Scienture Holdings, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, as appropriate, in order to allow timely decisions in connection with required disclosure. Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our co-Chief Executive Officers and our Chief Financial Officer (our principal executive officers and principal accounting/financial officer), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Report. Based on this evaluation, our co-Chief Executive Officers and our Chief Financial Officer concluded that as of December 31, 2025, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports filed with the SEC pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our co-CEOs and CFO, as appropriate, to allow timely decisions regarding required disclosures. As a result of the formative stage of our development, the Company has not fully implemented the necessary internal controls. The matters involving internal controls and procedures that the Company’s management considered to be material weaknesses under the standards of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) were: (1) The Company did not maintain a fully integrated financial consolidation and reporting system throughout the period and as a result, extensive manual analysis, reconciliation and adjustments were required in order to produce financial statements for external reporting purposes, and (2) The Company does not currently have a sufficient complement of technical accounting and external reporting personnel commensurate to support standalone external financial reporting under public company or SEC requirements. Specifically, the Company did not effectively segregate certain accounting duties due to the small size of its accounting staff and maintain a sufficient number of adequately trained personnel necessary to anticipate and identify risks critical to financial reporting and the closing process. In addition, there were inadequate reviews and approvals by the Company’s personnel of certain reconciliations and other processes in day-to-day operations due to the lack of a full complement of accounting staff. Management believes that the material weaknesses set forth above did not have an effect on the Company’s financial results reported herein. We are committed to improving our financial organization. As part of this commitment, we have increased our personnel resources and technical accounting expertise as we develop the internal and financial resources of the Company. In addition, the Company has prepared and implemented sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of GAAP and SEC disclosure requirements. Management has prepared and is in the process of implementing sufficient written policies and checklists to remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. We have improved our financial organization as we have increased our personnel resources and technical accounting expertise. We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis. 100 Table of Contents Management’s Report on Internal Control Over Financial Reporting Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. The Company’s internal control over financial reporting includes those policies and procedures that are designed to: ● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework (2013). Based on our assessment, management concluded that the Company’s internal controls over financial reporting were not effective as of December 31, 2025, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Specifically, management’s determination was based on the following material weaknesses which existed as of December 31, 2025: ● Financial Reporting Systems: The Company did not maintain a fully integrated financial consolidation and reporting system throughout the period and as a result, extensive manual analysis, reconciliation and adjustments were required in order to produce financial statements for external reporting purposes. ● Segregation of Duties: The Company does not currently have a sufficient complement of technical accounting and external reporting personnel commensurate to support standalone external financial reporting under public company or SEC requirements. Specifically, the Company did not effectively segregate certain accounting duties due to the small size of its accounting staff and maintain a sufficient number of adequately trained personnel necessary to anticipate and identify risks critical to financial reporting and the closing process. In addition, there were inadequate reviews and approvals by the Company’s personnel of certain reconciliations and other processes in day-to-day operations due to the lack of a full complement of accounting staff. Limitations on the Effectiveness of Controls Management of the Company, including its co-Chief Executive Officers and its current Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Furthermore, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons or by the collusion of two or more persons. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Changes in Internal Control Over Financial Reporting. There have not been any changes in our internal control over financial reporting during the year ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Our workforce operated primarily in a work from home environment for the year ended December 31, 2025. While pre-existing controls were not specifically designed to operate in our current work-from-home operating environment, we do not believe that such work-from-home actions have had a material adverse effect on our internal controls over financial reporting. We have continued to re-evaluate and refine our financial reporting process to provide reasonable assurance that we could report our financial results accurately and timely. ITEM 9B. OTHER INFORMATION During the quarter ended December 31, 2025, there was no information required to be disclosed in a report on Form 8-K which was not disclosed in a report on Form 8-K. During the quarter ended December 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 101 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required under Item 10 is incorporated herein by reference to the information set forth in our the 2026 Proxy Statement. We have adopted an Insider Trading Policy which governs the purchase, sale, and/or other disposition of our securities by our directors, officers, and employees and other covered persons designated by the policy. We believe our Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and Nasdaq listing standards, as applicable. A copy of our Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report. ITEM 11. EXECUTIVE COMPENSATION The information required under Item 11 is incorporated herein by reference to the information set forth in our the 2026 Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Certain information required under Item 12 is incorporated herein by reference to the information set forth in our the 2026 Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required under Item 13 is incorporated herein by reference to the information set forth in our the 2026 Proxy Statement. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required under Item 14 is incorporated herein by reference to the information set forth in our the 2026 Proxy Statement. 102 Table of Contents PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES (a) The following is an index of the financial statements, schedules and exhibits included in this Annual Report. (1) All Financial Statements Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm 72 Consolidated Balance Sheets 73 Consolidated Statements of Operations 74 Consolidated Statements of Changes in Stockholders’ Equity 75 Consolidated Statements of Cash Flows 76 Notes to Consolidated Financial Statements 77 (2) Consolidated Financial Statement Schedules Except as provided above, all financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto included in this Annual Report. 103 Table of Contents (3) Exhibits Incorporated by Reference Filing Filed/Furnished Exhibit No. Description Form File No. Exhibit Date Herewith 2.1 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, Inc. 8-K 001-39199 2.1 7/31/2024 3.1 Second Amended and Restated Certificate of Incorporation of Trxade Group, Inc. S-1 333-234221 3.1 10/15/2019 3.3 Certificate of Amendment to Second Amended and Restated Certificate of Incorporation (1-for-6 Reverse Stock Split of Common Stock) filed with the Delaware Secretary of State on February 12, 2020, and effective February 13, 2020 8-K 001-39199 3.1 2/13/2020 3.4 Certificate of Amendment of Certificate of Incorporation (changing name TRxADE HEALTH, INC.) 8-K 001-39199 3.1 5/28/2021 3.5 Form of Certificate of Amendment to Second Amended and Restated Certificate of Incorporation 8-K 001-39199 3.1 6/15/2023 3.6 Certificate of Amendment of Second Amended and Restated Certificate of Incorporation 8-K 001-39199 3.1 9/24/2024 3.7 Certificate of Designation of Series B Preferred Stock 8-K 000-55218 3.1 06/26/2023 3.8 Certificate of Designation of Preferences, Rights and Limitations of Series C Preferred Stock 8-K 000-55218 3.1 10/11/2023 3.9 Certificate of Designation of Preference, Rights and Limitations of Series X Non-Voting Convertible Preferred Stock. 8-K 001-39199 3.1 7/31/2024 3.10 Amended and Restated Bylaws of Trxade Group, Inc. 10-12G/A 000-55218 3.1 7/24/2014 3.11 Form of Common Stock Purchase Warrant 8-K 000-55218 4.2 10/7/2022 4.1 Description of Registered Securities 10-K 001-39199 4.1 3/27/2023 10.1* Second Amended and Restated Trxade Group, Inc. 2019 Equity Incentive Plan 8-K 001-39199 10.1 5/28/2021 10.2* Form of Stock Option Agreement Trxade Group, Inc. Amended and Restated 2019 Equity Incentive Plan S-8 333-246318 10.6 8/14/2020 10.3* Form of Restricted Stock Grant Agreement Trxade Group, Inc. Amended and Restated 2019 Equity Incentive Plan S-8 333-246318 10.7 8/14/2020 10.4* Form of Trxade Group, Inc. 2019 Equity Incentive Plan Restricted Stock Grant Agreement S-8 333-246318 10.8 8/14/2020 10.5* Trxade Group, Inc. Independent Director Compensation Policy adopted April 14, 2020 10-Q 001-39199 10.8 7/27/2020 104 Table of Contents 10.6+ Master Services Agreement, dated October 29, 2024, by and between the Company and Anthem Biosciences Pvt. Ltd. S-1/A 333-283591 10.25 1/14/2025 10.7+ Exclusive Commercial and Supply Agreement dated March 4, 2025, by and between Scienture, LLC and Summit Biosciences Inc. 8-K 001-39199 1.1 3/10/2025 10.8 Consulting Agreement by and between Scienture Holdings, Inc. and Draper, Inc. dated March 17, 2025 8-K 001-39199 10.1 3/21/2025 10.9* Independent Contractor Agreement by and between Scienture Holdings, Inc. and EMS Consulting Services, LLC 8-K 001-39199 5.1 3/13/2025 10.10+ Form of Common Stock Purchase Agreement by and between Scienture Holdings, Inc. and the investors named therein. 10-Q 001-39199 10.1 8/12/2025 10.11 Form of Indemnification Agreement 8-K 001-39199 10.1 7/3/2025 10.12 Membership Interest Purchase Agreement by and among Scienture Holdings, Inc., Integra Pharmacy Solutions LLC, and Tollo Health, Inc., dated April 8, 2025 8-K 001-39199 1.01 4/11/2025 10.13 Stock Purchase Agreement by and among Scienture Holdings, Inc. and Tollo Health, Inc., dated April 8, 2025 8-K 001-39199 1.02 4/11/2025 10.14 Form of Promissory Note 8-K 001-39199 1.03 4/11/2025 10.15* First Amendment to Employment Agreement effective October 1, 2024, by and between Scienture, LLC and Dr. Narasimhan Mani 8-K 10.1 10/24/2025 10.16* First Amendment to Employment Agreement effective October 1, 2024, by and between Scienture, LLC and Dr. Shankar Hariharan 8-K 10.2 10/24/2025 10.17 Second Amendment of Loan and Security Agreement dated October 10, 2025, by and among the Company, Scienture, LLC, and NVK Finance, LLC 8-K 10.1 10/16/2025 10.18 Note Purchase Agreement dated October 14, 2025, by and between the Company and Streeterville Capital, LLC 8-K 10.2 10/16/2025 10.19 Secured Promissory Note dated October 14, 2025, made by the Company in favor of Streeterville Capital, LLC 8-K 10.3 10/16/2025 10.20 Security Agreement dated October 14, 2025, by and between the Company and Streeterville Capital, LLC 8-K 10.4 10/16/2025 10.21 Security Agreement dated October 14, 2025, by and between Scienture, LLC and Streeterville Capital, LLC 8-K 10.5 10/16/2025 10.22 Guaranty dated October 14, 2025, made by Scienture, LLC for the benefit of Streeterville Capital, LLC 8-K 10.6 10/16/2025 10.23 Letter Agreement dated October 2, 2025, by and among the Company, Arena Finance Markets, LP, and Arena Special Opportunities III LP 8-K 10.1 10/3/2025 105 Table of Contents 10.24 Equity Distribution Agreement, dated September 19, 2025, with Maxim Group LLC 8-K 1.1 9/23/2025 10.25 Form of Securities Purchase Agreement 8-K 10.1 8/15/2025 10.26 Form of Placement Agency Agreement 8-K 10.2 8/15/2025 14.1 Code of Ethics 10-K 000-55218 14.1 3/23/2015 19.1 Insider Trading Policy 10-K 001-39199 19.1 4/22/2024 21.1 List of Subsidiaries X 23.1 Consent of Independent Registered Accounting Firm X 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act X 31.2 Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act X 32.1 Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act X 32.2 Certification of Principal Accounting Officer Pursuant to Section 906’ of the Sarbanes-Oxley Act X 97.1 Form of Clawback Policy 10-K/A 001-39199 97.1 5/3/2024 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X 101.SCH Inline XBRL Taxonomy Extension Schema Document X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 104 Inline XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline XBRL Document Set. * Indicates management contract or compensatory plan or arrangement. + Exhibits and/or schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplementally copies of any of the omitted exhibits and schedules upon request by the SEC; provided, however, that the registrant may request confidential treatment pursuant to Rule 24b-2 under the Exchange Act for any exhibits or schedules so furnished. ITEM 16. FORM 10–K SUMMARY None. 106 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SCIENTURE HOLDINGS, INC. By: /s/ Dr. Narasimhan Mani Dr. Narasimhan Mani Co-Chief Executive Officer and President By: /s/ Dr. Shankar Hariharan Dr. Shankar Hariharan Co-Chief Executive Officer and Executive Chairman Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this registration statement has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Dr. Narasimhan Mani Co-Chief Executive Officer and President March 30, 2026 Dr. Narasimhan Mani (Co-Principal Executive Officer) /s/ Dr. Shankar Hariharan Co-Chief Executive Officer and Executive Chairman March 30, 2026 Dr. Shankar Hariharan (Co-Principal Executive Officer) /s/ Eric Sherb Chief Financial Officer March 30, 2026 Eric Sherb (Principal Financial and Accounting Officer) /s/ Donald G. Fell Director March 30, 2026 Donald G. Fell /s/ Mayur Doshi Director March 30, 2026 Mayur Doshi /s/ Subbarao Jayanthi Director March 30, 2026 Subbarao Jayanthi 107