceeds from issuance of common stock

Repayment of development liability

Cash dividends paid

( 14,858,831 )

Proceeds from sale of future revenue

Proceeds from exercise of warrants

Proceeds from securities purchase agreement

Proceeds from exercise of options

Net cash (used in)

provided by financing activities from continuing operations

Net cash provided by (used in) financing activities from continuing operations

( 12,974,770 )

Net cash used in financing

activities from discontinued operations

cash (used in) provided by financing activities

Net cash used in financing activities from discontinued operations

Net cash provided by (used in) financing activities

( 12,979,770 )

Net change in cash

( 1,094,577 )

Cash at beginning of year

Cash at end of year

Supplemental disclosure

of cash flow information:

Cash at beginning of period

Cash at end of period

Supplemental disclosure of cash flow information:

Cash paid for interest

Cash paid for taxes

Supplemental disclosure

of non-cash investing and financing activities:

Supplemental disclosure of non-cash investing and financing activities:

Conversion of note payable into common stock

Equity line of commitment shares issued as offering costs

Issuance of note receivable in exchange for other receivables

Issuance of shares pursuant to Merger

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Insurance premium financed

Issuance of common shares in connection with converible debenture

Deferred offering costs

Derivative liability recognized in connection with issuance of convertible note

Warrants issued with convertible note

Issuance of common shares in connection with

converible debenture

Equity line of commitment shares issued as

offering costs

Derivative liability recognized in connection

with issuance of convertible note

Note issued as SOSRx contribution

Disposition of assets, related party

Issuance of note receivable

accompanying notes are an integral part of the unaudited consolidated financial statements.

Common stock issued for convertible note settlement

Common stock issued for convertible note extension

Accretion of original issue discount on Treasury Bills

accompanying notes are an integral part of the consolidated financial statements.

1 – ORGANIZATION AND BASIS OF PRESENTATION

September 20, 2024, the Company filed with the Secretary of State of the State of Delaware an amendment to its Second Amended and Restated

Certificate of Incorporation to change the legal name of the Company from “TRxADE HEALTH, Inc.” to “Scienture Holdings,

Company owned, as of December 31, 2024, 100 % of Softell Inc.

(f/k/a Trxade Inc.), Integra Pharma Solutions, LLC, and Scienture, LLC

(f/k/a Scienture, Inc.).

October 4, 2024, the Company and Softell Inc.

(f/k/a Trxade Inc.) (“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 Integra Pharma Solutions, LLC (“IPS”).

As a result, IPS is now a wholly-owned subsidiary of

During the year ended December 31, 2023 and a portion of the quarter ended March 31, 2024, Softell, operated a web-based market

platform that enabled commerce among healthcare buyers and sellers of pharmaceuticals, accessories and services.

Softell’s current

primary operations are conducted through IPS.

is a licensed pharmaceutical wholesaler and sells brand, generic and non-drug products to customers.

IPS’ customers include all

healthcare markets including government organizations, hospitals, clinics and independent pharmacies nationwide.

Health, LLC was formed to hold certain telehealth assets acquired in October 2019.

The “Bonum Health Hub” was launched in

February 2020;

however, the Company does not anticipate installations moving forward.

The Company is in the process of determining a divestment and winddown plan for Softell and IPS.

On January 25, 2025,

the Company’s Board of Directors approved the preparation of a divestment and winddown plan for the winddown of each of Softell,

IPS, Bonum Health, Inc., and Bonum.

LLC (f/k/a Scienture, Inc.) (“Scienture”) is a New York based branded, specialty pharmaceutical research company which is

engaged in the research and development of branded pharmaceutical products.

The intellectual property application process was initiated

in November 2019 and the product development activities commenced in January 2020.

Scienture also plans to foray into commercialization

of innovative and branded pharmaceutical products in the US market.

Scienture’s assets in development are across therapeutics areas

and indications and cater to different market segments.

Scienture’s mission is to identify, develop and bring to market innovative

technology-based products to address unmet medical needs.

Its targeted portfolio consists of short term and long-term opportunities with

efficient development, regulatory, and go to market strategies.

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.

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.

Specialty Pharmacy, LLC and Alliance Pharma Solutions, LLC

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).

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.

July 14, 2023, the Company entered into an Amended and Restated Agreement and Plan of Merger (the “Superlatus Merger Agreement”)

with Superlatus, Inc., a U.S.-based holding company of food products and distribution capabilities (“Superlatus”) and Foods

Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”).

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”).

July 31, 2023, the Company completed its acquisition of Superlatus in accordance with the terms and conditions of the Superlatus Merger

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with and into Superlatus, with Superlatus being a wholly owned subsidiary of the Company and the surviving entity in the Superlatus Merger.

the terms of the Superlatus Merger Agreement, at the closing of the Superlatus Merger, 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”).

Each share of Series B Preferred Stock is 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 .

Upon consummation of the Superlatus Merger, the Company continued to trade under its former ticker symbol “MEDS”.

all of the closing conditions of the Superlatus Merger Agreement were met.

As a result, the Company entered into Amendment No.

Amended and Restated Agreement and Plan of Merger (the “Superlatus Amendment”) on January 8, 2024.

Under the terms of the

Superlatus Amendment, the merger consideration to the shareholders of Superlatus was adjusted to an 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

As described below, in March 2024, the Company divested of its interest in Superlatus.

July 25, 2024, the Company entered into and closed an Agreement and Plan of Merger (the “Scienture Merger Agreement”) with

MEDS Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub I”), MEDS Merger

Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Merger Sub II” and, together

with Merger Sub I, the “Merger Subs”), and Scienture.

Pursuant to the Scienture Merger Agreement, (i) Merger Sub I merged

with and into Scienture (the “First Merger”), with Scienture continuing as the surviving entity and a wholly owned subsidiary

of the Company, and (ii) Scienture merged with and into Merger Sub II (the “Second Merger” and, together with the First Merger

and all other related transactions, the “Scienture Merger”), with Merger Sub II continuing as the surviving entity.

In connection

with the transactions, the Company changed its name to “Scienture Holdings, Inc.” and Merger Sub II, as the surviving entity

of the Second Merger, changed its name to “Scienture, LLC”.

consideration for the Scienture Merger, at the effective time of the First Merger (the “Effective Time”), the shares of Scienture

common stock issued and outstanding immediately prior to the Effective Time 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 Non-Voting Convertible

Preferred Stock (the “Series X Preferred Stock”), each share of which is convertible into one share of common stock.

LLC is a specialty pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system

and cardiovascular diseases.

Scienture is developing a broad range of novel product candidates including new potential treatments for

hypertension, migraine, pain and thrombosis and other related disorders.

The intellectual property application process was initiated

in November 2019 and the product development activities commenced in January 2020.

Scienture’s assets in development are across

therapeutics areas and indications and cater to different market segments.

Scienture’s mission is to identify, develop and bring

to market innovative technology-based products to address unmet medical needs.

Its targeted portfolio consists of short term and long-term

opportunities with efficient development, regulatory, and go to market strategies.

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.

16, 2024, the parties consummated the closing of the transactions contemplated by the MMS APA.

Softell operated a web-based market platform

designed to enable trading among healthcare buyers and sellers of pharmaceuticals, accessories and services.

The purchase price paid

at closing was $ 22,660,182 .

Pursuant to the terms and conditions of the MMS APA, 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 $ 7,500,000 in May 2024.

March 5, 2024, the Company entered into a Stock Purchase Agreement (the “Superlatus SPA”) with Superlatus Foods Inc.

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.

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

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.

Company’s management determined that certain representatives of a former subsidiary of the Company likely unilaterally took actions

related to the supplier agreement.

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.

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.

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 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 became rights and obligations of the

A $1.00 purchase

price was delivered to the Company at the closing, which occurred simultaneously with the execution of the Superlatus SPA.

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.

Legacy Subsidiaries

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.

& IPS Entities

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.

IPS became a wholly-owned subsidiary of Softell.

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.

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.

Health Entities

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.

November 2025, the Company dissolved Bonum Health, LLC.

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.

Note 3 for further detail on the dispositions.

of Presentation and Principles of Consolidation

Company’s consolidated financial statements include the accounts of Scienture LLC, TRxADE Health, Inc., Softell, Integra Pharma

Solutions, Inc., and Bonum Health.

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.

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.

significant intercompany accounts and transactions have been eliminated.

All significant intercompany accounts

and transactions have been eliminated.

preparation of condensed consolidated financial statements in accordance with U.S.

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The actual results experienced by the Company may differ materially and adversely from its estimates.

To the extent there are material

differences between estimates and the actual results, future results of operations will be affected.

Significant estimates for the years

ended December 31, 2024 and 2023 include the valuation of intangible assets, including goodwill, valuation of derivative liabilities

and gain (losses) on dispositions.

ended December 31, 2025 and 2024 include the valuation of intangible assets, including goodwill, and gain (losses) on dispositions.

of Previously Issued Financial Statements for Correction of Immaterial Errors

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.

assessed the materiality of the error on both a quantitative and qualitative basis, in accordance with SEC Staff Accounting Bulletin

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.

Value of Financial Instruments

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the notes bear interest rates that are consistent with current market rates.

Company’s derivative liability is a Level 3 liability measured at fair value on a recurring basis.

June 21, 2023, the Company executed a 1:15 reverse stock split for stockholders of record on that date .

This was executed to comply with

the Nasdaq Listing Rule 5550(a)(2) to have the price of the stock above $ 1.00 .

Issued Accounting Pronouncements

November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07 Segment Reporting (Topic 280):

to Reportable Segment Disclosures .

The new guidance requires enhanced disclosure of significant expenses that are regularly reported

to the chief operating decision maker and the nature of segment expense information used to manage operations.

The new guidance is effective

for all public companies for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning

after December 15, 2024.

Early adoption is permitted.

The Company adopted ASU 2023-07 on January 1, 2024.

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) :

Improvements to Income Tax Disclosures .

The new guidance

requires disaggregated information about the effective tax rate reconciliation and additional information on taxes paid that meet a quantitative

The new guidance is effective for public companies for annual reporting periods beginning after December 15, 2024, and for

non-public companies for annual reporting periods beginning after December 15, 2025, with early adoption permitted for both.

will adopt the new standard in annual reporting period beginning after December 15, 2025, and is currently evaluating the impacts of

the new guidance on its disclosures within the consolidated financial statements.

Note 9 for further detail.

and Cash Equivalents

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.

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

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Company places its cash and cash equivalents with financial institutions.

Deposits are insured to Federal Deposit Insurance Corp limits.

During years ended December 31, 2024 and 2023, no sales to customers represented greater than 10 % of revenue.

Deposits are insured to Federal Deposit Insurance Corporation

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

Receivable, net

January 1, 2023, the Company adopted ASU 2016-13 “ Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit

Losses on Financial Instruments” and its related amendments using the prospective method.

The new standard requires the use

of a current expected credit loss impairment model to develop and recognize credit losses for financial instruments at amortized cost

when the asset is first originated or acquired, and each subsequent reporting period.

Company’s receivables are from customers and are typically collected within 90 days.

The Company determines the allowance based

on known troubled accounts, historical experience, and other currently available evidence.

of December 31, 2024 and 2023, other receivables are $ 4,138,770 and $ 1,224,702 .

As of December 31, 2024, other receivables primarily

consist of short-term advances to related parties including Wellgistics Health, Inc.

(f/k/a Danam Health Inc.) and Tollo Health, Inc.

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.

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.

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.

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.

write-downs are recorded as a component of cost of goods sold and are not reversed if the market value of the inventory subsequently

Offering Costs

Company complies with the requirements of Accounting Standards Codification (“ASC”) 340-10-S99-1 with regards to offering

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, 2024 and 2023, the Company has $ 534,800 and $ 0 , respectively, capitalized deferred offering costs.

Financial Instruments

Company evaluates its convertible notes to determine if such instruments have derivatives or contain features that qualify as embedded

For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded

at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes pricing model to value the derivative

instruments at inception and on subsequent valuation dates.

The classification of derivative instruments, including whether such instruments

should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.

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.

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 (“VIE”) 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.

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

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The acquired goodwill represents the value in excess of the net assets and liabilities acquired at the acquisition

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.

is an asset representing the excess cost over the fair market value of net assets acquired in business combinations.

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Management can resume the qualitative assessment in any subsequent period for any reporting unit.

of December 31, 2024, management performed a qualitative impairment assessment of our reporting units, of which there were no indications

that it was more likely than not that the fair value of our reporting units were less than their respective carrying values.

a quantitative goodwill test was not required, and no goodwill impairment was recognized during the year ended December 31, 2024.

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.

connection with the Scienture acquisition, the Company identified product technologies assets.

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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).

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.

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

of Long-Lived Assets

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the fair value less costs to sell.

Company did not record an impairment charge for the years ended December 31, 2024 and 2023.

Company accounts for investments that it does not control using the cost method, equity method or fair value method, as applicable.

in companies in which the Company owns less than a 20% equity interest and where it does not exercise significant influence over the

operating and financial policies of the investee are accounted for using the cost method of accounting.

The Company periodically reviews

the carrying value of these investments to determine if there has been an other-than-temporary decline in fair value below carrying value.

A variety of factors are considered when determining if a decline in fair value below carrying value is other-than-temporary, including,

among others, the financial condition and business prospects of the investee, as well as the Company’s investment intent.

method investments are carried at cost, which approximates or is less than fair value.

Dividends received by the Company are recognized

in equity (losses) earnings of affiliates, net of tax on the consolidated statements of operations.

February 29, 2024, Softell entered into a Subscription Agreement (the “Subscription Agreement”) with Lafayette Energy Corp.,

a Delaware corporation (“Lafayette”).

Pursuant to the Subscription Agreement, Softell will, in two equal tranches, invest

a total of up to $ 5,000,000 in Lafayette in exchange for up to 2,000,000 shares of Lafayette’s Series A Convertible Preferred Stock,

with the second tranche becoming payable only upon Softell’s receipt of notice that Lafayette has successfully drilled its first

oil and gas well and produced at least one hundred (100) barrels of oil.

of December 31, 2024, the Company evaluated the financial condition and business prospects of Lafayette, and determined there was an

other-than-temporary decline in fair value below carrying value.

As such, the Company recognized an impairment of $ 2,500,000 .

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.

of December 31, 2025, SCN-102 passed the ASC 360 undiscounted cash flow recoverability test, therefore, no impairment was recorded.

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.

Company accounts for stock-based compensation to employees in accordance with ASC 718, “Compensation-Stock Compensation.”

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date of employee termination.

Effective January 1, 2019, the Company adopted ASU 2018-07 for the accounting of share-based payments granted

to non-employees for goods and services.

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.

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.

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.

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& Development Expenses

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.

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.

(loss) Per Common Share

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using the treasury stock method.

As of December 31, 2024, we had 238,594 warrants to purchase shares of common stock, 15,759 shares of

Series B preferred stock and 23,930 options to purchase shares of common stock, all outstanding

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.

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

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$ ( 18,244,480 )

Net income (loss) on discontinued

( 9,360,710 )

Net income (loss)

Net income on discontinued operations

Net (loss) income

$ ( 41,512,264 )

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Net loss per common share from continuing operations

Net income (loss) per common share from discontinued

Net income (loss)

Net income per common share from discontinued operations

Net (loss) income

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

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primarily to the establishment of a valuation allowance, utilization of deferred and the effect of permanent differences and adjustments.

Issued Accounting Pronouncements

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.

is effective for annual periods beginning after December 15, 2024.

The Company adopted ASU 2023-09 effective January 1, 2025 on a prospective

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.

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

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.

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.

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.

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.

2 – GOING CONCERN

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financial statements are issued.

In accordance with Financial Accounting Standards Board, or the FASB, ASU 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.

of December 31, 2024, the Company had an accumulated deficit of $ 39,038,973 and $ 308,096 in cash.

will need to raise additional capital or secure debt funding to support on-going operations, and to fund the assets and operations of

any businesses or assets we acquire.

The sources of this capital are expected to be the sale of equity and debt, which may not be available

on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders.

If we are unable to access additional

capital moving forward, it may hurt our ability to grow and to generate future revenues, our financial position, and liquidity.

factors raise substantial doubt about the ability of the Company to continue as a going concern.

Unless management is able to obtain

additional financing, it is unlikely that the Company will be able to meet its funding requirements during the next 12 months.

The financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

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.

of December 31, 2025, the Company had an accumulated deficit of $ 80,551,237 and cash and cash equivalents of $ 6,662,008 .

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

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.

3 – ACQUISITIONS AND DISPOSITIONS

Company evaluated the Scienture Merger Agreement pursuant to ASC 805 and ASU 2017-01, Topic 805, Business Combinations .

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.

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 .

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.

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.

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.

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

OF PURCHASE PRICE ALLOCATION

Purchase consideration:

X preferred stock

July 25, 2024

Purchase consideration:

Series X preferred stock

Total purchase consideration

Purchase price allocation:

Operating lease right-of-use

Intangible assets - product

Prepaid expenses

Operating lease right-of-use assets

Intangible assets - product technologies

Accounts payable

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( 2,000,000 )

tax liability

Deferred tax liability

( 13,524,213 )

Accounts payable and other current liabilities

Purchase price payable

Notes payable

assets acquired

Net assets acquired

is primarily attributable to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible

1 unchanged sentence

The goodwill is not deductible for tax purposes.

results of Scienture have been included in the consolidated financial statements since the date of acquisition.

Scienture’s revenue

and net loss included in the consolidated financial statements since the acquisition date through December 31, 2024 were $ 0 and a loss

of $ 3,509,597 , respectively.

Pro Forma Financial Information

following unaudited pro forma financial information presents the Company’s financial results as if the Scienture Merger had occurred

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 unaudited pro forma financial information is not necessarily indicative of what the financial results actually

would have been had the acquisitions been completed on this date.

In addition, the unaudited pro forma financial information is not indicative

of, nor does it purport to project, the Company’s future financial results.

The pro forma information does not give effect to any

estimated and potential cost savings or other operating efficiencies that could result from the acquisition:

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:

SCHEDULE OF PRO

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$ ( 19,459,955 )

$ ( 9,698,339 )

Net loss from continuing operations per share

July 31, 2023, the Company entered into the Superlatus Merger Agreement (see Note 1) with Superlatus whereby the Company acquired 100 %

of the stock of Superlatus in the Superlatus Merger.

Superlatus includes a wholly-owned subsidiary, Sapientia.

Consideration for the

Superlatus Merger consisted of (i) 136,441 shares of the Company’s common stock at a fair value of $ 7.30 per share and (ii) 306,855

shares of the Company’s Series B Preferred Stock, each share of which is convertible into 100 shares of common stock.

fair value of the common stock and Series B Preferred Stock on the closing date was $ 225,000,169 (the “Purchase Price”).

On January 8, 2024, the Company entered into the Superlatus Amendment.

Under the terms of the Superlatus Amendment, the merger consideration

to the shareholders of Superlatus was adjusted to an aggregate of 136,441 shares of the Company’s common stock and 15,759 shares

of the Company’s Series B Preferred Stock.

The total fair value of the common stock and Series B Preferred Stock on the closing

date was adjusted to $ 12,500,089 (the “Amended Purchase Price”).

Additionally, the shareholders of Superlatus agreed to surrender

back to the Company 289,731 shares of the Company’s Series B Preferred Stock received before the Superlatus Amendment.

acquisition of Superlatus was accounted for as a business combination using the acquisition method pursuant to FASB ASC Topic 805.

the acquirer for accounting purposes, the Company had estimated the Purchase Price, assets acquired and liabilities assumed as of the

acquisition date, with the excess of the Purchase Price over the fair value of net assets acquired recognized as goodwill.

An independent

valuation expert assisted the Company in determining these fair values.

Amended Purchase Price allocation as of the acquisition date is presented as follows:

OF PURCHASE PRICE ALLOCATION

Purchase consideration:

Common Stock,

at fair value

B Preferred Stock, at fair value

purchase consideration

Purchase price allocation:

Prepaid expenses

Intangible assets, net

Assets acquired

Accounts payable and other

current liabilities

Purchase price payable

( 1,905,000 )

Liabilities assumed

( 2,538,548 )

assets acquired

Urgent Company, Inc.

September 27, 2023, the Company entered into an Asset Purchase Agreement (the “TUC APA”) with The Urgent Company, Inc.

and its wholly owned subsidiaries, pursuant to which, the Company was assigned certain inventory and property and equipment and assumed

certain operating leases for consideration of $ 4,400,000 in promissory notes (see Note 11).

Subsequent to December 31, 2023, we divested

our interest in TUC.

transaction was accounted for as an asset acquisition pursuant to FASB ASC Topic 805.

As the acquirer for accounting purposes, the Company

allocated the cost of the asset acquisition to the assets acquired and liabilities assumed as of the acquisition date based on their

respective relative fair value as of the date of the transaction.

following summarizes the provisional relative fair values of the assets acquired as of the acquisition date based on the allocation of

the cost of the asset acquisition:

OF FAIR VALUES OF ASSETS ACQUIRED

consideration:

purchase consideration

of cost of assets acquired:

and equipment

assets acquired

and Divestitures

Pharma Solutions, LLC and Community Specialty Pharmacy, LLC

August 22, 2023, the Company and Wood Sage, LLC (“Wood Sage”) entered into (i) a Membership Interest Purchase Agreement (the

“APS MIPA”), pursuant to which the Company sold its 100 % membership interest in Alliance Pharma Solutions, LLC (“APS”)

for consideration of a $ 125,000 promissory note (the “APS Sale Price”) and (ii) a Membership Interest Purchase Agreement

(the “CSP MIPA”), pursuant to which the Company sold 100 % of the membership interest in Community Specialty Pharmacy, LLC

(“CSP”) in exchange for a $ 100,000 promissory note (the “CSP Sale Price”).

As a result, the results of APS and

CSP were classified as discontinued operations in our consolidated statements of operations and excluded from both continuing operations

and segment results for the year ended December 31, 2023.

part of recognizing the business as held for sale in accordance with U.S.

GAAP, the Company was required to measure APS and CSP at the

lower of its carrying amount or fair value less cost to sell.

As a result of this analysis, during the year ended December 31, 2023,

the Company recognized a non-cash, pre-tax loss on disposal of $ 3,300,225 .

The loss is included in “Net loss from discontinued

operations” in the consolidated statements of operations.

The loss was determined by comparing the fair value of the consideration

received for the sale of a 100% interest in APS and CSP with the net assets of APS and CSP, respectively, immediately prior to the transaction.

a result of the transactions, the following assets and liabilities of APS and CSP were transferred to Wood Sage as of August 22, 2023:

OF ASSETS AND LIABILITIES

Solutions, LLC

Pharmacy, LLC

Accounts receivable, net

Prepaid assets

Intangible assets and capitalized software,

Accounts payable

Accrued liabilities

Net assets sold

February 16, 2024, the Company, together with Softell and MMS, entered into the MMS APA under which MMS agreed to purchase for cash substantially

all of the assets of Softell.

to Note 1 for further detail on the disposition of the Company’s legacy subsidiaries.

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 .

Subject to the terms and conditions of the MMS APA, 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.

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.

received the payment in May 2024.

MMS APA was accounted for a business disposition in accordance with ASC 810-40-40-3A.

4 unchanged sentences

Cash received from MMS

Other receivable from

Fair value of consideration received

Other receivable from MMS

Fair value of consideration received

Carrying amount

of assets and liabilities

Total fair value of consideration received

Carrying amount of assets and liabilities

Accounts receivable, net

9 unchanged sentences

Notes payable, current portion

Lease liability, net of

current portion

Lease liability, net of current portion

Notes payable

carrying amount of assets and liabilities

Gain on disposition

Total carrying amount of assets and liabilities

Gain on disposition of business

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.

March 5, 2024, the Company entered into the Superlatus SPA with the Buyer.

Pursuant to the Superlatus SPA, the Company sold all of the

issued and outstanding stock of Superlatus to 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 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

of operations of the year ended December 31, 2024.

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

became rights and obligations of the Buyer.

1 unchanged sentence

As of March 5, 2024, the Company no longer

consolidated the assets, liabilities, revenues and expenses of Superlatus.

consolidated the assets, liabilities, revenues and expenses of Superlatus Inc.

The components of the disposition are as follows:

OF BUSINESS ACQUISITIONS ASSETS AND LIABILITIES

Fair value of consideration

Fair value of consideration received

Carrying amount

of assets and liabilities

Total fair value of consideration received

Carrying amount of assets and liabilities

Property, plant and equipment, net

9 unchanged sentences

Notes payable

carrying amount of assets and liabilities

Loss on disposition

Total carrying amount of assets and liabilities

Loss on disposition of business

$ ( 2,083,742 )

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 operations of the year ended December 31, 2024.

of Legacy Subsidiaries

Notes 1 and 4 for detailed discussion.

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.

of December 31, 2024, we had $ 8,145

of the current assets from discontinued operations,

comprised of accounts receivable and $ 5,346

of current liabilities from discontinued operations,

comprised of accounts payable of $ 5,211 and

accrued liabilities of $ 135 .

results of the discontinued operations for the years ended December 31, 2024 and 2023 consist of the following:

The results of the

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

OF DISCONTINUED OPERATIONS

Cost of sales

Gross profit (loss)

( 3,872,135 )

Operating expenses:

4 unchanged sentences

Total operating expenses

Operating income (loss)

( 5,224,547 )

( 3,337,513 )

Operating income

Non-operating income (expense):

Goodwill impairment

( 5,129,116 )

Gain (loss) on dispositions

Gain on dispositions

( 2,083,742 )

Interest expense

Total non-operating income (expense)

( 2,083,742 )

( 5,191,801 )

( 6,023,197 )

Provision for income taxes

Net income (loss) on

discontinued operations

$ ( 152,670 )

$ ( 2,083,742 )

$ ( 10,416,348 )

$ ( 410,280 )

$ ( 706,587 )

Net income on discontinued operations

$ ( 2,083,742 )

4 unchanged sentences

Health and Tollo Health

November 21, 2023, but effective September 14, 2023, the Company issued a promissory note (the “Wellgistics Note”) to Wellgistics

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 .

Wellgistics prepaid $ 250,000 prior to the

execution date.

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 .

As of December 31, 2023, the balance of the

Wellgistics Note was $ 50,000 .

The Wellgistics Note was fully paid off in February 2024.

of December 31, 2024, other receivables include a $ 3,923,770 receivable from Wellgistics and $ 215,000 receivable from Tollo Health.

advances are unsecured, non-interest bearing and due on demand.

Note 7 for detail on the note receivable from Wood Sage.

Wellgistics Health and Tollo Health have common ownership and management with the Company.

February 29, 2024, the Company’s wholly owned subsidiary, Softell, entered into the Subscription Agreement with Lafayette.

to the Subscription Agreement, Softell will, in two equal tranches, invest a total of up to $ 5,000,000 in Lafayette in exchange for up

to 2,000,000 shares of Lafayette’s newly created Series A Convertible Preferred Stock, with the second tranche becoming payable

only upon Softell’s receipt of notice that Lafayette has successfully drilled its first oil and gas well and produced at least

one hundred (100) barrels of oil.

As of December 31, 2024, the Company determined Lafayette’s investment to be impaired and recognized

an impairment of $ 2,500,000 .

July 2024, the executives of Scienture issued a short-term loan to Scienture for an aggregate amount of $ 265,000 .

The loans are unsecured,

non-interest bearing and due on demand.

The loans were still outstanding as of December 31, 2024.

November 2024, the executives of Scienture issued a short-term loan to Scienture for an amount of $ 150,000 .

The loans are unsecured,

non-interest bearing and due on demand.

The loans were outstanding as of December 31, 2024.

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.

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 .

Company recognized a loss on disposition of $ 385,528 .

On June 24, 2025, the promissory note was assigned by Tollo to Integral Health,

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.

Note 6 for detail on the note receivable from Wood Sage, LLC.

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.

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 were no amounts outstanding under these loan agreements as of December 31, 2025.

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 were

no amounts outstanding under these loan agreements as of December 31, 2025.

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

were no amounts outstanding under these loan agreements as of December 31, 2025.

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 were

no amounts outstanding under these loan agreements as of December 31, 2025.

5 – REVENUE RECOGNITION

Company derives revenue from one primary source—product revenue.

revenue consists of shipments of:

of pharmaceutical products to pharmacies;

for our products are recognized and invoiced when the product is shipped to the customer.

for one-time services are recognized at the point in time when services are rendered.

Payment terms for products and services are generally

0 to 60 days and the Company has no contract assets or liabilities.

Revenues for the years ended December 31, 2024 and 2023 were $ 136,643 and

$ 1,363,830 , respectively.

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.

is measured at the net transaction price equal to the gross invoice price reduced by estimated variable consideration.

Gross-to-net adjustments

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.

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.

Pay Discounts.

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

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.

of variable consideration are reassessed each reporting period.

Changes in estimates are recorded as adjustments to revenue in the period

Accrued gross-to-net liabilities are included within accrued liabilities on the consolidated balance sheets.

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

OF DISAGGREGATION OF REVENUE

December 31, 2025

December 31, 2024

ARBLI™ (SCN-102, Losartan Potassium Oral Suspension)

Legacy TrXade product revenues

Total revenues

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.

6 – NOTES RECEIVABLE – RELATED PARTY

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.

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

7 – INVENTORY

3 unchanged sentences

Finished goods

expenses and other current assets included $ 750,000 in deposits for future inventory was written off during the year ended December 31,

7 – NOTES RECEIVABLE – RELATED PARTY

August 22, 2023, the Company received a Promissory Note (the “Wood Sage Note”) in the amount of $ 1,300,000 from Wood Sage.

The Wood Sage Note bears no interest and is currently due and payable.

As of both December 31, 2024 and 2023, the outstanding balance

of the Wood Sage Note was $ 1,300,000 .

8 – GOODWILL AND INTANGIBLE ASSETS

connection with the Scienture Merger on July 25, 2024, the Company recorded goodwill of $ 21,372,960 and intangible assets of $ 76,400,000 .

purchase price allocation of intangible assets was evaluated under ASC 805.

The identified intangible assets were determined to be product

technologies, and were valued accordingly by each product candidate:

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

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:

OF INTANGIBLE ASSETS WERE DETERMINED TO BE PRODUCT TECHNOLOGIES

Product Candidate

expects SCN-102 to achieve regulatory approval in late 2024, with product commercialization projected to begin in 2025.

received regulatory approval in March 2025.Product commercialization began in the third quarter of 2025.

expects SCN-104 to achieve regulatory approval in late 2027 or early 2028, with product commercialization projected to begin in 2028.

10 unchanged sentences

The Company discounted the expected future cash flows at a 53.0% rate of return, equal to the

weighted-average cost of capital (“WACC”) 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.

of December 31, 2024, the Company has not begun amortizing any of the product technology intangible assets.

9 – CONTINGENT FUNDING LIABILITIES

December 13, 2023, the Company entered into a non-recourse funding agreement with a third-party for the purchase and sale of future receivables

(the “December Receivables Agreement”).

Pursuant to the December Receivables Agreement, the third party agreed to fund the

Company $ 150,000 to purchase $ 214,500 of future receivables.

The Company also paid $ 7,500 as a one-time origination fee in connection

with the December Receivables Agreement.

This agreement was fully paid off in February 2024.

November 22, 2023, the Company entered into a non-recourse funding agreement with a third-party for the purchase and sale of future receivables

(the “November Receivables Agreement”).

Pursuant to the November Receivables Agreement, the third party agreed to fund the

Company $ 275,000 to purchase $ 393,250 of future receivables.

The Company also paid $ 13,750 as a one-time origination fee in connection

with the November Receivables Agreement.

This agreement was fully paid off in February 2024.

October 25, 2023, the Company entered into a non-recourse funding agreement with a third-party for the purchase and sale of future receivables

(the “October Receivables Agreement”).

Pursuant to the October Receivables Agreement, the third party agreed to fund the

Company $ 1,200,000 to purchase $ 1,728,000 of future receivables.

The Company also paid $ 60,000 as a one-time origination fee in connection

with the October Receivables Agreement.

This agreement was fully paid off in February 2024.

Company’s relationship with the funding source meets the criteria in ASC 470-10-25 – Sales of Future Revenues or Various

Other Measures of Income (“ASC 470”), which relates to cash received from a funding source in exchange for a specified percentage

or amount of revenue or other measure of income of a particular product line, business segment, trademark, patent or contractual right

for a defined period.

Under this guidance, the Company recognized the fair value of its contingent obligation to the funding source,

as of the acquisition date, as a current liability in its consolidated balance sheet.

ASC 470, amounts recorded as debt are to be amortized under the interest method.

The Company made an accounting policy election to utilize

the prospective method when there is a change in the estimated future cash flows, whereby a new effective interest rate is determined

based on the revised estimate of remaining cash flows.

The new rate is the discount rate that equates the present value of the revised

estimate of remaining cash flows with the carrying amount of the debt, and it will be used to recognize interest expense for the remaining

Under this method, the effective interest rate is not constant, and any change in expected cash flows is recognized prospectively

as an adjustment to the effective yield.

As of December 31, 2024, and 2023, the total contingent funding liability was

$ 0 and $ 1,246,346 respectively, and the effective interest rate was approximately 0 % and 31 %, respectively.

This rate represents the

discount rate that equates the estimated future cash flows with the fair value of the debt and is used to compute the amount of interest

to be recognized each period.

Any future payments made to the funding source will decrease the contingent funding liability balance accordingly.

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.

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.

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

Treasury yield as of December 31, 2025);

a market rate of return of 13.0% (10-year CAGR of S&P 500, 2016–2025);

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%).

Impairment – ASC 350

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.

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.

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.

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.

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

(in thousands)

Balance, December 31, 2024

Impairment charge

Balance, December 31, 2025

Assets – Classification and Annual Assessment

Company’s intangible assets consist of four product technology assets acquired in connection with the Scienture Merger.

(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)

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.

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):

OF INTANGIBLE ASSETS IMPAIRMENT TEST RESPECTIVE ESTIMATED FAIR VALUE

Carrying Amount

Impairment Loss

SCN-104 (DHE Mesylate Injection)

SCN-106 (Cathflo Injection – Potential Biosimilar)

SCN-107 (Bupivacaine Long-Acting Injection)

Total IPR&D impairment charges

Intangible Asset – Recoverability Test (ASC 360)

(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.

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.

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

OF INTANGIBLE ASSETS

SCN-102 – finite-lived (net of $454 amortization)

SCN-104 – indefinite-lived IPR&D

SCN-106 – indefinite-lived IPR&D

SCN-107 – indefinite-lived IPR&D

Total intangible assets, net

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.

9 – CONVERTIBLE DEBT AND NOTES PAYABLE

Debenture – Arena

November 22, 2024, the Company entered into a Securities Purchase Agreement with the Arena Finance Markets, LP (“Arena Finance”),

Arena Special Opportunities Partners III, LP (“ASOP” and, together with Arena Finance, the “Arena Investors”).

Under the Securities Purchase Agreement, the Company will issue 10 % original issue discount secured convertible debentures (“Debentures”)

in a 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.

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 %).

convertible debenture will be matured eighteen months from the date first closing.

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.

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.

First Closing Debentures contain customary events of default.

2 unchanged sentences

the First Closing Debentures, in an amount equal to 125 % of the outstanding principal amount and accrued and unpaid interest.

to limited exceptions set forth in the First Closing Debentures, the First Closing Debentures prohibit the Company and, as applicable,

its subsidiaries from incurring any new indebtedness that is not subordinated to the Arena Investors and, as applicable, any subsidiary’s

obligations in respect of the First Closing Debentures until the First Closing Debentures are paid in full.

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.

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.

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.

fair value of the shares of common stock issued was $ 420,200 , which was included as a debt discount as noted below.

Company agreed, pursuant to a Security Agreement, dated November 25, 2024 (the “Security Agreement”), to grant 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, LLC, entered into a Guarantee

Agreement, dated November 25, 2024 (the “Guarantee”), with the Arena Investors, pursuant to which it agreed to guarantee

the prompt payment,

shall accrue 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, in which case Default Interest shall accrue and be paid instead of PIK Interest.

The PIK Interest

shall be added to the outstanding principal amount of this 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 represent

the PIK Interest.

Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall

accrue daily commencing on the Original Issue Date 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.

the year ended December 31, 2024, the Company accrued $ 33,333 in interest expense pertaining to the Arena debentures.

a result of the debentures, the Company recognized an aggregate debt discount of $ 3,333,333 .

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

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.

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.

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.

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).

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.

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.

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.

At December 31, 2024, the outstanding balance of the debentures, including

the outstanding principal of $ 3,333,333 less

the unamortized discount of $ 2,721,058 ,

was $ 612,275 .

The following is a summary of the Arena Debentures:

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.

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.

following is a summary of the First Closing Debentures:

OF THE ARENA DEBENTURES

5 unchanged sentences

( 2,477,217 )

Excess debt discount amortization at issuance

Excess debt discount amortization at issuance date

Amortization of debt discount

Arena note, net of unamortized

debt discount, at December 31, 2024

Company evaluated the terms of the conversion features of the 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 notes 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 convertible debenture, 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 debentures.

Arena note, net of unamortized debt discount, at December 31, 2025

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

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.

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 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.

the fair value of the contingent consideration liability related to updated assumptions and estimates are recognized within the statements

of operations.

Changes in the fair value

of the contingent consideration liability related to updated assumptions and estimates are recognized within the statements of operations.

Company valued the derivative liability using a Black-Scholes method using following assumptions:

OF DERIVATIVE LIABILITY TABLE TEXT BLOCK

OF DERIVATIVE LIABILITY

December 31, 2025

December 31, 2024

Risk-free interest rate

Expected term (in years)

Expected volatility

Expected volatility+A13

Expected dividend yield

2 unchanged sentences

Outstanding as of December 31, 2024

Issuance of embedded derivative

Change in fair value

( 2,296,834 )

Outstanding as of December 31, 2025

Convertible Debt

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 percent and the prime rates are adjusted quarterly.

As of 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 shall be paid 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 .

The balance of the NVK debt upon the Scienture Merger and at December 31, 2024 was $ 2,000,000 .

Interest expense on the NVK debt was $ 231,639

for the year ended December 31, 2024.

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 .

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.

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

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.

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

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.

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.

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, 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 will be required to make a payment of $ 360,000 to the noteholder and each month thereafter the

Company will be 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 shall be 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 .

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 .

During the year ended December 31, 2024, the Company incurred $ 43,200 in interest expense pertaining to the note.

issuance date of these financial statements, the note is still outstanding and the parties are working on an extension.

connection with the note, 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.

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.

debt discount recognized in connection with the note was $ 117,332 , of which $ 42,755 was amortized through December 31, 2024.

payable, net of unamortized discount of $ 74,577 , was $ 285,423 as of December 31, 2024.

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

OF THE COMPANY’S DEBT

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.

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.

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

As of December 31, 2025

debt discount

of December 31, 2024

Convertible debenture - Arena

Scienture convertible debt

Streeterville note

Current maturity of debt

Total long-term debt

As of December 31, 2024

debt discount

3 unchanged sentences

August 2024 note

Scienture convertible

Scienture convertible debt

( 2,795,635 )

Current maturity of debt

long-term debt

Total long-term debt

$ ( 2,721,058 )

64 unchanged sentences

10 – STOCKHOLDERS’ EQUITY

of Series B Preferred Stock

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.

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.

of December 31, 2025 and 2024, there were 15,759 issued and outstanding shares of Series B Preferred Stock.

of Series X Preferred Stock

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”).

Concurrently with revoking the Company’s authority to issue Series A Preferred

Stock, the Company authorized the issuance of up to 9,211,246 shares of the Series X Preferred Stock, a new class of preferred stock.

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.

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

5 unchanged sentences

Common Stock as to distributions of assets upon liquidation, dissolution, or winding up of the Company.

consideration for the Scienture Merger, at the Effective Time of First Merger, the shares of Scienture common stock issued and outstanding immediately

prior to the Effective Time 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 is convertible into one share of

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.

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

of Series C Preferred Stock

October 4, 2023, the Company filed a Certificate of Designation, Preferences, Rights and Limitations of the Series C Preferred Stock

with the Secretary of the State of Delaware which designated 1,000 shares of the Company’s authorized and unissued preferred stock

as convertible Series C Preferred Stock at a par value of $ 0.00001 per share.

Global Ventures Stock Purchase Agreement

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.

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

of Series B Preferred Stock

June 26, 2023, the Company filed a Certificate of Designation, Preferences, Rights and Limitations of the Series B Preferred Stock with

the Secretary of the State of Delaware which 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.

1:15 Stock Split

June 21, 2023, the Company executed a 1:15 reverse stock split for stockholders of record on that date.

This was executed to comply with

the Nasdaq Listing Rule 5550(a)(2) to have the price of the stock above $ 1 .

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

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

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.

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 to Scienture convertible debt as consideration for a loan maturity extension and default

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).

the year ended December 31, 2025, the Company issued 3,760,150 shares of common stock for services.

1 unchanged sentence

services was $ 4,310,090 and was included in general and administrative expenses in the consolidated statements of operations.

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).

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

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).

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

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.

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.

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.

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.

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).

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).

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.

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 .

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

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

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

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

Note Commitment Shares

additional consideration for the Purchaser’s execution and delivery of this Agreement, (i) concurrently with the execution and

delivery of this Agreement on the First Closing Date (as defined below), the Company shall cause the Transfer Agent, to issue to each

Purchaser participating in the first Closing or its designee on the First Closing Date its pro rata portion of 55,000 of the shares of

Common Stock being issued as Commitment Shares in connection with the First Closing, and (ii) in connection with any Closing following

the First Closing, the Company shall cause its Transfer Agent to issue to each Purchaser participating in such Closing or its designee

a certain number of Commitment Shares.

The aggregate number of Commitment Shares owing to each Purchaser in connection with any Closing

following the First Closing will be agreed among the Company and the Purchasers participating in such Closing, and shall be set forth

in an allocation table prior to such Closing (each a “Commitment Shares Allocation Table.”) For the avoidance of doubt, all

of the Commitment Shares issuable in connection with the First Closing on the First Closing Date shall be fully earned as of the First

Closing Date regardless of whether a Subsequent Closing shall occur (see Note 10).

this connection, 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.

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.

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).

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.

Line of Credit

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 has 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, including, without limitation, and additional shares to be sold to the

Investor from time to time under the ELOC Agreement.

The term of the ELOC Agreement began on the date of execution and ends 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 shall

have 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”).

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.

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 (“Initial Commitment Fee Shares”) and (ii) in two

separate tranches, a number of additional shares of common stock (“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 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 shall be subject

to a true-up after each issuance pursuant to the terms of the ELOC Agreement.

consideration for the Investor’s execution and delivery of the ELOC Agreement, the Company issued to the Investor, as a commitment

fee, 70,000 shares of the Company’s common stock on November 25, 2024.

The fair value of shares issued was $ 534,800 and was included

(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

The Additional Commitment Fee Shares were subject to a true-up after each issuance pursuant to the terms of the ELOC Agreement.

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.

Cash Dividend

March 6, 2024, the Company announced the declaration of a special cash dividend of eight dollars ($ 8.00 ) per share of common stock, payable

In March 2025, the deferred offering costs previously capitalized were

offset against the gross proceeds from the ELOC share issuances (see below).

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.

March 2025, the Company issued an aggregate of 2,800,000 shares of its common stock pursuant to the terms of the ELOC Agreement.

issuance generated total gross proceeds, which after deducting applicable offering costs, resulted in net proceeds of $ 4,333,609 .

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.

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.

Direct Offering

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.

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.

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

Special Cash Dividend

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.

1 unchanged sentence

the aggregate) was paid using a portion of the proceeds from the closing of the sale of certain assets to MMS.

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.

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.

Compensation Awards

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.

on August 13, 2023, the Board approved the issuance of 24,444 shares of common stock of the Company to each of Mr.

(who each at the time of issuance were members of the Board) for services rendered to the Company during fiscal 2023, which shares were

valued at $ 110,000 .

The Board also approved the issuance of 14,056 shares of common stock of the Company to Jeff Newell (who, at the

time of issuance was a member of the Board) for services rendered during fiscal 2023, which were valued at $ 63,250 based on the most

recent close price of the Company’s common stock on the date approved by the Board.

The shares vest at the rate of 1/4th of such

shares immediately on the grant date, and 1/4th of such shares on each of October 1, 2023, January 1, 2024 and April 1, 2024, subject

to each applicable independent director’s continued service to the Company on such dates.

Additionally, the Board approved 10,000

shares with immediate vesting to each Board member to recognize the significant additional work for various financing, sales, acquisitions,

operations restructuring.

of the awards discussed above were issued under the Company’s Second Amended and Restated 2019 Equity Incentive Plan (the “Plan”)

and all restricted stock awards discussed above were evidenced by Restricted Stock Grant Agreements.

Company’s board of directors 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.

12 – PREFUNDED AND PRIVATE PLACEMENT WARRANTS

October 4, 2022 the Company entered into a securities purchase agreement (the “2022 SPA”) with an institutional investor

(the “Purchaser”) which provided for the sale and issuance by the Company of (i) the Company’s common stock, (ii) pre-funded

warrants (the “Pre-Funded Warrants”) and (iii) warrants (the “Private Placement Warrants” and, together with

the shares of common stock and the Pre-Funded Warrants, the “Securities”).

January 4, 2023, the investor exercised the Pre-Funded Warrants for a purchase price of $ 6.02 .

The investor was issued the shares on

Each Private Placement Warrant has an exercise price of $ 22.50 per share and is exercisable following the stockholder approval

obtained in December 2022, and will expire on the fifth anniversary of the date on which the Private Placement Warrants became exercisable.

The Private Placement Warrants contain standard adjustments to the exercise price including for stock splits, stock dividend, rights

offerings and pro rata distributions, and include full ratchet anti-dilutive rights in the event the Company issues shares of Common

Stock or Common Stock equivalents within fifteen months of the initial exercise date, with a value less than the then exercise price

of such Private Placement Warrants, subject to certain customary exceptions, and further subject to a minimum exercise price of $ 3.48

The Private Placement Warrants also include certain rights upon ‘fundamental transactions’ as described in the

Private Placement Warrants, including allowing the holders thereof to require that the Company re-purchase such Private Placement Warrants

at the Black Scholes Value of such securities.

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.

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.

11 – WARRANTS

the year ended December 31, 2024, 28,487 warrants to purchase shares of common stock were exercised for a total purchase price of $ 16,567

(see Note 11).

connection with a note (see Note 10), 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 commons stock on a cashless basis.

Company uses the Black-Scholes pricing model to estimate the fair value of stock-based awards on the date of the grant.

cost related to the warrants for the year ended December 31, 2024, and 2023 was $ 71,332 and $ 0 , respectively.

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.

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.

of December 31, 2025 and 2024, the Company remeasured the fair value of warrants outstanding at $ 10,914 and $ 919,935 , respectively.

connection with remeasurement of warrants, a loss of $ 182,982 and $ 148,420 was recognized during the years ended December 31, 2024 and

2023, respectively, as the change in fair value of warrant liability.

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.

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

OF OUTSTANDING AND EXERCISABLE WARRANTS

Average Exercise Price

Life In Years

Warrants outstanding as of December 31, 2022

Warrants granted

Warrants forfeited, expired, cancelled

Warrants exercised

Exercise Price

Warrants outstanding as of December 31, 2024

Warrants exercisable as of December 31, 2024

Warrants granted

3 unchanged sentences

Warrants exercisable as of December 31, 2025

Company maintains stock option plans under which certain employees are awarded option grants based on a combination of performance and

The stock option plans provide for the grant of up to 155,556 shares, and the Plan provides for automatic increases in the number

of shares available under such plan (currently 133,333 shares) on April 1 st of each calendar year, beginning in 2021 and ending

in 2029 (each a “Date of Determination”), in each case subject to the approval and determination of the administrator of

the plan (the Board of Directors or Compensation Committee) on or prior to the applicable Date of Determination, equal to the lesser

of (A) ten percent (10%) of the total shares of common stock of the Company outstanding on the last day of the immediately preceding

fiscal year and (B) such smaller number of shares as determined by the administrator.

The administrator as a result of the annual meeting

shareholder vote increased the number of shares available to grant to employees under the Plan by 2,000,000.

The administrator did not

approve an increase in the number of shares covered under the Plan as of April 1, 2022.

Company’s board of directors 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.

the year ended December 31, 2024, no options to purchase shares were granted.

For the year ended December 31, 2024, 2,371 options to

purchase shares of common stock were exercised for $ 9,840 in cash (see Note 12).

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 .

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.

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

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 .

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

OF STOCK OPTION ACTIVITY

Weighted-Average

Exercise Price

Weighted-Average

Contractual Life in Years

outstanding as of December 31, 2022

exercisable as of December 31, 2022

outstanding as of December 31, 2023

exercisable as of December 31, 2023

outstanding as of December 31, 2024

exercisable as of December 31, 2024

15 – CONTINGENCIES

License and Commercial Agreements

entered into an exclusive license and commercial 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 (SCN-102 and SCN-104 are together referred

to as “the Products”) for use in the United States of America.

March 2024, the parties have terminated the agreement, and the parties agreed that Scienture shall pay Kesin a total gross amount of

Life in Years

Options outstanding as of December 31, 2024

Options exercisable as of December 31, 2024

Options granted

Options cancelled

( 2,000,000 )

Forfeited/expired

Options exercised

Options outstanding as of December 31, 2025

Options exercisable as of December 31, 2025

13 – COMMITMENTS AND CONTINGENCIES

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.

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.

March 5, 2024, the Company sold all of the issued and outstanding stock of Superlatus Inc.

to Superlatus Foods Inc.

pursuant to the Superlatus

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.

shares of Series B Preferred Stock issued in connection with the Superlatus Acquisition remain outstanding.

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.

Pharma Corporation

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.

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.

agreement also requires that if the full $1,285,900 has not been repaid within two years of the early of i) commercial launch or ii)

120 from FDA approval, then interest will accrue prospectively at a rate of 8% annually on unpaid balance.

Accordingly, Scienture recorded

a $1,285,000 termination fee liability .

As of September 30, 2024, the entire amount is outstanding.

The royalty agreement requires that if the 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).

OF DEVELOPMENT AGREEMENT LIABILITY

Development Agreement Liability

December 31, 2025

December 31, 2024

Current portion

Long-term portion

Total development agreement liability

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 LLC’s business combination with the Company.

Scienture LLC has disputed that the

amount is payable, and the parties entered into discussions to resolve the issue.

March 11, 2025, Kesin filed a complaint against Scienture LLC in the United States District Court for the Eastern District of New York

seeking payment of the disputed $ 1.285 million.

There can be no assurance that an amicable resolution will be obtained.

Scienture LLC

intends to vigorously defend itself in the litigation.

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

The Company determined that the new lease required measurement and recognition of the lease liability and right-of-use assets

of $ 313,301 .

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.

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.

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.

July 25, 2024, the Company entered into and closed the Scienture Merger Agreement.

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.

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.

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.

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.

balance sheet information related to leases are as follows:

OF BALANCE SHEET INFORMATION RELATED TO LEASES

Weighted-average remaining lease term (in years)

Weighted-average discount rate

SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR OPERATING LEASE LIABILITIES

3 unchanged sentences

Present value of future minimum lease payments

current obligation

current obligation under lease

Long-term lease obligations

the years ended December 31, 2024, and 2023, total operating lease expense was $ 82,342 and $ 323,961 , respectively, which is included

in general and administrative expenses in the consolidated statements of operations, as well as $ 0 and $ 271,922 from discontinued operations,

respectively.

the years ended December 31, 2024, and 2023, total short-term lease expense was $ 10,978 and $ 62,016 respectively, which is included in

general and administrative expenses in the condensed consolidated statements of operations, as well as $ 750 and $ 34,000 from discontinued

operations, respectively.

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.

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

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

The Company’s CEO is the chief operating decision-maker.

Company classifies its business interests into reportable segments which are:

- Licensed wholesaler of brand, generic and non-drug products – B2B sales

– pharmaceutical research company which is engaged in the research and development of branded pharmaceutical products

- Other – corporate overhead expense and discontinued operations.

OF BUSINESS INTERESTS INTO REPORTABLE SEGMENTS

Ended December 31, 2024

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).

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.

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:

$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 .

following table presents key financial information for the Company’s 1 single reportable segment for the years ended December 31,

2025 and 2024:

OF SEGMENTAL FINANCIAL INFORMATION

December 31, 2025

December 31, 2024

Cost of sales

Research and development expense

Total operating expenses (excl.

Impairment loss

Total operating expenses

Operating loss

( 42,590,842 )

( 14,701,015 )

Interest expense

Net loss from continuing operations, net of tax

$ ( 41,512,264 )

Geographic information as of and for the year ended December 31, 2024 is presented below:

OF GEOGRAPHIC INFORMATION

For The Year Ended December 31, 2024

Assets as of December 31, 2024

$ ( 18,244,480 )

Ended December 31, 2023

Interest expense

Geographic information as of and for the year ended December 31, 2023 is presented below:

For The Year Ended December 31, 2023

Assets as of December 31, 2023

Total assets (at period end)

$ 104,853,805

16 – INCOME TAXES

provision (benefit) for income taxes on income from operations for the years ended December 31, 2024 and 2023 consists of the following:

(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:

(LOSS) BEFORE INCOME TAXES

December 31, 2025

December 31, 2024

United States

$ ( 43,182,487 )

$ ( 9,600,194 )

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

OF PROVISION FOR INCOME TAXES

Federal total

December 31, 2025

December 31, 2024

Total current

Total deferred

Total income tax benefit (provision)

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:

OF EFFECTIVE INCOME TAX RATE RECONCILIATION

December 31, 2025

December 31, 2024

federal statutory rate ( 21 %)

$ ( 9,068,322 )

the year ended December 31, 2024, the Company recorded a $ 360,016 tax provision expense pertaining to discontinued operations, which

is included within net income (loss) from discontinued operations, net of tax per the consolidated statements of operations.

The accompanying

income tax payable is included within accrued liabilities on the consolidated balance sheet.

(loss) before income taxes for the years ended December 31, 2024 and 2023 consisted of the following:

(LOSS) BEFORE INCOME TAXES

income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial

reporting purposes and the amounts used for income tax purposes.

The significant components of the deferred tax assets and liabilities

are as follows:

$ ( 2,016,041 )

State income taxes, net of federal benefit

Non-deductible stock-based compensation (ISO)

Deductible stock-based compensation

Other permanent differences

Change in valuation allowance

Total income tax benefit (provision)

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

OF DEFERRED TAX ASSETS AND LIABILITIES

operating losses

research and development costs

issuance costs

December 31, 2025

December 31, 2024

Deferred tax assets:

Tax Liabilities:

to use assets

Net operating loss carryforwards

Capitalized R&D costs (IRC §174)

Accruals and reserves

Operating lease liability

Debt issuance costs

Total gross deferred tax assets

Valuation allowance

Net deferred tax assets

Deferred tax liabilities:

deferred tax asset (liability)

2023, the Company has established a valuation allowance equal to the full amount of the deferred tax asset primarily due to uncertainty

in the utilization of the net operating loss carry forwards.

As of December 31, 2024, the Company utilized all remaining valuation allowance,

resulting in a net deferred tax liability of $ 13,524,213 .

estimated net operating loss carry forwards of approximately $ 11,998,985 will be available based on the new carryover rules in section

172(a) passed with the Tax Cuts and Jobs Acts.

19 – SUBSEQUENT EVENTS

January 2025, the Company issued in aggregate 240,000 shares of common stock for services.

Line of Credit

connection with the ELOC Agreement (see Note 11), the investor purchased 2,800,000

shares of common stock for net proceeds of approximately $ 4.6 million during the calendar year beginning January 1,

In addition, the Company issued the investor an additional 295,901 commitment fee shares as part of a true-up calculation.

Departure of Directors or Certain Officers;

Election of Directors;

of Certain Officers

On March 13, 2025, the Board of Directors appointed Eric Sherb to serve

as the Company’s Chief Financial Officer effective as of March 13, 2025 (the “Effective Date”).

Sherb will succeed

Prashant Patel, who previously served as the Company’s Interim Principal Financial/Accounting Officer.

Patel notified the Company’s

Board of Directors of his intention to resign his position as Interim Principal Financial/Accounting Officer effective as of the Effective

Patel will continue to serve as the Company’s President and Chief Operating Officer.

Patel’s decision to resign

as the Company’s Interim Principal Financial/Accounting Officer is not the result of any dispute or disagreement with the Company,

the Company’s management or the Company’s Board of Directors on any matter relating to the Company’s operations, policies

or practices.

January 15, 2025 and January 16, respectively, Narasimhan Mani and Prashant Patel each voluntarily resigned as directors of the Company.

Neither resignation was the result of any dispute or disagreement with the Company or any matter relating to the Company’s operations,

policies or practices.

Patel and Dr.

Mani will not receive compensation for their service on the Board of Directors of the Company

Patel and Dr.

Mani each will continue on in their respective management roles.

connection with the foregoing director resignations, the Board approved a decrease in the size of the Board from 7 directors to 5 directors.

As such, the Board currently does not have any vacancies.

Intangible assets

$ ( 16,044,000 )

$ ( 13,524,213 )

Right-of-use assets

Total deferred tax liabilities

( 16,052,838 )

( 13,533,051 )

Net deferred tax liability

$ ( 13,012,482 )

$ ( 11,004,427 )

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.

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

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.

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.

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.

IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data