What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-13 compared with 2026-05-15 · 372 added, 302 removed, 220 unchanged (75% of the section changed)

17 unchanged sentences

addition, unless the context otherwise requires and for the purposes of this Report only:

“ Exchange Act ”

refers to the Securities Exchange Act of 1934, as amended;

Act ” refers to the Securities Exchange Act of 1934, as amended;

Act ” refers to the Securities Act of 1933, as amended.

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Results of Operations .

An analysis of our financial results comparing the three months ended March 31, 2026 and 2025.

An analysis of our financial results comparing the three and six months ended June 30, 2026 and 2025.

Critical Accounting

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in our reported financial results and forecasts.

July 25, 2024, we acquired a wholly-owned subsidiary, Scienture LLC.

Scienture LLC is a specialty pharmaceutical company focused on the

commercialization and development of products for the treatment of Cardiovascular (“ CVS ”) and Central Nervous

System (“ CNS ”) diseases.

Scienture LLC launched its first commercial product for hypertension and is in the process

of commercializing its second product for the treatment of opioid overdose.

Its development pipeline consists of a broad range of novel

product candidates including new potential treatments for migraine, thrombosis, pain and other related disorders.

Scienture LLC’s

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

Its targeted portfolio consists of

short term and long-term opportunities with efficient development, regulatory, and go to market strategies.

our acquisition of Scienture, we existed as a holding company owning all equity interests of Softell Inc.

(f/k/a Trxade Inc.) (“ Softell ”),

Integra Pharma Solutions, LLC d.b.a.

Trxade Prime (“ IPS ”), Bonum Health, LLC, Bonum Health Inc., and Scienture.

October 4, 2024, the Company and Softell entered into IPS Assignment Agreement, pursuant to which the Company transferred, and Softell

accepted, 100% of the membership interests of IPS.

As a result, IPS became a wholly-owned subsidiary of Softell.

During the year ended

December 31, 2023 and a portion of the quarter ended March 31, 2024, Softell, operated a web-based market platform that enabled commerce

among healthcare buyers and sellers of pharmaceuticals, accessories and services.

Softell’s current primary operations are conducted

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

IPS’ customers

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

September 20, 2024, the Company fil changed its legal name from “TRxADE HEALTH, Inc.” to “Scienture Holdings, Inc.”

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

The “Bonum Health Hub” was launched

in February 2020;

however, the Company does not anticipate installations moving forward.

On April 30, 2025, the Company completed the

sale of Bonum Health, Inc.

and Bonum Health, LLC.

of Legacy Subsidiaries

April 8, 2025, the Company entered into a Membership Interest Purchase Agreement (the “ IPS MIPA ”) with Tollo

Health, LLC (“ Tollo ”), pursuant to which Tollo agreed to purchase and the Company agreed to sell all of the

Company’s membership interests in IPS.

April 8, 2025, the Company also entered into a Stock Purchase Agreement (the “ Bonum and Softell SPA ” and together

with the IPS MIPA, the “ Agreements ”) with Tollo, pursuant to which Tollo agreed to purchase and the Company

agreed to sell all issued and outstanding shares of common stock of Bonum Health, Inc.

Suren Ajjarapu, the Company’s

former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer, each had a beneficial

interest in Tollo at the time the Company entered into the each of the Agreements.

connection with each of the Agreements, the Company agreed to retain certain excluded liabilities of IPS, Softell and Bonum Health, Inc.

including all liabilities:

(i) related to, in connection with or arising out of any claims, charges, complaints, actions, suits, settlements,

hearings, investigations, proceedings, or governmental or regulatory inquiries with respect to IPS, Softell or Bonum Health, Inc., respectively,

prior to the closing under the applicable Agreement;

(ii) related to, in connection with or arising out of any breach by the Company

of the applicable Agreement or any other agreements and documents required to be delivered by the Company;

(iii) not disclosed by the

Company in accordance with each Agreement;

(iv) related to any actions threatened or initiated by a governmental entity against IPS,

Softell, or Bonum Health, Inc., respectively;

and (v) related to tax returns or tax matters of the Company, IPS, Softell, or Bonum Health,

Inc., respectively, for any periods prior to closing under the applicable Agreement.

Company and Tollo consummated the closing of each of the Agreements on April 30, 2025.

As consideration for acquiring IPS, Softell, and

Bonum Health, Inc., Tollo agreed to pay the Company $5 million, with that consideration delivered in the form of a promissory note bearing

interest at the prime rate.

The promissory note matures on June 30, 2030.

However, Tollo is required to pay 20% of the proceeds of a

future equity financing toward repayment of the principal and accrued but unpaid interest owed under the promissory note.

2025, the promissory note was assigned to Integral Health, Inc., which (at the time of the assignment) was owned by Suren Ajjarapu, the

Company’s former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer.

divestitures are part of a broader strategic realignment at the Company designed to sharpen operational focus and unlock long-term value.

It is aligned with the Company’s commitment to streamline its core operations, optimize its portfolio, and accelerate growth in

with our wholly-owned subsidiary, Scienture, LLC, which we acquired on July 25, 2024, we are a Commack, New York based specialty

pharmaceutical company focused on providing enhanced value to patients, physicians and caregivers through developing, bringing to

market, and distributing novel specialty pharmaceutical products to satisfy unmet market needs.

We are particularly focused on the

commercialization and development of products for the treatment of Cardiovascular (“ CVS ”) and Central

Nervous System (“ CNS ”) diseases as well as a broad range of novel product candidates including new

potential treatments for hypertension, migraine, pain and thrombosis and other related disorders.

To date, we have launched

ARBLI™, a commercial product for the treatment of hypertension, and we are in the process of commercializing a second product,

REZENOPY™, for the treatment of opioid overdose.

Our development pipeline consists of a broad range of novel product

candidates including new potential treatments for migraine, thrombosis, pain and other related disorders.

Our mission is to bring to

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

We target a diversified portfolio of short- and

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

connection with our $11 million financing facility with Streeterville that we established in April 2026, we formed a wholly owned subsidiary—SCNX

Holdings, LLC (“ SCNX Sub ”).

SCNX Sub exists solely in connection with the financing facility and has no operations.

At closing of the financing facility, Streeterville paid deposited $3 million into a bank account held by SCNX Sub, which is secured

pursuant to a deposit account control agreement among SCNX Sub, Streeterville, and the bank.

the year ended December 31, We previously were known as TRxADE HEALTH, Inc.

and operated a web-based market platform focused on enhancing

commerce among healthcare participants, a licensed pharmaceutical wholesaler, and a digital telehealth company, through our ownership

of Softell Inc.

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

Trxade Prime (“ IPS ”),

Bonum Health, LLC, and Bonum Health Inc.

In April 2025, we sold Softell, IPS, and Bonum Health Inc.

We dissolved Bonum Health Inc.

November 2025.

In connection with the acquisition of Scienture, LLC, we changed our legal name to “Scienture Holdings, Inc.”

The divestiture of these legacy subsidiaries was part of a broader strategic realignment designed to sharpen operational focus and unlock

long-term value.

It is aligned with our commitment to streamline our core operations, optimize our 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.

Company believes that the key benefits of the divestitures include:

Operational Efficiency :

Streamlining the Company’s structure aimed at strengthening its balance sheet, providing

for leaner operations and a more agile decision-making framework.

Consolidating overlapping functions and eliminating redundancies intended to cause annualized cost savings.

Affording the full focus and deployment of resources to the commercial products and the high value product pipeline

in development at its Scienture subsidiary.

to the disposition of IPS, Softell, and Bonum Health, Inc.

we now exist as a holding company for existing and planned pharmaceutical

operating companies focused on providing enhanced value to patients, physicians and caregivers through developing, bringing to market,

and distributing novel specialty pharmaceutical products to satisfy unmet market needs.

We are in the process of winding down our Bonum

Health, LLC subsidiary.

since 2019, Scienture, located in Commack, New York, is a specialty pharmaceutical company focused providing enhanced value to

patients, physicians and caregivers by offering novel specialty products to satisfy unmet market needs.

In this regard, Scienture is

in the process of developing and commercializing products for the treatment of CNS and CVS diseases as well as a broad range of novel product candidates including new potential treatments

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

vision is to be a leader in the industry by developing and commercializing new medicines for the treatment of CNS and CVS diseases and

vision is to be a leader in the industry by developing and commercializing new branded pharmaceutical products for the treatment of CNS and CVS diseases and

across other therapeutic areas.

Key elements of Scienture’s strategy to achieve this vision include:

product candidates through clinical studies and toward commercialization.

Scienture is in various stages of clinical development

for the product candidates in its pipeline, and it intends to move these programs efficiently toward being commercially available

to patients, subject to approval by the U.S.

Key elements of our strategy to achieve this vision include:

Advance product candidates

through clinical studies and toward commercialization.

The product candidates in our pipeline are at various stages of clinical development.

We intend to move these programs efficiently toward being commercially available to patients, subject

to approval by the U.S.

Food and Drug Administration (the “ FDA ”).

growth and profitability.

Using dedicated sales and marketing resources in the U.S., which Scienture is in the process of building,

Scienture will seek to begin to generate revenues and then drive the revenue growth of its product candidates approved for marketing

Drive growth and profitability.

Using dedicated sales and marketing resources in the U.S., which we are in the process of building, we will seek to

begin to generate revenues and then drive the revenue growth of our product candidates approved for marketing by the FDA.

to grow pipeline.

Scienture will continue to evaluate and seek to develop additional product candidates that it believes have significant

commercial potential through Scienture’s internal research and development efforts.

strategic business development opportunities.

Scienture is exploring a broad range of strategic opportunities.

This may include in-licensing

products and entering into co-promotion and co-development partnerships for Scienture’s product candidates, although no agreements

have been reached.

currently has four primary product candidates in its development pipeline, summarized below, and is engaged in a variety of research

We will continue to evaluate commercial product acquisition opportunities and seek to develop additional

product candidates that we believe have significant commercial potential through our internal research and

development efforts.

Target strategic business

development opportunities.

We are exploring a broad range of strategic opportunities.

This may include in-licensing products

and entering into co-promotion and co-development partnerships for our product candidates, although no agreements have

been reached.

currently has two commercial products that have been launched and three primary product candidates in our development pipeline, summarized below, and are engaged in a variety of research

and development efforts to develop novel product candidates for the treatment of various disease conditions.

To date, Scienture has

generated limited revenue from product sales and will not generate meaningful revenues until it fully commercializes its

FDA-approved product candidate (SCN-102) and successfully obtains regulatory approval for, and commercializes, its other product

The progress of Scienture products its development pipeline to date is represented by the green bars shown

has devoted and will continue to devote significant resources to research and development activities, and expects to incur significant

expenses as Scienture continues advancing its product candidates towards FDA approval and expanding product indications for approved

products and its intellectual property portfolio.

Scienture’s expectations regarding its research and development programs are

subject to risks, including the risk that Scienture’s financial condition and results of operations may be materially and adversely

affected by delays and failures in the completion of clinical development of its product candidates, which could increase its costs or

delay or limit our ability to generate revenues.

currently depends on third-party commercial manufacturing organizations (“ CMOs ”) for its manufacturing operations,

including the production of raw materials, finished dosage form product, and product packaging for both its planned product commercialization

and for use in its preclinical and clinical research.

Scienture does not own or operate manufacturing facilities for the production of

any of its product candidates nor does Scienture have plans to develop its own manufacturing operations in the foreseeable future to

To date, we have generated

limited revenue from product sales and will not generate meaningful revenues until we fully commercializes our FDA-approved product candidates

(Arbli ™ and REZENOPY ™ ) and successfully obtain regulatory approval for, and commercialize, our other product candidates.

The progress of our

products in our development pipeline to date is represented by the green bars shown below.

have devoted and will continue to devote significant resources to sales and marketing of our commercial products and research and

development activities, and expects to incur significant expenses as we continue advancing our product candidates

towards FDA approval and expanding product indications for approved products and our intellectual property portfolio.

Our expectations regarding our research and development programs are subject to risks, including the risk that

our financial condition and results of operations may be materially and adversely affected by delays and failures in

the completion of clinical development of our product candidates, which could increase costs or delay or limit our ability to

generate revenues.

currently depend on third-party commercial manufacturing organizations (“ CMOs ”) for our manufacturing operations,

including the production of raw materials, finished dosage form product, and product packaging for both our planned product commercialization

and for use in our preclinical and clinical research.

We do not own or operate manufacturing facilities for the production of

any of our product candidates nor do we have plans to develop such manufacturing operations in the foreseeable future to

support clinical trials or commercial production.

Scienture currently employs internal resources to manage its manufacturing contractors.

is in discussion with CMOs headquartered in North America, Europe and Asia for its pipeline product candidates.

We currently employs internal resources to manage our manufacturing contractors.

We are in discussion with CMOs headquartered in North America, Europe and Asia for our pipeline product candidates.

These CMOs offer a comprehensive

range of commercial contract manufacturing and packaging services.

Scienture fails to produce its products and product candidates in the volumes that it requires on a timely basis, or fails to comply

with stringent regulations applicable to pharmaceutical drug manufacturers, Scienture may face delays in the development and commercialization

of its products and product candidates or be required to withdraw its products from the market for risks associated with

manufacturing and supply of its products and product candidates.

(ARBLI TM - Losartan Oral Suspension)

with the brand name Arbli TM , is an oral liquid formulation of losartan potassium for (i) treatment of hypertension, to lower

we fail to produce our products and product candidates in the volumes that we require on a timely basis, or fail to comply

with stringent regulations applicable to pharmaceutical drug manufacturers, we may face delays in the development and commercialization

of our products and product candidates or be required to withdraw our products from the market for risks associated with

manufacturing and supply of our products and product candidates.

(ARBLI ™ - Losartan Oral Suspension)

with the brand name Arbli ™ , is an oral liquid formulation of losartan potassium for (i) treatment of hypertension, to lower

blood pressure in adults and children greater than 6 years old, (ii) reduction of the risk of stroke in patients with hypertension and

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and has reduced dosing volume and long-term shelf life at room temperature storage.

has two formulation composition and method of use patents listed in the FDA’s Approved Drug Products with Therapeutic Equivalence

has three formulation composition and method of use patents listed in the FDA’s Approved Drug Products with Therapeutic Equivalence

Evaluations, commonly referred to as the “orange book”:

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2024, titled “LOSARTAN LIQUID FORMULATIONS AND METHODS OF USE”.

SCN-102 also has a third patent titled “LOSARTAN LIQUID FORMULATION AND METHODS OF USE” that was issued

on April 21, 2026, and expires on October 7, 2041.

SCN-110 (REZENOPY TM – Naloxone HCl Nasal Spray)

LLC entered into an Exclusive Commercial and Supply Agreement (the “Kindeva Agreement”) with Summit Biosciences Inc.,

a wholly-owned subsidiary of Kindeva, on March 4, 2025, pursuant to which Kindeva granted Scienture LLC an exclusive, non-transferrable,

non-sublicensable right and license to commercialize REZENOPY TM (Nalaxone HCI nasal spray 10mg/0.11mL) within the United States

and its territories.

Scienture LLC intends to use the exclusive right and license to price, launch, promote, market, distribute, and educate

the public on REZENOPY TM .

Approved by the FDA in 1971, naloxone

is considered the standard of care and has been shown to be effective in opioid overdose reversals.

The opioid overdose reversal market

(specifically for naloxone-based products) includes several branded and generic products across nasal spray, auto-injector, and injectable

formulations.

Most growth in recent years has been in intranasal products, such as Narcan 4mg, RiVive 3mg and Kloxxado 8mg, which are

needle free and easier for bystanders and community responders to use.

Real world studies suggest the need for multiple naloxone administrations

(“MNA”) using these products among bystanders and EMS providers continues to increase.

With the increase of synthetic opioids

and the rapid onset of effect, evidence is emerging suggesting the need for increased doses of naloxone to reverse opioid toxicity.

(Naloxone HCl Nasal Spray, 10mg) is the highest FDA-approved nasal spray dose available in the U.S.

SCN-102 also has a third patent titled “LOSARTAN LIQUID

FORMULATION AND METHODS OF USE” that was issued on April 21, 2026, and expires on October 7, 2041.

(REZENOPY ™ – Naloxone HCl Nasal Spray)

March 4, 2025, Scienture, LLC entered into an Exclusive Commercial and Supply Agreement (the “Kindeva Agreement”) with

Summit Biosciences Inc., a wholly-owned subsidiary of Kindeva, pursuant to which Kindeva granted us an

exclusive, non-transferrable, non-sublicensable right and license to commercialize REZENOPY TM (Nalaxone hydrochloride nasal spray

10mg/0.11mL) within the United States and its territories.

We intend to use the exclusive right and license to price,

launch, promote, market, distribute, and educate the public on REZENOPY TM .

by the FDA in 1971, naloxone is considered the standard of care and has been shown to be effective in opioid overdose reversals.

opioid overdose reversal market (specifically for naloxone-based products) includes several branded and generic products across nasal

spray, auto-injector, and injectable formulations.

Most growth in recent years has been in intranasal products, such as Narcan 4mg, RiVive

3mg and Kloxxado 8mg, which are needle free and easier for bystanders and community responders to use.

Real world studies suggest the

need for multiple naloxone administrations (“MNA”) using these products among bystanders and EMS providers continues to increase.

With the increase of synthetic opioids and the rapid onset of effect, evidence is emerging suggesting the need for increased doses of

naloxone to reverse opioid toxicity.

(Naloxone hydrochloride Nasal Spray, 10mg) is the highest FDA-approved nasal spray dose available in the U.S.

The product provides maximum

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stabilization in emergency situations.

REZENOPY TM provides potential longer duration of opioid receptor block, improves chances

REZENOPY ™ provides potential longer duration of opioid receptor block, improves chances

of quicker reversal and possible coverage against multiple abuse agents inclusive of synthetic opioids and combinations, through a single

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and reducing the requirement of MNA.

has one issued formulation composition and method of use patents listed in the FDA’s Approved Drug Products with Therapeutic Equivalence

has two issued formulation composition and method of use patents listed in the FDA’s Approved Drug Products with Therapeutic Equivalence

Evaluations, commonly referred to as the “orange book”:

(i) Patent #:

12,514,854 B2, Issue Date:

12,514,854, Issue Date:

January 6, 2026, an Orange

Book-listable patent, titled “DRUG PRODUCTS FOR INTRANASAL ADMINISTRATION AND USES THEREOF”, Expiration Date:

2041 and (ii) Patent #:

12,622,903, Issue Date:

June 2, 2026, an Orange Book-listable patent, titled “DRUG PRODUCTS

FOR INTRANASAL ADMINISTRATION AND USES THEREOF”, Expiration Date:

February 5, 2041.

(Multi-dose Dihydroergotamine Mesylate (“ DHE ”) injection pen)

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to have no toxicological significance across hematology, coagulation parameters, clinical chemistry and urinalysis.

has had discussions with the FDA regarding its development program for SCN-104, with the FDA indicating that the reference product selected

for a comparative regulatory study and proposed plan for manufacturing New Drug Application registration batches are acceptable.

FDA also provided Scienture with feedback on nonclinical safety studies and stability testing.

Scienture is working to scale the formulation

to enable future commercial scale production and the pen has been optimized for commercial use.

Currently, Scienture is focused on planning

bioequivalence studies and increasing manufacturing activities for the SCN-104 injection pen.

Scienture plans to initiate a Phase 1 single

dose study in healthy adults in 2026, following submission of an Investigational New Drug application (an “ IND ”),

if the IND is cleared by the FDA.

have had discussions with the FDA regarding the development program for SCN-104, with the FDA indicating that the reference product

selected for a comparative regulatory study and proposed plan for manufacturing New Drug Application registration batches are

The FDA also provided us with feedback on nonclinical safety studies and stability testing.

We are working to scale the

formulation to enable future commercial scale production and the pen has been optimized for commercial use.

Currently, we are

focused on planning bioequivalence studies and increasing manufacturing activities for the SCN-104 injection pen.

initiate a Phase 1 single dose study in healthy adults in early 2027, following submission of an Investigational New Drug application (an

“ IND ”), if the IND is cleared by the FDA.

has a formulation composition and method of use application pending in the U.S.

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(Potential Biosimilar)

is developing a potential biosimilar, SCN-106, based on Cathflo Activase, a reference product that is a thrombolytic agent that binds

We are developing a potential biosimilar, SCN-106, based on Cathflo Activase, a reference product that is a thrombolytic agent that binds

to fibrin in clots and converts entrapped plasminogen to plasmin.

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the complementary DNA for natural human tPA obtained from a Chinese hamster ovary cell-line.

is working with Anthem Biosciences Pvt, Ltd.

to develop a biosimilar product that utilizes the same mechanism(s) of action for the proposed

condition of use, and has the same route of administration, dosage form, and strength as the reference product.

The development program

is focused on establishing the analytical similarity of SCN-106 to the reference product.

Multiple clones of CHO cells have been produced

to synthesize lots of SCN-106 which were screened for similarity to the reference product for several key biochemical quality attributes

as well as overall protein yield and finalization of a lead clone.

Specifically,

we are working with Anthem Biosciences Pvt, Ltd.

to develop a biosimilar product that utilizes the same mechanism(s) of action for

the proposed condition of use, and has the same route of administration, dosage form, and strength as the reference product.

development program is focused on establishing the analytical similarity of SCN-106 to the reference product.

Multiple clones of CHO

cells have been produced to synthesize lots of SCN-106 which were screened for similarity to the reference product for several key

biochemical quality attributes as well as overall protein yield and finalization of a lead clone.

completed a Biosimilar Initial Advisory meeting with the FDA in June 2023 to discuss the CMC, non-clinical, and clinical studies required

for regulatory approval.

As a result of this meeting, Scienture learned that its analytical strategy for initiating analytical similarity

As a result of this meeting, we learned that our analytical strategy for initiating analytical similarity

studies between SCN-106 and a proposed biosimilar product is acceptable.

Scienture also learned that SCN-106 is suitable for further

We also learned that SCN-106 is suitable for further

development and received guidance from the FDA on a comparable clinical study needed to demonstrate biosimilarity of SCN-106 and the

reference product.

In this regard, Scienture was informed that no additional safety, PK, toxicology or dose range finding studies will

In this regard, we were informed that no additional safety, PK, toxicology or dose range finding studies will

be required due to the method of use (very limited exposure) and the availability of an extensive amount of data on the original brand

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are no clinically meaningful differences between SCN-106 and the currently marketed product.

is a potential biosimilar and considered by the Company to be part of its product development portfolio, however the Company is not pursuing

is a potential biosimilar and considered by to be part of our product development portfolio, however we are not pursuing

patent protection for this product.

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is a long-acting injection suspension formulation of a non-opioid analgesic that is indicated for postsurgical local and regional analgesia.

Scienture’s long-acting formulation, SCN-107, is a novel microsphere-based formulation of bupivacaine that comprises the drug in

Our long-acting formulation, SCN-107, is a novel microsphere-based formulation of bupivacaine that comprises the drug in

polymer-based microspheres and is intended to provide pain management over a period of 5-7 days.

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potentially provide longer term post-surgical pain relief compared to the currently available products in the market.

on initial discussions with FDA regarding this program, Scienture believes this product candidate would require at least one Phase 3

on initial discussions with FDA regarding this program, we believe this product candidate would require at least one Phase 3

clinical trial to support submission of a marketing application.

Scienture anticipates submitting an IND and, if cleared by the FDA,

initiating a Phase 1 single dose study in healthy adults in 2025 to conduct an initial assessment of safety and tolerability of SCN-107.

has entered into Feasibility Study and Animal Trial Material Manufacturing Agreement with Innocore Technologies, B.V.

(“ Innocore ”),

as amended on December 2, 2022 (the “ Innocore License ”), for certain intellectual property rights associated

with SCN-107.

Under the Innocore License, Innocore granted Scienture a worldwide exclusive, milestone, royalty-bearing and sublicensable

license to certain patent rights for the research and development of SCN-107 in postsurgical local and regional analgesia.

the Innocore License, Scienture is required to make low single-digit percentage royalty payments based on annual net sales of licensed

products for the first three years of sales on a country-by-country basis, subject to a low single digit increase as of the fourth year

of sales on a country-by-country basis.

We anticipate submitting an IND in 2027 and, if cleared by the FDA,

plan to conduct an initial assessment of safety and tolerability of

LLC previously entered into a Feasibility Study and Animal Trial Material Manufacturing Agreement with Innocore Technologies, B.V.

(“ Innocore ”), as amended on December 2, 2022 (the “ Innocore License ”), for

certain intellectual property rights associated with SCN-107.

Under the Innocore License, Innocore granted us a worldwide

exclusive, milestone, royalty-bearing and sublicensable license to certain patent rights for the research and development of SCN-107

in postsurgical local and regional analgesia.

Pursuant to the Innocore License, we are required to make low single-digit

percentage royalty payments based on annual net sales of licensed products for the first three years of sales on a

country-by-country basis, subject to a low single digit increase as of the fourth year of sales on a country-by-country

has a formulation composition and method of use application pending in the U.S.

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Applications in Canada and Europe are currently pending.

As described above, the Company

licenses certain patent rights from Innocore for the research and development of SCN-107.

As described above, we

license certain patent rights from Innocore for the research and development of SCN-107.

and Capital Resources

was $3,542,754 as of March 31, 2026, compared to $6,662,008 as of December 31, 2025.

We expect that our future available capital resources

will consist primarily of cash generated from Scienture’s operations, remaining cash balances, borrowings, and additional funds

raised through sales of debt and/or equity securities.

was $8,188,140 as of June 30, 2026, compared to $6,662,008 as of December 31, 2025.

In addition, we held restricted cash of $3,012,271

as of June 30, 2026, representing proceeds of the B Note held in a lender-controlled deposit account.

We expect that our future available

capital resources will consist primarily of cash generated from our operations, remaining cash balances, borrowings, and

additional funds raised through sales of debt and/or equity securities.

current assets, current liabilities, short term debt and working capital at the end of each period were as follows:

$ (3,119,254 )

June 30, 2026

Current assets (excluding cash)

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Working capital

$ (3,210,681 )

principal sources of liquidity have historically been cash provided by operations, sales of business assets and operations from time

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Outlook Cash Explanation

primary objectives for the remainder of 2026 are expected to be the continued implementation of Scienture business plan, and to complete

potential strategic transactions of our business-to-consumer subsidiaries, which may include a potential sale, spin-off, fund raising,

combination or other strategic transaction.

primary objectives for the remainder of 2026 are expected to be the continued implementation of our business plan.

There can be no assurance that our operations will generate significant positive cash flow,

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Our plan for the next twelve months is to continue exploring

strategic transactions or relationships with counterparties in industries that we deem synergistic or complimentary to those of the Company,

while also seeking to expand our Scienture operations organically or through acquisitions, as funding and opportunities arise.

strategic transactions or relationships with counterparties in industries that we deem synergistic or complimentary to us,

while also seeking to expand our operations organically or through acquisitions, as funding and opportunities arise.

event we require additional funding, we plan to raise that through the sale of debt or equity, which may not be available on favorable

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moving forward, it may hurt our ability to grow and to generate future revenues.

accompanying interim consolidated financial statements have been prepared assuming that the Company will continue as a going concern,

accompanying interim consolidated financial statements have been prepared assuming that we 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

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within one year after the date that the financial statements are issued.

of March 31, 2026, the Company had an accumulated deficit of $83,953,501.

As of March 31, 2026, the Company had $3,542,754 in cash.

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

any businesses or assets we acquire.

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

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

If we are unable to access additional

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

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

Unless management is able to obtain

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

The financial

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

of June 30, 2026, we had an accumulated deficit of $86,775,872.

As of June 30, 2026, we had $8,188,140 in cash and

$3,012,271 in restricted cash.

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

of any businesses or assets we acquire.

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

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

If we are unable to

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

and liquidity.

While these factors initially indicated substantial doubt about the ability of the Company to continue as a going

concern, management believes that its existing cash on hand, revenues from the commercialization of ARBLI™ (SCN-102) and

REZENOPY™ (SCN-110) and its planned financing activities alleviate that doubt.

following table summarizes our Consolidated Statements of Cash Flows for the following periods:

Three Months Ended

Net cash used in operating activities

2 unchanged sentences

Net change in cash

used in operating activities for the three months ended March 31, 2026 was $2,919,255, compared to cash used in operating activities

of $2,956,457 for the three months ended March 31, 2025.

The slight decrease was primarily due to changes in working capital, partially

offset by higher operating expenses during the 2026 period.

was no cash provided by or used in investing activities for the three months ended March 31, 2026 or 2025.

used in financing activities for the three months ended March 31, 2026 was $200,000, compared to cash provided by financing activities

of $4,697,999 for the three months ended March 31, 2025.

Cash used in financing activities for the three months ended March 31, 2026

reflected the $200,000 repayment of the development agreement liability.

Cash provided by financing activities for the three months ended

March 31, 2025 was primarily attributable to gross proceeds of approximately $4,598,000 from the issuance of common stock pursuant to

the equity line commitment, partially offset by other financing activity.

used in operating activities for the six months ended June 30, 2026, was $6,051,597, compared to cash used in operating activities

of $4,990,704 for the six months ended June 30, 2025.

The increase of $1,060,893 was primarily due to the $400,000 repayment of the

development agreement liability and other changes in working capital, including reductions in accounts payable and accrued

liabilities, partially offset by a lower net loss during the 2026 period.

was no cash provided by or used in investing activities for the six months ended June 30, 2026, or 2025.

provided by financing activities for the six months ended June 30, 2026, was $10,590,000, compared to cash provided by financing activities

of $4,697,999 for the six months ended June 30, 2025.

Cash provided by financing activities for the six months ended June 30, 2026, reflected

$10,590,000 of proceeds from the issuance of the Streeterville notes in April 2026, net of issuance costs.

Cash provided by financing activities for the six months ended June 30,

2025, was primarily attributable to gross proceeds of approximately $4,598,000 from the issuance of common stock pursuant to an equity

line commitment, partially offset by other financing activity.

of Operations

1 unchanged sentence

the notes to these statements included above.

Month Period Ended March 31, 2026 compared to Three Month Period Ended March 31, 2025

Month Period Ended June 30, 2026 compared to Three Month Period Ended June 30, 2025

Three Months Ended

10 unchanged sentences

Change in fair value of derivative liability

Loss on conversion of note payable

Loss on disposition of subsidiaries

Interest income

1 unchanged sentence

Benefit / (provision) for income taxes

for the three months ended March 31, 2026 were $56,325, compared to $10,258 for the three months ended March 31, 2025, an increase of

The increase was primarily attributable to the continued ramp of wholesale distribution sales of SCN-102 (ARBLI™) following

its commercial launch.

of goods sold for the three months ended March 31, 2026 was $2,475, compared to $9,585 for the three months ended March 31, 2025, resulting

in gross profit of $53,850 for the three months ended March 31, 2026 compared to gross profit of $673 for the three months ended March

and salary expense decreased by $276,060 for the three months ended March 31, 2026 to $420,008 compared to $696,068 for the comparable

period in 2025.

The decrease was primarily due to lower headcount following the disposition of legacy subsidiaries in April 2025.

fees increased by $519,702 to $932,552 for the three months ended March 31, 2026, compared to $412,850 for the comparable period in 2025.

The increase was primarily attributable to higher external consulting fees during the 2026 period.

and legal expense decreased by $144,647 for the three months ended March 31, 2026 to $326,178, compared to $470,825 for the comparable

Revenues for the three months ended June 30, 2026, were $343,639, compared to $0 for the three months ended June 30, 2025.

The increase was

primarily attributable to the continued ramp of wholesale distribution sales of SCN-102 (ARBLI™) following its commercial

Gross product sales for the quarter were $392,700, which were reduced by $49,061 of wholesale distribution fees,

rebates and chargebacks to arrive at net revenues.

All ARBLI™ product sales in the quarter were made through three national wholesale

distributors — McKesson Corporation, Cencora and Cardinal Health — with McKesson accounting for approximately two-thirds of

gross product sales.

While we expect ARBLI™ revenues to continue to grow as prescription demand and payor coverage build, quarterly

revenues may fluctuate with wholesaler ordering patterns and with the level of rebates, chargebacks and distribution fees, which will

vary with payor and channel mix.

Two of these distributors accounted for approximately 84% and 82% of revenues for the three and six months

ended June 30, 2026, respectively (see “Concentration of Credit Risks and Major Customers” in the notes to our unaudited condensed

consolidated financial statements).

We expect this concentration to continue, and the loss of, or a material reduction in purchases by,

any of these distributors could materially and adversely affect our revenues and cash flows.

of goods sold for the three months ended June 30, 2026, was $7,860, compared to $0 for the three months ended June 30, 2025, resulting

in gross profit of $335,779 for the three months ended June 30, 2026 compared to $0 for the three months ended June 30, 2025.

and salary expense decreased by $362,328 for the three months ended June 30, 2026 to $411,411, compared to $773,739 for the

comparable period in 2025.

The decrease was primarily due to lower headcount following the disposition of legacy subsidiaries in

Following the dispositions, our workforce is concentrated in a small number of research and development, commercial

and administrative personnel, and we have engaged a contract commercial organization — the cost of which is reflected in professional

fees — in lieu of building an internal sales force.

fees increased by $753,989 to $963,752 for the three months ended June 30, 2026, compared to $209,763 for the comparable period in 2025.

The increase was primarily attributable to outsourced commercial costs supporting the launch of ARBLI™ — including our contract commercial organization,

sales training, market access consulting, pharmacy and sample fulfillment services, and commercial data purchases — which had no

counterpart in the prior-year quarter.

We expect professional fees to remain elevated relative to prior-year periods for as long as we

commercialize ARBLI™ through an outsourced commercial model.

and legal expense decreased by $263,868 for the three months ended June 30, 2026 to $117,815, compared to $381,683 for the comparable

period in 2025.

The decrease was primarily due to lower SEC filing and corporate transaction-related professional services activity during

the 2026 period.

and administrative expenses (including stock-based compensation expense) decreased by $281,084 for the three months ended March 31, 2026

The decrease was primarily due to elevated activity in the prior-year quarter associated with the disposition of the legacy subsidiaries and related

corporate transactions and SEC filings, which did not recur in 2026.

With our simplified corporate structure, we expect accounting and

legal expense to remain below prior-year levels for the remainder of 2026.

and administrative expenses (including stock-based compensation expense) decreased by $2,558,974 for the three months ended June 30,

2026, to $368,790, compared to $2,927,764 for the comparable period in 2025.

The decrease was primarily due to lower stock-based compensation

expense during the 2026 period.

expense decreased by $45,857 for the three months ended March 31, 2026 to $15,763, compared to $61,620 for the comparable period in 2025.

The decrease was primarily because the prior-year quarter included substantial non-cash charges for common stock issued for services, which

did not recur in 2026;

stock option expense recognized in the three months ended June 30, 2026 was $103,457.

The decrease occurred notwithstanding

the inclusion in the 2026 quarter of $453,846 of amortization of intangible assets, which had no counterpart in the prior-year quarter

and is expected to continue at a comparable quarterly rate.

expense decreased by $14,269 for the three months ended June 30, 2026, to $7,139, compared to $21,408 for the comparable period in 2025.

The decrease was primarily due to lower software-related expenses following the disposition of IPS in April 2025.

and development expense for the three months ended March 31, 2026 was $793,984, compared to $574,679 for the comparable period in 2025,

and development expense for the three months ended June 30, 2026, was $1,166,605, compared to $843,549 for the comparable period in 2025,

an increase of $323,056.

The increase was primarily due to higher contract research organization costs related to advancement of pipeline

product candidates.

The increase was primarily attributable to higher contract research and contract manufacturing organization costs, which comprised substantially

all of our research and development expense for the quarter, driven by the continued advancement of SCN-106 (Alteplase) and SCN-104 (DHE).

We expect research and development expense

to continue to increase as our product candidates advance.

Total expenses by program were as follows:

1 unchanged sentence

Project Codes

March 31, 2026

June 30, 2026

Total research and development expense

expense was $37,019 for the three months ended March 31, 2026, compared to $670,784 for the three months ended March 31, 2025.

was primarily due to the repayment in full of the Arena convertible debentures during 2025 and the related cessation of debt discount

amortization.

recognized a gain on the change in the fair value of the warrant liability of $10,910 for the three months ended March 31, 2026, compared

to a gain of $645,986 for the three months ended March 31, 2025, in each case based on the underlying valuation inputs.

was no gain or loss on the change in the fair value of the derivative liability for the three months ended March 31, 2026, as the derivative

liability was fully derecognized in connection with the repayment of the Arena debentures during 2025.

We recognized a gain on the change

in the fair value of the derivative liability of $603,322 for the three months ended March 31, 2025.

the three months ended March 31, 2026, the Company incurred a net loss of $3,402,264, compared to a net loss of $3,063,997 for the three

months ended March 31, 2025.

The increase in net loss of $338,267 was primarily attributable to the changes in operating expenses and

non-operating income/(expense) discussed above.

expense was $269,785 for the three months ended June 30, 2026, compared to $653,493 for the three months ended June 30, 2025.

was primarily due to the repayment in full of certain convertible debentures during 2025 and the related cessation of debt discount

amortization, partially offset by stated interest and debt discount amortization on the Streeterville notes issued in April 2026.

income was $147,147 for the three months ended June 30, 2026, compared to $63,148 for the three months ended June 30, 2025.

was primarily attributable to interest earned on Treasury Bill holdings and on the note receivable, together with interest credited on

the restricted deposit account established in April 2026.

recognized no gain or loss on the change in the fair value of the warrant liability for the three months ended June 30, 2026, compared

to a gain of $76,122 for the three months ended June 30, 2025, in each case based on the underlying valuation inputs.

was no gain or loss on the change in the fair value of the derivative liability for the three months ended June 30, 2026, as the derivative

liability was fully derecognized in connection with the repayment of certain debentures during 2025.

We recognized a loss on the change

in the fair value of the derivative liability of $662,916 for the three months ended June 30, 2025.

recognized no loss on disposition of subsidiaries for the three months ended June 30, 2026, compared to a loss on disposition of subsidiaries

of $385,528 for the three months ended June 30, 2025, which arose on the divestiture of the legacy subsidiaries in April 2025.

the three months ended June 30, 2026, we incurred a net loss of $2,822,371, compared to a net loss of $6,720,573 for the

three months ended June 30, 2025.

The decrease of $3,898,202 was primarily attributable to the increase in revenue and changes in

operating expenses and non-operating income/(expense) discussed above.

Month Period Ended June 30, 2026 compared to Six Month Period Ended June 30, 2025

Six Months Ended

Cost of sales

Operating expenses:

Wage and salary expense

Professional fees

Accounting and legal expense

Technology expense

General and administrative (including stock-based compensation expense)

Research and development

Total operating expenses

Change in fair value of warrant liability

Change in fair value of derivative liability

Loss on conversion of note payable

Loss on disposition of subsidiaries

Interest income

Interest expense

Benefit / (provision) for income taxes

$ (6,224,635 )

$ (9,784,570 )

for the six months ended June 30, 2026, were $399,964, compared to $10,258 for the six months ended June 30, 2025 (all of which represented legacy pharmaceutical product resale revenue of the subsidiaries disposed of in April 2025), an increase of

The increase was primarily attributable to the continued ramp of wholesale distribution sales of SCN-102 (ARBLI™)

following its commercial launch.

As discussed above, our revenues remain concentrated among a small number of wholesale distributors.

of goods sold for the six months ended June 30, 2026, was $10,335, compared to $9,585 for the six months ended June 30, 2025, resulting

in gross profit of $389,629 for the six months ended June 30, 2026, compared to $673 for the six months ended June 30, 2025.

and salary expense decreased by $638,388 for the six months ended June 30, 2026, to $831,419, compared to $1,469,807 for the

comparable period in 2025.

The decrease was primarily due to lower headcount following the disposition of legacy subsidiaries in

As discussed above, following the dispositions our workforce is concentrated in research and development, commercial

and administrative functions, with outsourced commercial selling costs reflected in professional fees.

fees increased by $1,273,691 to $1,896,304 for the six months ended June 30, 2026, compared to $622,613 for the comparable period in

The increase was primarily attributable to outsourced commercial costs supporting the launch of ARBLI™ — including our contract commercial organization,

sales training, market access consulting, pharmacy and sample fulfillment services, and commercial data purchases — which had no

counterpart in the prior-year period.

We expect professional fees to remain elevated relative to prior-year periods for as long as we

commercialize ARBLI™ through an outsourced commercial model.

and legal expense decreased by $408,515 for the six months ended June 30, 2026, to $443,993, compared to $852,508 for the comparable period

The decrease was primarily due to elevated activity in the prior-year period associated with the disposition of the legacy subsidiaries and related

corporate transactions and SEC filings, which did not recur in 2026.

With our simplified corporate structure, we expect accounting and

legal expense to remain below prior-year levels for the remainder of 2026.

and administrative expenses (including stock-based compensation expense) decreased by $2,840,058 for the six months ended June 30, 2026,

to $1,443,654, compared to $4,283,712 for the comparable period in 2025.

The decrease was primarily because the 2025 period included $3,781,253 of non-cash charges for common stock issued for services, which did not

recur in 2026, while stock option expense was broadly comparable at $205,777 for the six months ended June 30, 2026 compared to $162,874

for the comparable period in 2025.

The decrease occurred notwithstanding the inclusion in the 2026 period of $907,693 of amortization

of intangible assets, which had no counterpart in the prior-year period.

expense decreased by $60,126 for the six months ended June 30, 2026, to $22,902, compared to $83,028 for the comparable period in 2025.

The decrease was primarily due to lower software-related expenses following the disposition of IPS in April 2025.

and development expense for the six months ended June 30, 2026, was $1,960,589, compared to $1,418,228 for the comparable period in 2025,

an increase of $542,361.

The increase was primarily attributable to higher contract research and contract manufacturing organization costs, which comprised substantially

all of our research and development expense for the period, driven principally by SCN-106 (Alteplase), which accounted for $989,059 of

expense for the six months ended June 30, 2026, together with the continued advancement of SCN-104 (DHE).

We expect research and development expense to continue to increase as

our product candidates advance.

Total expenses by program were as follows:

Six Months Ended

Project Codes

June 30, 2026

Total research and development expense

expense was $306,804 for the six months ended June 30, 2026, compared to $1,324,277 for the six months ended June 30, 2025.

was primarily due to the repayment in full of certain convertible debentures during 2025 and the related cessation of debt discount

amortization, partially offset by stated interest and debt discount amortization on the Streeterville notes issued in April 2026.

income was $280,491 for the six months ended June 30, 2026, compared to $88,590 for the six months ended June 30, 2025.

was primarily attributable to interest earned on Treasury Bill holdings and on the note receivable, together with interest credited on

the restricted deposit account established in April 2026.

recognized a gain on the change in the fair value of the warrant liability of $10,910 for the six months ended June 30, 2026, compared

to a gain of $722,108 for the six months ended June 30, 2025, in each case based on the underlying valuation inputs.

was no gain or loss on the change in the fair value of the derivative liability for the six months ended June 30, 2026, as the derivative

liability was fully derecognized in connection with the repayment of certain debentures during 2025.

We recognized a loss on the change

in the fair value of the derivative liability of $59,594 for the six months ended June 30, 2025.

recognized no loss on conversion of note payable or loss on disposition of subsidiaries for the six months ended June 30, 2026, compared

to a loss on conversion of note payable of $96,646 and a loss on disposition of subsidiaries of $385,528 for the six months ended June

the six months ended June 30, 2026, we incurred a net loss of $6,224,635, compared to a net loss of $9,784,570 for the six months

ended June 30, 2025.

The decrease of $3,559,935 was primarily attributable to the changes in operating expenses and non-operating income/(expense)

discussed above.

Accounting Policies

7 unchanged sentences

or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

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

We account 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 we are the target’s primary beneficiary, and therefore we

must consolidate its financial statements, or (b) we acquire 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

We record 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.

3 unchanged sentences

in the determination of the fair value of assets acquired and liabilities assumed in order to properly

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

We account 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

3 unchanged sentences

date of employee termination.

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

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

to non-employees for goods and services.

1 unchanged sentence

addition to our financial results determined in accordance with the generally accepted accounting principles in the United States (“GAAP”),

our management uses earnings before interest, taxes, depreciation, and amortization expenses to net income (“EBITDA”), a

non-GAAP measure, as a key measure in operating our business.

We use EBITDA to make strategic decisions, establish business plans and

forecasts, identify trends affecting our business, and evaluate performance.

For example, we use adjusted EBITDA as a measure of our

operating performance.

Adjusted EBITDA is presented for supplemental informational purposes only, should not be considered a substitute

for, or a more meaningful measure than, financial information presented in accordance with GAAP, and may be different from similarly

titled non-GAAP measures used by other companies.

A reconciliation is provided below for adjusted EBITDA to the most directly comparable

financial measure presented in accordance with GAAP.

Investors are encouraged to review the related GAAP financial measure and the reconciliation

of adjusted EBITDA to its most directly comparable GAAP financial measure.

the three months ended March 31, 2026, adjusted EBITDA was $(2,939,166), compared to adjusted EBITDA of $(2,475,856) for the three months

ended March 31, 2025.

The increase in the adjusted EBITDA loss of $463,310 was primarily attributable to a higher net loss of $(3,402,264)

for the three months ended March 31, 2026 compared to $(3,063,997) for the prior-year period, driven by increased operating expenses

including higher professional fees and research and development costs associated with pipeline advancement, partially offset by higher

gross profit from the continued ramp of SCN-102 (ARBLI™) wholesale distribution revenues.

The decrease was further moderated by

lower non-cash stock-based compensation expense of $102,320 in the current period compared to $1,080,437 in the prior-year period, a

significant reduction in interest expense to $37,019 from $670,784 following the repayment of the Arena convertible debentures during

2025, and higher depreciation and amortization of $468,013 compared to $15,024 in the prior-year period.

The following table reconciles

net loss to adjusted EBITDA for the three months ended March 31, 2026 and 2025:

our management uses adjusted EBITDA, which we define as net loss before interest, taxes, depreciation and amortization, further adjusted

for stock-based compensation and other non-cash and non-recurring items, as a key measure in operating our business.

We use EBITDA to

make strategic decisions, establish business plans and forecasts, identify trends affecting our business, and evaluate performance.

example, we use adjusted EBITDA as a measure of our operating performance.

Adjusted EBITDA is presented for supplemental informational

purposes only, should not be considered a substitute for, or a more meaningful measure than, financial information presented in accordance

with GAAP, and may be different from similarly titled non-GAAP measures used by other companies.

A reconciliation is provided below for

adjusted EBITDA to the most directly comparable financial measure presented in accordance with GAAP.

Investors are encouraged to review

the related GAAP financial measure and the reconciliation of adjusted EBITDA to its most directly comparable GAAP financial measure.

the three months ended June 30, 2026, adjusted EBITDA was $(2,134,705), compared to $(2,263,734) for the three months ended June 30, 2025.

For the six months ended June 30, 2026, adjusted EBITDA was $(5,073,870), compared to $(4,754,615) for the six months ended June

Net loss decreased to $(2,822,371) and $(6,224,635) for the three and six months ended June 30, 2026, from $(6,720,573) and

$(9,784,570) for the comparable periods in 2025, reflecting lower general and administrative expense and higher gross profit from the

continued ramp of SCN-102 (ARBLI™) wholesale distribution revenues.

Adjusted EBITDA improved for the three months ended June 30, 2026 but declined for the six months then ended, because

the prior-year net loss included substantially larger non-cash and non-operating charges that are added back in the reconciliation.

stock-based compensation was $103,457 and $205,777 for the three and six months ended June 30, 2026, compared to $2,863,691 and $3,944,127 for the comparable 2025 periods.

Interest expense was $269,785 and $306,804 for the three and six months ended June 30, 2026, compared to

$653,493 and $1,324,277 for the comparable 2025 periods.

Depreciation and amortization increased to $461,571 and $929,585, from $30,481

in each of the comparable 2025 periods, following commencement of amortization of the finite-lived intangible asset.

following table reconciles net loss to adjusted EBITDA for the three and six months ended June 30, 2026 and 2025:

Three Months Ended

Six Months Ended

$ (2,822,371 )

$ (6,720,573 )

$ (6,224,635 )

$ (9,784,570 )

Depreciation and amortization

5 unchanged sentences

$ (2,263,734 )

$ (5,073,870 )

$ (4,754,615 )

Issued Accounting Standards

4 unchanged sentences

to Item 305(e) of Regulation S-K (17 C.F.R.

§ 229.305(e)), the Company is not required to provide the information required by

this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

§ 229.305(e)), we are not required to provide the information required by this

Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis