Scienture Holdings, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS Scienture Holdings, Inc. formerly TRxADE HEALTH, INC. Condensed Consolidated Balance Sheets As of March 31, 2026 and December 31, 2025 (Unaudited) March 31, December 31, 2026 2025 ASSETS Current assets: Cash and cash equivalents $ 3,542,754 $ 6,662,008 Accounts receivable, net 722,545 731,328 Inventory 210,934 213,408 Prepaid expenses 250,427 262,278 Deferred offering costs 47,384 47,384 Total current assets 4,774,044 7,916,406 Property, plant and equipment, net 15,000 15,500 Notes receivable 5,000,000 5,000,000 Interest receivable 343,750 250,000 Intangible assets, net 70,519,218 70,973,064 Operating lease right-of-use assets 9,693 23,360 Total assets $ 80,661,705 $ 84,178,330 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,404,794 $ 1,443,266 Accrued liabilities 703,872 657,034 Operating lease liability - current 10,004 24,137 Warrant liability - 10,914 Development agreement liability - current portion 685,000 600,000 Total current liabilities 2,803,670 2,735,351 Development agreement liability - 285,000 Deferred tax liability 11,037,595 11,037,595 Total liabilities 13,841,265 14,057,946 Commitments and contingencies (Note 15) - - Stockholders’ equity: Series A preferred stock, $ 0.00001 par value; 0 and 9,211,246 shares authorized; 0 shares issued and outstanding as of both March 31, 2026 and December 31, 2025 - - Series B preferred stock, $ 0.00001 par value; 787,754 shares authorized; 15,759 shares issued and outstanding as of both March 31, 2026 and December 31, 2025 - - Series C preferred stock, $ 0.00001 par value; 1,000 shares authorized; 0 shares issued and outstanding as of both March 31, 2026 and December 31, 2025 - - Series X preferred stock, $ 0.00001 par value; 9,211,246 shares authorized; 0 shares issued and outstanding as of both March 31, 2026 and December 31, 2025 - - Preferred Stock - - Common stock, $ 0.00001 par value; 100,000,000 shares authorized; 40,630,815 and 40,630,815 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively 1,015,000 and 1,015,000 shares unvested as of March 31, 2026 and December 31, 2025, respectively 406 406 Additional paid-in capital 150,773,535 150,671,215 Accumulated deficit ( 83,953,501 ) ( 80,551,237 ) Total stockholders’ equity 66,820,440 70,120,384 Total liabilities and stockholders’ equity $ 80,661,705 $ 84,178,330 The accompanying notes are an integral part of the unaudited consolidated financial statements. 4 Table of Contents Scienture Holdings, Inc. formerly TRxADE HEALTH, INC. Condensed Consolidated Statements Of Operations For the Three Months Ended March 31, 2026 and 2025 (Unaudited) 2026 2025 Three Months Ended March 31, 2026 2025 Revenues $ 56,325 $ 10,258 Cost of sales 2,475 9,585 Gross profit 53,850 673 Operating expenses: Wage and salary expense 420,008 696,068 Professional fees 932,552 412,850 Accounting and legal expense 326,178 470,825 Technology expense 15,763 61,620 General and administrative 1,074,864 1,355,948 Research and development 793,984 574,679 Total operating expenses 3,563,349 3,571,990 Operating loss ( 3,509,499 ) ( 3,571,317 ) Non-operating income (expense): Change in fair value of warrant liability 10,910 645,986 Change in fair value of derivative liability - 603,322 Loss on conversion of note payable - ( 96,646 ) Interest income 133,344 25,442 Interest expense ( 37,019 ) ( 670,784 ) Total non-operating expense 107,235 507,320 Benefit (provision) for income taxes - - Net loss $ ( 3,402,264 ) $ ( 3,063,997 ) Net loss per common share Basic $ ( 0.08 ) $ ( 0.33 ) Diluted $ ( 0.08 ) $ ( 0.33 ) Weighted average common shares outstanding Basic 40,630,815 9,425,751 Diluted 40,630,815 9,425,751 The accompanying notes are an integral part of the unaudited consolidated financial statements. 5 Table of Contents Scienture Holdings, Inc. formerly TRxADE HEALTH, INC. Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Equity Series A Series B Series C Series X Common Additional Total Preferred Stock Preferred Stock Preferred Stock Preferred Stock Stock Paid-in Accumulated Stockholders’ Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Equity Balances at December 31, 2024 - $ - 15,759 $ - - $ - - $ - 8,750,582 $ 87 $ 118,111,007 $ ( 39,038,973 ) $ 79,072,121 Common stock issued for services - - - - - - - - 240,000 2 1,079,998 - 1,080,000 Common stock issued for cash pursuant to ELOC agreement, net of offering costs - - - - - - - - 2,800,000 28 2,691,439 - 2,691,467 Equity line of commitment shares issued - - - - - - - - 450,437 5 971,727 - 971,732 Conversion of note payable into common stock - - - - - - - - 274,000 3 410,997 - 411,000 Stock-based compensation expense - - - - - - - - - - 437 - 437 Net loss - - - - - - - - - - - ( 3,063,997 ) ( 3,063,997 ) Balances at March 31, 2025 - $ - 15,759 $ - - $ - - $ - 12,515,019 $ 125 $ 123,265,605 $ ( 42,102,970 ) $ 81,162,760 Balances at December 31, 2025 - $ - 15,759 $ - - $ - - $ - 40,630,815 $ 406 $ 150,671,215 $ ( 80,551,237 ) $ 70,120,384 Balances - $ - 15,759 $ - - $ - - $ - 40,630,815 $ 406 $ 150,671,215 $ ( 80,551,237 ) $ 70,120,384 Stock-based compensation expense - - - - - - - - - - 102,320 - 102,320 Net loss - - - - - - - - - - - ( 3,402,264 ) ( 3,402,264 ) Balances at March 31, 2026 - $ - 15,759 $ - - $ - - $ - 40,630,815 $ 406 $ 150,773,535 $ ( 83,953,501 ) $ 66,820,440 Balances - $ - 15,759 $ - - $ - - $ - 40,630,815 $ 406 $ 150,773,535 $ ( 83,953,501 ) $ 66,820,440 The accompanying notes are an integral part of the unaudited consolidated financial statements 6 Table of Contents Scienture Holdings, Inc. formerly TRxADE HEALTH, INC. Condensed Consolidated Statements of Cash Flows For The Three Months Ended March 31, 2026 and 2025 (Unaudited) 2026 2025 Three Months Ended March 31, 2026 2025 Cash flows from operating activities: Net loss $ ( 3,402,264 ) $ ( 3,063,997 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 500 500 Amortization of intangible assets 453,846 - Change in fair value of warrant liability ( 10,914 ) ( 645,986 ) Change in fair value of derivative liability - ( 603,322 ) Loss on conversion of note payable - 96,646 Stock-based compensation 102,320 437 Common stock issued for services - 1,080,000 Amortization of debt discount - 509,118 Amortization of right-of-use assets 13,667 14,524 Interest income ( 93,750 ) - Changes in operating assets and liabilities: Accounts receivable, net 8,783 7,371 Prepaid expenses and deposits 11,851 ( 415,379 ) Inventory 2,474 - Other receivables - 95,001 Lease liability ( 14,133 ) ( 15,041 ) Accounts payable ( 38,473 ) ( 113,913 ) Accrued liabilities 46,838 97,584 Net cash used in operating activities ( 2,919,255 ) ( 2,956,457 ) Cash flows from financing activities: Proceeds from loan payable, related party - 100,000 Gross proceeds from issuance of common stock - 4,597,999 Repayment of development liability ( 200,000 ) - Net cash (used in) provided by financing activities ( 200,000 ) 4,697,999 Net change in cash ( 3,119,255 ) 1,741,542 Cash at beginning of period 6,662,008 308,096 Cash at end of period $ 3,542,754 $ 2,049,638 Supplemental disclosure of cash flow information: Cash paid for interest $ - $ - Cash paid for taxes $ - $ - Supplemental disclosure of non-cash investing and financing activities: Conversion of note payable into common stock $ - $ 411,000 Equity line of commitment shares issued as offering costs $ - $ 971,732 The accompanying notes are an integral part of the unaudited consolidated financial statements. 7 Table of Contents NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION Overview On September 20, 2024, the Company 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. Bonum Health, LLC was formed to hold certain telehealth assets acquired in October 2019. The “Bonum Health Hub” was launched in February 2020; however, the Company does not anticipate installations moving forward. On April 30, 2025, the Company completed the sale of Bonum Health, LLC. Scienture a New York based branded, specialty pharmaceutical research company which is engaged in the research and development of branded pharmaceutical products. The intellectual property application process was initiated in November 2019 and the product development activities commenced in January 2020. Scienture also plans to foray into commercialization of innovative and branded pharmaceutical products in the US market. Scienture’s assets in development are across therapeutics areas and indications and cater to different market segments. Scienture’s mission is to identify, develop and bring to market innovative technology-based products to address unmet medical needs. Its targeted portfolio consists of short term and long-term opportunities with efficient development, regulatory, and go to market strategies. 8 Table of Contents Disposition of Legacy Subsidiaries The Company also previously owned 100 % of Softell Inc. (f/k/a Trxade Inc.) (“Softell”), Integra Pharma Solutions, LLC (“IPS”), Bonum Health, Inc., and Bonum Health, LLC. Softell & IPS Entities On October 4, 2024, the Company and Softell entered into an Assignment and Assumption of Membership Interests, pursuant to which the Company transferred, and Softell accepted, 100 % of the membership interests of IPS. As a result, IPS became a wholly-owned subsidiary of Softell. On April 8, 2025, the Company entered into a Membership Interest Purchase Agreement 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 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 March 31, 2026 and December 31, 2025, Integral Health and Tollo was no longer considered a related party. On April 8, 2025, the Company also entered into a Stock Purchase Agreement 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. Bonum Health Entities On April 8, 2025, the Company also entered into a Stock Purchase Agreement 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. In November 2025, the Company dissolved Bonum Health, LLC. 9 Table of Contents The divestitures described above are part of a broader strategic realignment at the Company designed to sharpen operational focus and unlock long-term value. It is aligned with the Company’s commitment to streamline its core operations, optimize its portfolio, and accelerate growth in the Branded and Specialty Pharma markets. The Company intends to use the proceeds obtained from the divestment to facilitate the high-growth commercial and strategic product development activities at its Scienture subsidiary. See Note 3 for further detail on the dispositions. Basis of Presentation and Principles of Consolidation The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“ U.S. GAAP ”) and the rules of the SEC and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 30, 2026, and amended on April 30, 2026. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. All significant intercompany balances and transactions have been eliminated in consolidation. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the year ended December 31, 2025, as reported in the Company’s Annual Report on Form 10-K have been omitted. Use of Estimates The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from its estimates. Significant estimates for the three months ended March 31, 2026 and 2025 include the valuation of intangible assets, including goodwill, and gain (losses) on dispositions. Fair Value of Financial Instruments Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1—Quoted prices in active markets for identical assets or liabilities. ● Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. 10 Table of Contents The carrying amounts for cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value because of their short-term maturity. The Company’s outstanding warrant liability is measured at fair value on a recurring basis and is classified within Level 3 of the fair value hierarchy. See Note 11 – Warrants for the significant unobservable inputs used in the valuation and a roll-forward of the warrant liability for the three months ended March 31, 2026. Concentration of Credit Risks and Major Customers Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and receivables. The Company places its cash and cash equivalents with financial institutions. Deposits are insured to Federal Deposit Insurance Corporation limits. During the three months ended March 31, 2026, two customers accounted for 76.5 % of revenue and during the three months ended March 31, 2025, no sales to customers represented greater than 10% of revenue. Accounts Receivable, net Accounts receivable represent amounts due from wholesale distributors for the sale of pharmaceutical products. These receivables are recorded at the invoiced amount, net of estimated variable consideration including rebates, chargebacks, discounts, and other gross-to-net sales adjustments, consistent with the Company’s revenue recognition policy. Payment terms are generally net 90 days from the date of invoice. The Company monitors the creditworthiness of its customers and evaluates the collectability of outstanding receivables on an ongoing basis. The Company estimates expected credit losses on trade receivables in accordance with ASC 326 using an allowance for credit losses (“ACL”). The ACL reflects management’s estimate of lifetime expected credit losses based on historical loss experience, current conditions, and reasonable and supportable forecasts. Trade receivables are pooled by similar risk characteristics. Balances are written off when deemed uncollectible, and recoveries are recorded when received. The Company monitors credit risk primarily through aging and customer-specific evaluations. Inventory Inventory is stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method and includes the purchase price, inbound freight, and other costs directly attributable to the acquisition of finished goods. Inventories primarily consist of finished pharmaceutical products held for sale. The Company regularly evaluates inventory for obsolescence and slow-moving items and records a reserve, if necessary, to write down inventories to their estimated net realizable value. Factors considered in the valuation include current market conditions, historical sales trends, product expiration dates, and projected demand. Inventory write-downs are recorded as a component of cost of goods sold and are not reversed if the market value of the inventory subsequently increases. Deferred Offering Costs The Company complies with the requirements of Accounting Standards Codification (“ ASC ”) 340-10-S99-1 with regards to offering costs. Prior to the completion of an offering, offering costs are capitalized. The deferred offering costs are charged to additional paid-in capital or as a discount to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed. As of March 31, 2026, the Company has capitalized $ 47,384 in deferred offering costs. Deferred offering costs were $ 47,384 as of March 31, 2026 and December 31, 2025, and $ 534,800 as of December 31, 2024. During the three months ended March 31, 2025, the Company reclassified $ 534,800 of deferred offering costs to additional paid-in capital upon the completion of equity offerings. No such amounts were reclassified during the three months ended March 31, 2026. 11 Table of Contents Acquisitions The Company accounts for acquisitions and investments in businesses as business combinations if the target meets the definition of a business and (a) the target is a variable interest entity and the Company is the target’s primary beneficiary, and therefore the Company must consolidate its financial statements, or (b) the Company acquires more than 50% of the voting interest of the target and it was not previously consolidated. The Company records business combinations using the acquisition method of accounting, which requires all the assets acquired and liabilities assumed to be recorded at fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of the net tangible and intangible assets acquired is recorded as goodwill. The application of the acquisition method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration between assets that are depreciated and amortized from goodwill. The fair value assigned to tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Significant assumptions and estimates include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset, if applicable. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the Company’s financial statements may be exposed to potential impairment of the intangible assets and goodwill. If the Company’s investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalizing transaction costs, and does not result in the recognition of goodwill. On July 25, 2024, the Company acquired intangible assets of $ 76,400,000 and recognized goodwill of $ 21,372,960 pursuant to the Scienture acquisition (see Note 3). The acquired goodwill represents the value in excess of the net assets and liabilities acquired at the acquisition date. During the year ended December 31, 2025, the Company performed its annual impairment assessment of goodwill and indefinite-lived intangible assets and recognized aggregate impairment charges of $ 26,346,050 . See Note 9 – Goodwill and Intangible Assets for a full description of the impairment testing methodology, triggering events, valuation inputs, and results. Goodwill Goodwill is an asset representing the excess cost over the fair market value of net assets acquired in business combinations. In accordance with Intangibles - Goodwill and Other (Topic 350), goodwill is not amortized but is tested annually for impairment or on an interim basis when indicators of potential impairment exist. Goodwill is tested for impairment at the reporting unit level. The Company’s reporting units discrete financial information is available and management regularly reviews the operating results. For purposes of impairment testing, goodwill is allocated to the applicable reporting units based on the reporting structure. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors assessed for each of the applicable reporting units include, but are not limited to, changes in macroeconomic conditions, industry and market considerations, cost factors, discount rates, competitive environments and financial performance of the reporting units. If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, a quantitative test is required. The Company also has the option to proceed directly to the quantitative test. Under the quantitative impairment test, the estimated fair value of each reporting unit is compared to its carrying value, including goodwill. If the carrying value of the reporting unit including goodwill exceeds its fair value, an impairment charge equal to the excess would be recognized, up to a maximum amount of goodwill allocated to that reporting unit. Management can resume the qualitative assessment in any subsequent period for any reporting unit. During the year ended December 31, 2025, the Company performed its annual impairment assessment of goodwill and indefinite-lived intangible assets and recognized aggregate impairment charges of $ 26,346,050 . See Note 9 – Goodwill and Intangible Assets for a full description of the impairment testing methodology, triggering events, valuation inputs, and results. Intangible Assets In connection with the Scienture acquisition, the Company identified product technologies assets. The product technologies represent a broad range of novel product candidates including new potential treatments for hypertension, migraine, pain and thrombosis and other related disorders. Each of the product technologies are in various phases of development and had not achieved regulatory approval as of the valuation date. 12 Table of Contents The product technologies are 505(b)(2) products and represent modifications and new delivery methods of already approved drugs (rather than novel drug compounds/formulations/treatments which require significant regulatory approvals and testing). These assets should be amortized over their expected remaining economic life. The product technology assets will remain unamortized, subject to potential impairment testing, until the assets are placed in service, which is when commercialization of the product commences. At that point, the assets will be amortized over their expected remaining life (likely a period of 15 - 20 years based on the patent lives). SCN-102 commenced amortization during the year ended December 31, 2025, upon the asset commercialization of the product commenced for its intended use. Amortization is recorded on a straight-line basis over an estimated useful life of 13 years; amortization expense recognized from the commencement date through March 31, 2026 was $ 907,692 . Other three intangible assets are not amortized until commercialization. See Note 9 – Goodwill and Intangible Assets for detail on impairment testing results. Impairment of Long-Lived Assets The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. During the year ended December 31, 2025, the Company performed its annual impairment assessment of goodwill and indefinite-lived intangible assets and recognized aggregate impairment charges of $ 26,346,050 . See Note 9 – Goodwill and Intangible Assets for a full description of the impairment testing methodology, triggering events, valuation inputs, and results. As of December 31, 2025, SCN-102 passed the ASC 360 undiscounted cash flow recoverability test, therefore, no impairment was recorded. The three other intangible assets failed their annual ASC 350 fair value tests, fair values determined via discounted cash flow analysis were below carrying amounts, resulting in total impairment charges of $ 4,973,090 for the year ended December 31, 2025. The Company did not record an impairment charge for the three months ended March 31, 2026 and 2025. 13 Table of Contents Stock-Based Compensation The Company accounts for stock-based compensation to employees in accordance with ASC 718, “Compensation-Stock Compensation.” ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. Stock option forfeitures are recognized at the date of employee termination. Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2018-07 for the accounting of share-based payments granted to non-employees for goods and services. Leases The Company accounts for its leases under ASC 842, “Leases.” Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred. In calculating the right of use asset and lease liability, the Company has elected to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term. Research & Development Expenses Research and development costs are expensed in the period incurred in accordance with ASC 730, “Research and Development.” These expenses consist of independent contractor costs, costs for outsourced analytical research and development activities, batch manufacturing cost and, advisory costs as a part of research, market research costs and other regulatory consulting costs. Income (loss) Per Common Share Basic net income per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted net income per common share is computed similar to basic net income per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The dilutive effect of the Company’s options and warrants is computed using the treasury stock method. As of March 31, 2026, 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. The following table sets forth the computation of basic and diluted loss per share: SCHEDULE OF BASIC AND DILUTED LOSS PER SHARE 2026 2025 Three Months Ended March 31, 2026 2025 Numerator: Net loss $ ( 3,402,264 ) $ ( 3,063,997 ) Denominator: Denominator for EPS – weighted average shares Basic 40,630,815 9,425,751 Diluted 40,630,815 9,425,751 Net loss Basic $ ( 0.08 ) $ ( 0.33 ) Diluted $ ( 0.08 ) $ ( 0.33 ) Income Taxes The Company’s provision for income taxes was $ 0 for the three months ended March 31, 2026 and 2025. The income tax provisions for these periods are based upon estimates of annual income (loss), annual permanent differences and statutory tax rates in the various jurisdictions in which the Company operates. For all periods presented, the Company utilized net operating loss carryforwards to offset the impact of any taxable income. The Company’s tax rate differs from the applicable statutory rates due primarily to the establishment of a valuation allowance, utilization of deferred and the effect of permanent differences and adjustments. 14 Table of Contents Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires public business entities to disclose, in tabular format, the nature of certain expenses included in specific income statement line items, including disaggregation by natural classification (inventory purchases, employee compensation, depreciation, intangible asset amortization, and other categories) and disclosure of total selling expenses. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard and anticipates it will result in additional footnote disclosures but does not expect a material impact on its financial position, results of operations, or cash flows. Management does not believe that any other recently issued, but not yet effective, accounting standards will have a material effect on the accompanying consolidated financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances. NOTE 2 – GOING CONCERN The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued. In accordance with Financial Accounting Standards Board (“ FASB ”) Accounting Standards Update No. 2014-15, “Presentation of Financial Statements - Going Concern” (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. As of March 31, 2026, the Company had an accumulated deficit of $ 83,953,501 and cash and cash equivalents of $ 3,542,754 . As of March 31, 2026, the Company had cash and cash equivalents of $ 3,542,754 and current liabilities of approximately $ 2.8 million, resulting in positive working capital of approximately $ 1.97 million. Management believes that its existing cash on hand, combined with revenues generated from the commercialization of ARBLI™ (SCN-102) and its planned financing activities, will be sufficient to fund the Company’s operations and meet its obligations as they become due for at least twelve months from the date these financial statements are issued. In making this assessment, management considered the following: (i) cash on hand of $ 3.5 million as of March 31, 2026, 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. The Company’s ability to continue as a going concern is dependent upon the successful commercialization of ARBLI™ (SCN-102) and its ability to raise additional capital as needed. 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 the Company is unable to achieve planned commercial revenues or obtain additional financing, the Company may be required to delay, reduce, or eliminate certain development programs or commercialization activities. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these condensed consolidated financial statements are issued. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 15 Table of Contents NOTE 3 – ACQUISITIONS AND DISPOSITIONS Acquisitions Scienture, Inc. The Company evaluated the Agreement and Plan of Merger, dated July 25, 2024, by and among the Company, MEDS Merger Sub I, Inc., MEDS Merger Sub II, LLC, and Scienture (the “ Scienture Merger Agreement ”) pursuant to ASC 805 and ASU 2017-01, Topic 805, “Business Combinations.” The Company first determined that Scienture met the definition of a business as it includes inputs and a substantive process that together significantly contribute to the ability to create outputs. Scienture’s results of operations are included in the Company’s consolidated financial statements from the date of acquisition. The acquisition method of accounting requires, among other things, that the assets acquired and liabilities assumed in a business combination be measured at their estimated respective fair values as of the closing date of the acquisition. Goodwill recognized in connection with this transaction represents primarily the potential economic benefits that the Company believes may arise from the acquisition. The purchase price allocation is preliminary and could be significantly revised as a result of additional information obtained regarding assets acquired and liabilities assumed and revisions of estimates of fair values of tangible assets and related deferred tax assets and liabilities. The Company will finalize its valuation and the allocation of the purchase price, along with required retrospective adjustments, if any, within a year following the acquisition date. On July 25, 2024, the parties consummated the mergers contemplated by the Scienture Merger Agreement (together, the “Scienture Merger”) and the Company issued 291,536 shares of common stock and 6,826,753 shares of Series X Preferred Stock at the closing. The aggregate fair value of the purchase price consideration was $ 78,646,184 . The fair value was determined by the underlying stock price of the common stock on the date of the Scienture Merger, which was $ 11.63 per share, which was utilized for both the issuance of common and preferred stock after evaluating the terms of the Series X Preferred Stock. The Company also applied a discount for lack of marketability of 5% due to certain lock-up terms on the shares issued. The following summarizes the purchase price consideration and the preliminary purchase price allocation as of the acquisition date: SCHEDULE OF PURCHASE PRICE ALLOCATION July 25, 2024 Purchase consideration: Common stock $ 3,221,245 Series X preferred stock 75,424,939 Total purchase consideration $ 78,646,184 Purchase price allocation: Cash $ 132,976 Operating lease right-of-use assets 61,578 Goodwill 21,372,960 Intangible assets - product technologies 76,400,000 Accounts payable ( 987,097 ) Accrued liabilities ( 1,198,134 ) Loan payable, related party ( 265,000 ) Lease liability ( 61,886 ) Development agreement liability ( 1,285,000 ) Long-term convertible notes ( 2,000,000 ) Deferred tax liability ( 13,524,213 ) Net assets acquired $ 78,646,184 Goodwill is primarily attributable to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible assets that do not qualify for separate recognition. The goodwill is not deductible for tax purposes. 16 Table of Contents Dispositions and Divestitures Refer to Note 1 and 4 for further detail on the disposition of the Company’s legacy subsidiaries. Discontinued Operations In accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying consolidated statements of operations. For the three months ended March 31, 2026 and 2025, the results of the discontinued operations for the three months ended March 31, 2026 and 2025 was $ 0 : NOTE 4- RELATED PARTY TRANSACTIONS Wellgistics Health and Tollo Health On November 21, 2023, but effective September 14, 2023, the Company issued a promissory note (the “ Wellgistics Note ”) to Wellgistics Health, Inc. (f/k/a Danam Health Inc.) (“ Wellgistics ”) in the amount of $ 300,000 . The Company prepaid $ 250,000 prior to the execution date. The Wellgistics Note did not accrue interest. As of December 31, 2023, the balance of the Wellgistics Note was $ 50,000 . The Wellgistics Note was fully paid off in February 2024. As of March 31, 2025, other receivables included a $ 3,828,769 receivable from Wellgistics and $ 215,000 receivable from Tollo. The receivables were unsecured, non-interest bearing and due on demand. The receivables were maintained by the Company’s former IPS subsidiary, which was sold to Tollo as of April 30, 2025. On April 30, 2025, the Company completed the sale of its subsidiaries, IPS, Softell, and Bonum Health, Inc. to Tollo in exchange for a $ 5,000,000 promissory note bearing interest at the prime rate and maturing on June 30, 2030 . The note requires Tollo to repay 20 % of any future equity financing proceeds toward the outstanding balance. In connection with the transaction, the Company recorded a $ 5,000,000 promissory note receivable, and derecognized subsidiaries’ accounts payable of $ 117,162 , other receivables of $ 4,219,239 , operating lease right-of-use assets of $ 142,138 , operating lease liability of $ 158,687 and a related party note receivable of $ 1,300,000 . As such, the Company recognized a loss on disposition of $ 385,528 . On June 24, 2025, the promissory note was assigned by Tollo to Integral Health, Inc. In August 2025, Integral Health, including its subsidiary IPS, were acquired by third parties. Therefore, as of December 31, 2025, Integral Health and Tollo is no longer considered a related party. As of December 31, 2025, the note receivable was outstanding and the Company recognized $ 250,000 in interest income during the year ended December 31, 2025, which was reclassified from note receivable, related party to note receivable on the consolidated balance sheet. As of March 31, 2026, the note receivable was outstanding and the Company recognized $ 93,750 in interest income during the three months ended March 31, 2026 See Note 6 for detail on the note receivable from Wood Sage, LLC. Suren Ajjarapu, the Company’s former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer, each had a beneficial interest in Tollo as of June 30, 2025. In August 2025, Integral Health, including its subsidiary IPS, were acquired by third parties. Therefore, at March 31, 2026 and December 31, 2025, Integral Health and Tollo was no longer considered a related party. NOTE 5 – REVENUE RECOGNITION The Company’s sole source of revenue is product revenue from the sale of pharmaceutical products through wholesale distribution channels. ARBLI™ (SCN-102, Losartan Potassium Oral Suspension) received FDA approval in March 2025 and commenced commercialization in the third quarter of 2025. Revenue is recognized when control transfers to the wholesale distributor, generally upon delivery. Revenue is measured at the net transaction price equal to the gross invoice price reduced by estimated variable consideration. Gross-to-net adjustments include: Chargebacks. The difference between the invoice price charged to wholesale distributors and the lower contract price distributors extend to end-customers (retail pharmacies, hospitals, clinics). Estimated based on expected sell-through and contractual terms. Wholesaler Rebates and Distribution Service Fees. Fees and rebates paid to wholesale distributors and group purchasing organizations under contractual arrangements. Estimated based on contracted rates and expected sales volumes. Prompt Pay Discounts. Discounts offered to wholesale distributors for timely payment, estimated based on contractual terms. Product Returns. Returns accepted under limited conditions (generally damaged, expired, or defective product). Returns have not been material to date given the early stage of ARBLI™ commercialization. Estimates of variable consideration are reassessed each reporting period. Changes in estimates are recorded as adjustments to revenue in the period identified. Accrued gross-to-net liabilities are included within accrued liabilities on the consolidated balance sheets. Revenue disaggregated by product for the three months ended March 31, 2026 and 2025 is as follows: SCHEDULE OF DISAGGREGATED BY PRODUCT Product 2026 2025 Three Months Ended March 31, Product 2026 2025 ARBLI™ (SCN-102, Losartan Potassium Oral Suspension) $ 56,325 $ - Pharmaceutical product resale - 10,258 Total revenues $ 56,325 $ 10,258 NOTE 6 – NOTES RECEIVABLE – RELATED PARTY On August 22, 2023, the Company received a Promissory Note (the “ Wood Sage Note ”) in the amount of $ 1,300,000 from Wood Sage, LLC. The Wood Sage Note bears no interest and is currently due and payable. As of March 31, 2026 and December 31, 2025, the outstanding balance of the Wood Sage Note was $ 0 . The note was held by Softell, a former subsidiary of the Company. On April 30, 2025, the Company completed the sale of its subsidiaries, IPS, Softell and Bonum Health, Inc., to Tollo in exchange for a $ 5,000,000 promissory note bearing interest at the prime rate and maturing on June 30, 2030 (see Notes 1 and 4). In August 2025, Integral Health, including its subsidiary IPS, were acquired by third parties. Therefore, at March 31, 2026 and December 31, 2025, Integral Health and Tollo was no longer considered a related party, which was reclassified from note receivable, related party to note receivable on the consolidated balance sheet. 17 Table of Contents NOTE 7 – INVENTORY Inventory value is determined using the weighted average cost method and is stated at the lower of cost or net realizable value. As of March 31, 2026 and December 31, 2025, inventory was comprised of the following: SCHEDULE OF INVENTORY 2026 2025 March 31, December 31, 2026 2025 Finished goods $ 210,934 $ 213,408 Inventory $ 210,934 $ 213,408 NOTE 8 – GOODWILL AND INTANGIBLE ASSETS In connection with the Scienture Merger on July 25, 2024, the Company recorded goodwill of $ 21,372,960 and intangible assets of $ 76,400,000 . The purchase price allocation of intangible assets was evaluated under ASC 805. The identified intangible assets were determined to be product technologies, and were valued accordingly by each product candidate: SCHEDULE OF INTANGIBLE ASSETS WERE DETERMINED TO BE PRODUCT TECHNOLOGIES Product Candidate Fair Value SCN-102 (a) $ 23,600,000 SCN-104 (b) 25,000,000 SCN-106 (c) 15,000,000 SCN-107 (d) 12,800,000 Intangible Assets $ 76,400,000 (a) SCN-102 received regulatory approval in March 2025.Product commercialization began in the third quarter of 2025. (b) Management expects SCN-104 to achieve regulatory approval in late 2027 or early 2028, with product commercialization projected to begin in 2028. (c) Management expects SCN-106 to achieve regulatory approval in 2027 or 2028, with product commercialization projected to begin in 2028. (d) Management expects SCN-107 to achieve regulatory approval in 2028 or 2029, with product commercialization projected to begin in 2029. The fair value of the product technologies was determined by the Income Approach: Multi-Period Excess Earnings Methods (“ MPEEM ”). The MPEEM measures economic benefits by calculating the cash flows attributable to an asset after deducting appropriate returns for contributory assets used by the business in generating the asset’s revenue and earnings. The MPEEM utilized revenue and cash flow projections through 2030 based on each product candidate’s phase of development. Key assumptions include a 2% long-term revenue growth rate and 3% contributory asset charge rate. The Company discounted the expected future cash flows at a 53.0% rate of return, equal to the weighted-average cost of capital plus 10%, to reflect the risk of the cash flows related to the product technologies . The Company then summed the present values of the estimated future cash flows and included an amortization tax benefit to the value indication of each of the product technologies. The fair value of each product technology was determined using the MPEEM, an income approach that isolates the cash flows attributable solely to the subject intangible asset by projecting revenues and operating costs, deducting contributory asset charges (working capital at 4.0%, property and equipment at 12.9%), and discounting the resulting excess earnings to present value using risk-adjusted discount rates. A tax amortization benefit is included in each fair value indication. Projections reflect each asset’s market size, projected penetration, and net pricing assumptions, with a long-term growth rate of 4.8% applied at terminal value, benchmarked to long-term U.S. nominal GDP expectations. Key valuation inputs included: a risk-free rate of 4.79% (20-year U.S. Treasury yield as of December 31, 2025); a market rate of return of 13.0% (10-year CAGR of S&P 500, 2016–2025); an unlevered beta of 0.98 (Damodaran pharmaceutical industry data); and an effective tax rate of 26.7% (combined U.S. federal rate of 21% and New York state rate of 7.3%) . Goodwill Impairment – ASC 350 In accordance with ASC 350-20, the Company performs its annual goodwill impairment test as of December 31. The Company operates as a single operating segment and, accordingly, goodwill is allocated to and tested at the consolidated entity level as a single reporting unit, consistent with ASC 280 and the manner in which the Company’s Chief Operating Decision Maker reviews operating results for purposes of resource allocation and performance evaluation. As of December 31, 2025, management identified the following indicators of impairment: (i) continued operating losses from continuing operations; (ii) a significant decline in the Company’s market capitalization relative to the carrying value of its net assets; and (iii) challenging conditions within the specialty pharmaceutical sector. Based on the presence of these triggering events, the Company bypassed the qualitative assessment and proceeded directly to a quantitative impairment test. The fair value of the reporting unit was estimated using the Market Capitalization Method, representing a Level 1 input under ASC 820, based on the Company’s quoted share price of $ 0.51 and 40,630,815 shares outstanding as of December 31, 2025, resulting in an estimated fair value of approximately $ 20.7 million. No control premium or marketability discount was applied, as the Company’s shares are actively traded and the quoted market price represents the most reliable indicator of fair value from a market participant perspective. The carrying amount of the reporting unit was approximately $ 82.7 million, resulting in a shortfall of approximately $ 62.0 million. As the shortfall exceeded the recorded goodwill balance, the entire goodwill balance was determined to be impaired in accordance with ASC 350-20-35-3C. The Company recognized a non-cash goodwill impairment charge of $ 21,372,960 for the year ended December 31, 2025, recorded within impairment loss in the consolidated statements of operations. As of March 31, 2026 and December 31, 2025, no goodwill remains on the consolidated balance sheet. Intangible Assets – Classification and Annual Assessment The Company’s intangible assets consist of four product technology assets acquired in connection with the Scienture Merger. SCN-102 (ARBLI™ – Losartan Oral Suspension) received FDA approval in March 2025 and commenced commercialization during the third quarter of 2025; accordingly, it is classified as a finite-lived intangible asset amortized on a straight-line basis over an estimated useful life of 13 years, reflecting remaining patent life. SCN-104 (DHE Mesylate Injection), SCN-106 (Cathflo Injection – Potential Biosimilar), and SCN-107 (Bupivacaine Long-Acting Injection) remain in pre-commercial development and are classified as indefinite-lived in-process research and development (“IPR&D”) assets subject to annual impairment testing under ASC 350-30. 18 Table of Contents Indefinite-Lived IPR&D – Annual Impairment Test (ASC 350-30) The Company performs its annual impairment test of indefinite-lived IPR&D assets as of December 31 each year, and on an interim basis when triggering events are identified. The fair value of each IPR&D asset was estimated using MPEEM, as described above. The required return on asset applied to SCN-104, SCN-106, and SCN-107 was 49.9%, reflecting a base unlevered cost of capital of 12.9% plus a 37.0% development and commercialization risk premium to capture regulatory approval uncertainty, market adoption risk, and execution risk associated with pre-commercial pharmaceutical assets. Based on the annual impairment test, the carrying amounts of SCN-104, SCN-106, and SCN-107 exceeded their respective estimated fair values as of December 31, 2025. In accordance with ASC 350-30-35, each asset was written down to its estimated fair value . Finite-Lived Intangible Asset – Recoverability Test (ASC 360) SCN-102 (ARBLI™ – Losartan Oral Suspension) received FDA approval in March 2025 and commenced commercialization during the third quarter of 2025. Upon commencement, SCN-102 was reclassified from indefinite-lived IPR&D to a finite-lived intangible asset and amortization commenced on a straight-line basis over an estimated useful life of 13 years. Amortization expense recognized from commercialization through December 31, 2025 was $ 453,846 and $ 453,846 during the three months ended March 31, 2026, resulting in a carrying amount of $ 22,692,308 as of March 31, 2026. Due to the presence of impairment indicators as of December 31, 2025, the Company evaluated SCN-102 for recoverability under ASC 360-10-35. The recoverability test compares the carrying amount of the asset to the sum of undiscounted future cash flows expected to result from its use and eventual disposition. The total undiscounted future cash flows attributable to SCN-102, based on management’s projections, were approximately $ 71.1 million, exceeding the carrying amount of $ 23.1 million by approximately $ 48.0 million. Accordingly, SCN-102 was determined to be recoverable and no impairment loss was recognized for this asset as of December 31, 2025. The following table summarizes the carrying amounts of intangible assets as of March 31, 2026 and December 31, 2025 (in thousands): SCHEDULE OF INTANGIBLE ASSETS Asset March 31, 2026 Dec 31, 2025 SCN-102 – finite-lived (net of $454 amortization each in 2026 and 2025) $ 22,692 $ 23,146 SCN-104 – indefinite-lived IPR&D $ 22,339 $ 22,339 SCN-106 – indefinite-lived IPR&D $ 13,381 $ 13,381 SCN-107 – indefinite-lived IPR&D $ 12,107 $ 12,107 Total intangible assets, net $ 70,519 $ 70,973 The decrease in intangible assets from $ 76,400,000 as of December 31, 2024 to $ 70,973,064 as of December 31, 2025 reflects $ 4,973,090 of impairment charges recognized on SCN-104, SCN-106, and SCN-107, and $ 453,846 of amortization expense recognized during the year ended December 31, 2025 and $ 453,846 during the three months ended March 31, 2026, 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. 19 Table of Contents NOTE 9 – DEBT Streeterville Note On October 14, 2025, the Company entered into a note purchase agreement with Streeterville Capital, LLC (“Streeterville”), providing for the issuance of a senior secured promissory note in the aggregate principal amount of $ 3,911,111.11 (the “Streeterville Note”). The Streeterville Note carried an original issue discount of $ 391,111.11 and an interest rate of 9 % per annum. After deducting the original issue discount and $ 20,000 in transaction costs, the Company received net proceeds of $ 3,500,000 , which were utilized to repay the outstanding balance of the Scienture Convertible Debt and for general corporate purposes. During the year ended December 31, 2025, the Streeterville Note was fully repaid. In connection with this repayment, the Company recognized interest expense of $ 13,981 representing accrued interest through the date of payoff. Additionally, the Company fully amortized the $ 391,111.11 original issue discount and the $ 20,000 in transaction costs, which were recognized as interest expense during the period. As of March 31, 2026 and December 31, 2025, the Note had no outstanding balance, and there was no remaining unamortized debt discount or transaction costs associated with this obligation. August 2024 Note In August 2024, the Company issued a convertible note of $ 360,000 , for which the Company received $ 314,000 in net proceeds. On the six-month anniversary of the issuance, the Company was required to make a payment of $ 360,000 to the noteholder and each month thereafter the Company was required to make a payment of $ 7,200 to the noteholder towards repayment of the note (each, an “ Amortization Payment ”). The note bears interest at 12 % per annum and is deemed earned in full and guaranteed as of the note issuance date. If the Company fails to pay any Amortization Payment, the noteholder will have the right to convert the outstanding principal and accrued interest at a conversion price equal to the Conversion Price (as defined below and subject to a floor price of $ 1.50 ). The Conversion Price is the lesser of (i) $ 8.36 or (ii) 85 % of the lowest volume-weighted average prices of the preceding five trading days . The note matures on August 20, 2025 . In connection with the note, the Company issued 76,923 warrants to purchase common stock to the noteholder. The warrants have an exercise price of $ 9.36 per share, are immediately exercisable and have a term of 5 years. The fair value of the warrant was $ 71,332 , which was recognized as a debt discount and will be amortized to interest expense over the life of the note. Total debt discount recognized in connection with the note was $ 117,332 , with $ 42,755 amortized through December 31, 2024, and an additional $ 28,931 amortized during the year ended December 31, 2025. The net carrying value of the note payable, after deducting the remaining unamortized discount of $ 45,646 , was $ 357,554 , including $ 43,200 of accrued interest. On March 31, 2025, the Company converted the outstanding note into equity by issuing 274,000 shares of common stock at a fair value of $ 411,000 . As a result, it recognized a $ 53,446 loss on conversion, reported as a non-operating expense in the consolidated statements of operations. NOTE 10 – STOCKHOLDERS’ EQUITY Designation of Series B Preferred Stock Effective June 26, 2023, the Company filed a Certificate of Designation, Preferences, Rights and Limitations of the Series B Preferred Stock (the “ Series B Preferred Stock ”) with the Secretary of the State of Delaware that designated 787,754 shares of the Company’s authorized and unissued preferred stock as convertible Series B Preferred Stock at a par value of $ 0.00001 per share. Holders of the Series B Preferred Stock are not entitled to receive dividends and do not have redemption or voting rights. Furthermore, the Series B Preferred Stock does not have a liquidation preference. Shares of Series B Preferred Stock are automatically convertible into shares of the Company’s common stock at a ratio of 100 shares of common stock for each share of Series B Preferred Stock upon stockholder approval of such conversion. As of March 31, 2026 and December 31, 2025, there were 15,759 issued and outstanding shares of Series B Preferred Stock. Designation of Series X Preferred Stock On July 25, 2024, the Company revoked the authorization to issue shares of the Company’s Series A Preferred Stock, par value $ 0.00001 per share (the “ Series A Preferred Stock ”) and concurrently authorized the issuance of up to 9,211,246 shares of the Series X Preferred Stock, a then new class of preferred stock. Holders of the Series X Preferred Stock are entitled to receive dividends on shares of the Series X Preferred Stock on an as-if-converted-to-Common-Stock basis, without regard to any beneficial ownership limitation described in a letter of transmittal, equal to and in the same form and manner as dividends are paid to holders of the shares of Common Stock. Subject to any requirements of the General Corporation Law of the State of Delaware, the Series X Preferred Stock has no voting rights. The Series X Preferred Stock ranks on parity with shares of Common Stock as to distributions of assets upon liquidation, dissolution, or winding up of the Company. As consideration for the Scienture Merger, the shares of Scienture common stock issued and outstanding immediately prior to the “Effective Time” of the mergers were converted into the right to receive, in the aggregate, (i) 291,536 shares of the Company’s common stock and (ii) 6,826,753 shares of the Company’s Series X Preferred Stock, each share of which was convertible into one share of common stock. In September 20, 2024, all previously issued shares of Series X Preferred Stock were converted into a total of 6,826,753 shares of common stock. As such, there were no issued and outstanding shares of Series X Preferred Stock as of December 31, 2025. Hudson Global Ventures Stock Purchase Agreement On October 4, 2023, the Company entered into a Securities Purchase Agreement the “Hudson SPA”) with Hudson Global Ventures, LLC (“Hudson”). Under the terms of the Hudson SPA, the Company agreed to sell, and Hudson agreed to purchase, Two Hundred Ninety ( 290 ) shares of Series C Preferred Stock (the “Purchased Shares”) at a price of $ 1,000 per share and a Warrant to purchase up to 41,193 shares of Common Stock. Additionally, pursuant to the Agreement, 40,000 shares of Common Stock were issued to Hudson upon closing for a commitment fee. The Company received $ 250,000 in exchange for the Purchased Shares, Common Stock, and Warrants, net of issuance costs. On July 12, 2024, the Company converted 290 shares of Series C Preferred Stock into 52,158 shares of common stock at the election of the holder. 20 Table of Contents Common Stock The Company did not issue any shares of common stock during the three-months ended March 31, 2026. During the year ended December 31, 2025, the Company issued an aggregate of 7,103,614 shares of common stock for net proceeds of $ 9,008,199 . Private Placements In July 2025, the Company’s board of directors approved a capital raise in an aggregate amount of up to $ 3,000,000 pursuant to a form of Common Stock Purchase Agreement (the “ Purchase Agreement ”). During July 2025, the Company sold an aggregate of 1,078,614 shares of common stock for aggregate proceeds of $ 1,679,993 , pursuant to Purchase Agreements with eight investors. Registered Direct Offering On August 15, 2025, the Company issued an aggregate of 3,225,000 shares of common stock for aggregate proceeds of $ 3,549,184 , pursuant to a Securities Purchase Agreement with several institutional investors as part of a registered direct offering made pursuant to a shelf registration statement on Form S-3 (File No. 333- 289198), which was originally filed by the Company with the Securities and Exchange Commission (the “ Commission ”) on August 1, 2025, and declared effective on August 8, 2025. ATM Program On September 19, 2025, the Company entered into an Equity Distribution Agreement (the “ATM Agreement”) with Maxim Group LLC (“Maxim”), acting as the sole sales agent for the offer and sale of the Company’s common stock, par value $ 0.00001 per share, through an “at-the-market” offering program (the “ATM Program”). These shares are issued pursuant to the Shelf Registration Statement on Form S-3 (File No. 333-289198), which was filed with the 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. During the year ended December 31, 2025, the Company issued and sold an aggregate of 15,722,659 shares of common stock under the ATM Program. These transactions resulted in aggregate net proceeds to the Company of $ 14,871,106 , after deducting the applicable sales commissions and offering expenses. This activity represents a significant increase from the 100 shares of common stock previously issued under the program as of December 31, 2025. The Company did not issue or sell shares under the ATM Program during the three months ended March 31, 2026. Restricted Common Stock As of March 31, 2026 and December 31, 2025, the Company had 1,200,898 restricted shares of common stock outstanding under the option plans. As of March 31, 2026 and December 31, 2025, 185,898 shares were vested. The Company recorded stock-based compensation expense of $ 102,320 in the consolidated statements of operations for the three months ended March 31, 2026. Unrecognized stock compensation outstanding on these grants was $ 636,673 as of March 31, 2026. Equity Compensation Awards Each independent member of the Company’s board of directors 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 of directors), and valued on such same date, based on the closing sales price on such date (or the first business day thereafter), which restricted stock awards will vest at the rate of 1/4th of such awards over the following four calendar quarters, subject to such directors continued service to the Company. The board of directors 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. 21 Table of Contents NOTE 11 – WARRANTS In connection with a note (see Note 9 – Debt), in August 2024 the Company issued 76,923 warrants to purchase common stock. The warrants have an exercise price of $ 9.36 per share, are immediately exercisable and have a term of 5 years. In August 2024, the holder exercised 28,571 warrants for shares of common stock on a cashless basis. Pursuant to the adjustment provisions in Section 3(b) of the warrant agreement, the exercise price automatically adjusted following the Company’s issuance of shares at a dilutive price of $ 1.20 on or about August 14, 2025, resulting in an automatic increase in the aggregate warrant share amount. Accordingly, in August 2025, the holder exercised aggregate of 279,402 warrants for shares of common stock on a cashless basis, including 12,706 warrants issued on October 4, 2023. Warrant liability As of March 31, 2026, the Company remeasured the fair value of warrants outstanding at $ 0 . In connection with the remeasurement of warrants, a gain of $ 10,910 was recognized during the three months ended March 31, 2026, as the change in fair value of warrant liability. The Company classifies its outstanding warrant liability within Level 3 of the fair value hierarchy, as the fair value is determined using the Black-Scholes option-pricing model with unobservable inputs. The following assumptions were used to estimate the fair value of the warrant liability as of March 31, 2026: SCHEDULE OF FAIR VALUE OF WARRANT LIABILITY Three Months Ended March 31, 2026 Expected stock price $ 0.29 Exercise price $ 22.50 Remaining contractual term (years) 1.52 Expected volatility 88.79 % Risk-free interest rate 4.70 % Expected dividend yield 0.00 % Changes in the fair value of the warrant liability, which is measured on a recurring basis using Level 3 inputs, for the three months ended March 31, 2026, were as follows: SCHEDULE OF CHANGE IN WARRANT LIABILITY Warrant Liability Outstanding as of December 31, 2025 $ 10,914 Change in fair value ( 10,910 ) Rounding off ( 4 ) Outstanding as of March 31, 2026 $ - The Company’s outstanding and exercisable warrants, as of March 31, 2026, are presented below: SCHEDULE OF OUTSTANDING AND EXERCISABLE WARRANTS Number Outstanding Weighted Average Exercise Price Contractual Life In Years Intrinsic Value Warrants outstanding as of December 31, 2025 177,536 $ 22.50 1.76 $ - Warrants granted - - - - Warrants forfeited, expired, cancelled - - - - Warrants exercised - - - - Warrants outstanding as of March 31, 2026 177,536 $ 22.50 1.52 - Warrants exercisable as of March 31, 2026 177,536 $ 22.50 1.52 - NOTE 12 – OPTIONS The Plan allows for and the Company maintains stock option award agreements under which certain employees may be awarded option grants based on a combination of performance and tenure. The number of shares available to grant to employees under the Plan is 5,000,000 . The Board and stockholders approved an amendment to the Plan increasing the available shares under the Plan to 5,000,000 shares of the Common Stock as such common stock existed on July 24, 2024. Total compensation cost related to stock options granted was $ 0 and $ 437 for the three months ended March 31, 2026, and 2025, respectively. On September 17, 2025, the Company cancelled 2,000,000 stock options and granted the related option holders 2,000,000 shares of common stock. This modification resulted in the Company recognizing the remaining expense under the original option and an additional incremental consideration as a result of the modification. Total stock-based compensation cost as a result of this transaction was $ 1,512,995 . The following table represents stock option activity for the three-month period ended March 31, 2026: SCHEDULE OF STOCK OPTION ACTIVITY Number Outstanding Weighted- Average Exercise Price Weighted- Average Contractual Life in Years Intrinsic Value Options outstanding as of December 31, 2025 19,899 $ 29.58 2.23 $ - Options granted - - - - Options cancelled - - - - Forfeited/expired - - - - Options exercised - - - - Options outstanding as of March 31, 2026 19,899 $ 29.58 1.98 $ - Options exercisable as of March 31, 2026 19,899 $ 29.58 1.98 - 22 Table of Contents NOTE 13 – COMMITMENTS AND CONTINGENCIES Eat Well In July 2023, the Company entered into, and closed on the transactions contemplated by, an Amended and Restated Agreement and Plan of Merger with Superlatus, whereby the Company acquired Superlatus (the “ Superlatus Acquisition ”). In connection with the Superlatus Acquisition, former shareholders of Superlatus received 306,855 shares of the Company’s Series B Preferred Stock, par value $ 0.00001 per share (the “ Series B Preferred Stock ”). The Series B Preferred Stock are convertible into shares of the Company’s common stock at a conversion ratio of 100-1 . In January 2024, shareholders holding shares of Series B Preferred Stock surrendered shares of the Series B Preferred Stock back to the Company as a result of Superlatus failing to meet certain post-closing conditions associated with the Superlatus Acquisition, such that only 15,759 shares of Series B Preferred Stock remained outstanding. On March 5, 2024, the Company sold all of the issued and outstanding stock of Superlatus Inc. to Superlatus Foods Inc. pursuant to the Superlatus SPA. As a result of the transaction, Superlatus Inc. ceased to be a subsidiary of the Company, and the rights and assets of Superlatus together with various liabilities and obligations that were specific to Superlatus Inc. became rights and obligations of the Buyer. The shares of Series B Preferred Stock issued in connection with the Superlatus Acquisition remain outstanding. In January 2025, Eat Well Investment Group, Inc., a Canadian company (“ Eat Well ”) holding 11,643.84 shares of the Series B Preferred Stock, filed a complaint against the Company in the United States District Court for the Middle District of Florida alleging, among other things, that the Company is responsible for paying certain consideration to Eat Well in connection with Superlatus’ acquisition of Eat Well in June 2023 prior to the Company’s acquisition of Superlatus. Ultimately, Eat Well is seeking $ 8.5 million to be delivered in the form Company common stock, $ 1.15 million in unpaid principal and accrued interest under a legacy note made by Superlatus in favor of Eat Well, $ 350,000 in cash consideration owed by Superlatus to Eat Well, $ 755,000 in unpaid principal and accrued interest on ten promissory notes made by Sapientia, Inc., a subsidiary of Superlatus, in favor of Eat Well, and certain other damages. There can be no assurance that an amicable resolution will be obtained. The Company intends to vigorously defend itself in the litigation. Kesin Pharma Corporation Scienture entered into an exclusive license and commercial agreement (the “ Kesin Agreement ”) with Kesin Pharma Corporation (“ Kesin ”) whereby Scienture granted the exclusive license rights to commercialize SCN-102 in 2022 and SCN-104 in 2023 to Kesin for use in the United States of America. In March 2024, the parties terminated the Kesin Agreement, and the parties agreed that Scienture would pay Kesin a total gross amount of $ 1,285,000 upon commercialization of product via a royalty arrangement. The royalty agreement requires that 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. During the three months ended March 31, 2026, the Company made aggregate payments of $ 217,534 , consisting of $ 200,000 of principal and $ 17,534 of accrued interest. As of March 31, 2026, the remaining outstanding balance of $ 685,000 is presented on the consolidated balance sheet as classified as current (Development agreement liability – current portion). SCHEDULE OF DEVELOPMENT AGREEMENT LIABILITY Development Agreement Liability March 31, 2026 December 31, 2025 Current portion $ 685,000 $ 600,000 Long-term portion - 285,000 Total development agreement liability $ 685,000 $ 885,000 In August 2024, Kesin demanded immediate payment of the full amount under the Kesin Termination Agreement, alleging the full amount is payable in connection with the consummation Scienture’s business combination with the Company. Scienture disputed that the amount is payable, and the parties entered into discussions to resolve the issue. On March 11, 2025, Kesin filed a complaint against Scienture in the United States District Court for the Eastern District of New York seeking payment of the disputed $ 1.285 million. The case was voluntarily dismissed on October 1, 2025. The Company and Kesin entered into a Settlement Agreement and Release on October 27, 2025, whereby Kesin agreed to unconditionally release and discharge the Company from all actions related to the complaint in exchange for the Company paying $ 1.285 million plus 8 % interest from March 13, 2025, and legal fees and costs related to the complaint according to a payment schedule through December 2026. 23 Table of Contents NOTE 14 – LEASES The Company entered into a lease agreement for the period of October 2018 to November 2023. At inception, management had included the renewal period from November 2023 to November 2028 within the initial recognition of the related right of use assets and lease liabilities, as it was reasonably expected, at the time, that the renewal option would be exercised. The Company determined that the new lease required measurement and recognition of the lease liability and right-of-use assets of $ 313,301 . The lease is classified as an operating lease. No incentives were included in the lease. On April 30, 2025, the Company completed the sale of its subsidiaries, IPS, Softell and Bonum Health, Inc., to Tollo. In connection with the transaction, the Company derecognized subsidiary’s operating lease right-of-use assets of $ 142,138 and operating lease liability of $ 158,687 (see Note 1). As such, the Company recognized a gain of $ 16,548 on disposition of related IPS lease. On July 25, 2024, the Company entered into and closed the Scienture Merger. Pursuant to the Scienture Merger Agreement, the Company acquired right of use asset value of $ 61,578 and right of use liability of $ 61,886 on the acquisition date together with all the assets and liabilities of Scienture. The table below reconciles the fixed component of the undiscounted cash flows for and the total remaining years to the lease liabilities recorded in the consolidated balance sheet as of March 31, 2026. Supplemental balance sheet information related to leases are as follows: SCHEDULE OF BALANCE SHEET INFORMATION RELATED TO LEASES March 31, December 31, 2026 2025 Weighted-average remaining lease term (in years) 0.33 0.58 Weighted-average discount rate 15.50 % 15.50 % SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR OPERATING LEASE LIABILITIES Future lease obligations 2026 $ 10,184 Total minimum lease payments 10,184 Less: effect of discounting ( 180 ) Present value of future minimum lease payments 10,004 Less: current obligation under lease 10,004 Long-term lease obligations $ - For the three months ended March 31, 2026, and 2025, total operating lease expense was $ 6,772 and $ 36,402 , respectively, which is included in general and administrative expenses in the unaudited condensed consolidated statements of operations. NOTE 15 – SEGMENT REPORTING Factors used to identify the Company’s reportable segments include the organizational structure of the Company and the financial information available for evaluation by the chief operating decision-maker in making decisions about how to allocate resources and assess performance. The Company’s operating segments have been broken out based on similar economic and other qualitative criteria. The Company operates all reporting segments in one geographical area (the United States). The Company’s chief operating decision-makers are its co-Chief Executive Officers (the “ CODM ”), who make resource allocation decisions and assess performance based on financial information presented on an aggregate basis. There are no segment managers who are held accountable by the CODM for any planning, strategy and key decision-making regarding operations. Accordingly, as of March 31, 2026, the Company has a single reportable segment and operating segment structure. The Company operates entirely within the United States. The key measures of segment profit or loss reviewed by the CODM are total revenues, gross profit, total operating expenses (including research and development expenses), and net loss from continuing operations. The CODM uses these measures to allocate resources, evaluate operational performance, and make strategic decisions regarding pipeline development and commercialization activities. The CODM does not evaluate performance based on asset information at the segment level. Significant segment expenses that are regularly provided to the CODM and included in the reported measure of segment profit or loss include: research and development expenses (SCN-102: $ 41 K; SCN-104: $ 111 K; SCN-106: $ 643 K; SCN-107: $ 0 for the three months ended March 31, 2026); wage and salary expense of $ 420,008 ; professional fees of $ 932,552 ; accounting and legal expense of $ 326,178 . Other segment items not separately disclosed include technology expense of $ 15,763 , general and administrative expense (including stock-based compensation) of $ 1,074,865 , and depreciation and amortization of $ 454,346 . The following table presents key financial information for the Company’s 1 single reportable segment for the three months ended March 31, 2026 and 2025: SCHEDULE OF SEGMENTAL FINANCIAL INFORMATION 2026 2025 Three Months Ended March 31, 2026 2025 Revenues $ 56,325 $ 10,258 Cost of sales 2,475 9,585 Gross profit 53,850 673 Research and development expense 793,984 574,679 Total operating expenses 3,563,349 3,571,990 Operating loss ( 3,509,499 ) ( 3,571,317 ) Net loss ( 3,402,264 ) ( 3,063,997 ) Total assets (at period end) 80,661,705 84,178,330 24 Table of Contents NOTE 16 – SUBSEQUENT EVENTS Streeterville Capital Secured Note Financing On April 27, 2026, the Company entered into and closed a Note Purchase Agreement (the “Streeterville Purchase Agreement”) with Streeterville Capital, LLC (the “Lender”) pursuant to which the Company issued two secured promissory notes: (i) a Secured Promissory Note A-1 in the original principal amount of $ 8.42 million (the “A-1 Note”), which carries an original issue discount of $ 400,000 , and (ii) a Secured Promissory Note B in the original principal amount of $ 3.0 million (the “B Note”). The Company also agreed to reimburse $ 20,000 of Streeterville’s transaction costs. Maxim Group LLC acted as placement agent. At closing, Streeterville funded $ 8.0 million in cash directly to the Company and deposited an additional $ 3.0 million into a deposit account at Lakeside Bank held by SCNX Holdings, LLC, a newly formed Utah wholly-owned subsidiary of the Company (“SCNX Sub”), subject to a Deposit Account Control Agreement among SCNX Sub, Streeterville, and Lakeside Bank. The Company intends to use the net proceeds for working capital, commercialization expenses, portfolio and product development expenses, and other general corporate purposes. The A-1 Note bears interest at 9 % per annum, and the B Note bears interest at 5 % per annum; both notes mature 18 months from issuance. Each note may be prepaid in whole or in part at any time, subject to a 115 % prepayment premium if prepayment is made in connection with third-party refinancing. Beginning eight months after closing, the Lender may redeem (i) up to $175,000 per calendar month and (ii) up to 10% of the daily dollar trading volume of the Company’s common stock when the stock trades more than 20% above the “Minimum Price” as defined under Nasdaq Rule 5635(d), with redemption amounts payable in cash within four trading days of notice. Each time the outstanding balance of the A-1 Note is reduced by $ 1.0 million, the Company has the right to exchange $ 1.0 million of the B Note for a new note on substantially the same terms as the A-1 Note pursuant to Section 3(a)(9) of the Securities Act of 1933. The notes contain customary “Major Trigger Events” and “Minor Trigger Events,” including non-payment, insolvency, bankruptcy, covenant breach, loss of DWAC eligibility, unauthorized reverse stock splits, and unsatisfied money judgments in excess of $500,000. Upon the occurrence of a trigger event, Streeterville may increase the outstanding balance by 15% per Major Trigger Event or 5% per Minor Trigger Event, subject to an aggregate cap of 25%. Uncured trigger events become Events of Default, in which case the outstanding balance becomes immediately due and payable and default interest accrues at the lesser of 18 % per annum or the maximum rate permitted by law. The Company’s obligations under the Streeterville Purchase Agreement are secured by (i) the Deposit Account Control Agreement, (ii) a guaranty from Scienture, LLC and SCNX Sub, (iii) security agreements granting Streeterville a first-priority security interest in substantially all assets of the Company and Scienture, LLC, (iv) an intellectual property security agreement covering Scienture, LLC’s intellectual property, and (v) a pledge by the Company of all of its membership interests in SCNX Sub. The Streeterville Purchase Agreement contains affirmative and negative covenants, including requirements to maintain SEC reporting status and national exchange listing, restrictions on additional liens, restrictions on Restricted Issuances (as defined in the Purchase Agreement), and limitations on subsidiary indebtedness and equity issuances. 25 Table of Contents