What changed in this filing

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Item 1. Business

2025-03-26 compared with 2024-04-22 · 1529 added, 468 removed, 32 unchanged (98% of the section changed)

information included in this Annual Report on Form 10-K should be read in conjunction with the consolidated financial statements and

related notes in “ Item 8.

Financial Statements and Supplemental Data ” of this Report.

see the “ Glossary ” above for a list of abbreviations and definitions used throughout this Report.

logo and some of our trademarks and tradenames are used in this Report.

This Report may also include trademarks, tradenames and service

marks that are the property of others.

Solely for convenience, trademarks, tradenames and service marks referred to in this Report may

appear without the ®, ™ and SM symbols.

References to our trademarks, tradenames and service marks are not intended to indicate

in any way that we will not assert to the fullest extent under applicable law our rights or the rights of the applicable licensors if

any, nor that respective owners to other intellectual property rights will not assert, to the fullest extent under applicable law, their

rights thereto.

We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with,

or endorsement or sponsorship of us by, any other companies.

market data and certain other statistical information used throughout this Report are based on independent industry publications, reports

by market research firms or other independent sources that we believe to be reliable sources.

Industry publications and third-party research,

surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do

not guarantee the accuracy or completeness of such information.

We are responsible for all of the disclosures contained in this Report,

and we believe these industry publications and third-party research, surveys and studies are reliable.

While we are not aware of any

misstatements regarding any third-party information presented in this Report, their estimates, in particular, as they relate to projections,

involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on various factors, including those

discussed under the section entitled “ Risk Factors ” beginning on page 17 of this Report.

These and other factors

could cause our future performance to differ materially from our assumptions and estimates.

Some market and other data included herein,

as well as the data of competitors as they relate to TRxADE HEALTH, INC., is also based on our good faith estimates.

information included in this Annual Report should be read in conjunction with the consolidated financial statements and related notes

Financial Statements and Supplemental Data” of this Annual Report.

logo and some of our trademarks and tradenames are used in this Annual Report.

This Annual Report may also include trademarks, tradenames

and service marks that are the property of others.

Solely for convenience, trademarks, tradenames and service marks referred to in this

Annual Report may appear without the ®, ™ and SM symbols.

References to our trademarks, tradenames and service marks are not

intended to indicate in any way that we will not assert to the fullest extent under applicable law our rights or the rights of the applicable

licensors if any, nor that respective owners to other intellectual property rights will not assert, to the fullest extent under applicable

law, their rights thereto.

We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship

with, or endorsement or sponsorship of us by, any other companies.

market data and certain other statistical information used throughout this Annual Report are based on independent industry publications,

reports by market research firms or other independent sources that we believe to be reliable sources.

Industry publications and third-party

research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although

they do not guarantee the accuracy or completeness of such information.

We are responsible for all of the disclosures contained in this

Annual Report , and we believe these industry publications and third-party research, surveys and studies are reliable.

While we are not

aware of any misstatements regarding any third-party information presented in this Annual Report, their estimates, in particular, as

they relate to projections, involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on

various factors, including those discussed under the section entitled “Risk Factors” of this Annual Report.

These and other

factors could cause our future performance to differ materially from our assumptions and estimates.

Some market and other data included

herein, as well as the data of competitors as they relate to us, are also based on our good faith estimates.

fiscal year ends on December 31st.

4 unchanged sentences

means the year ended December 31, 2023.

the context requires otherwise, references to the “ Company, ” “ we, ” “ us, ” “ our, ”

“ Trxade ”, “ Trxade Group ” and “ TRxADE HEALTH, INC.

” refer specifically to TRxADE

and its consolidated subsidiaries.

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

the context requires otherwise, references to the “Company,” “we,” “us,” and “our” refer

specifically to Scienture Holdings, Inc., formerly known as TRxADE HEALTH, INC., and its consolidated subsidiaries.

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

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

or the “ Commission ” refers to the United States Securities and Exchange Commission;

refers to the United States Securities and Exchange Commission;

● “Securities

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

file annual, quarterly, and current reports, proxy statements and other information with the SEC.

Our SEC filings are available to the

public over the Internet at the SEC’s website at http://www.sec.gov and are available for download, free of charge, soon

after such reports are filed with or furnished to the SEC, on the “ NASDAQ:

MEDS ,” “ SEC Filings ”

page of our website at www.trxadehealth.com .

file annual, quarterly, and current reports, proxy statements and other

information with the SEC.

Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov and

are available for download, free of charge, soon after such reports are filed with or furnished to the SEC, on the “Investors”

page of our website at www.scientureholdings.com.

Copies of documents filed by us with the SEC are also available from us without charge,

upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of

Our website addresses are www.trxadehealth.com and www.rxintegra.com .

Information on our websites is not incorporated

by reference into this Form 10-K.

The information on, or that may be accessed through, our websites not incorporated by reference into

this Report and should not be considered a part of this Report.

AND ORGANIZATIONAL HISTORY

Company was incorporated in Delaware on July 15, 2005, as “ Bluebird Exploration Company ” (“ Bluebird ”).

Bluebird was originally formed to engage in the exploitation of mineral properties.

In December 2008, Bluebird changed its name to “ Xcellink

International, Inc.

” (“ XCEL ”), and subsequently announced that its business plan was being expanded to include

the development and marketing of platform-independent customer-centric payment systems and methodologies.

XCEL was unable to raise the

funds necessary to implement its business strategy, and never generated any revenue.

On January 9, 2014, Trxade Group, Inc., a then privately

held Nevada corporation, merged with and into XCEL, and XCEL changed its name to “ Trxade Group, Inc.

” On June 1, 2021,

the Company changed its name from “Trxade Group, Inc” to “TRxADE HEALTH, INC.”

LLC, a Nevada limited liability company (“ PharmaCycle ”), was formed in August 2010 by Prashant Patel, our President,

to serve as a web-based market platform designed to enable trading among healthcare buyers and sellers of pharmaceuticals, accessories

and services.

In January 2013, PharmaCycle converted into a Florida corporation and changed its name to Trxade, Inc.

In May 2013, Trxade Florida created a new wholly-owned subsidiary, Trxade Group, Inc., a Nevada corporation (“ Trxade

Trxade Nevada acquired Trxade Florida pursuant to a reverse triangular merger, resulting in Trxade Florida becoming

a wholly-owned subsidiary of Trxade Nevada (the “ Nevada-Florida Merger ”).

The sole purpose of the Nevada-Florida Merger

was to provide for a holding company to own Trxade Florida, the operating company.

Immediately following the Nevada-Florida Merger, Messrs.

Ajjarapu and Patel collectively owned 99% of Trxade Nevada.

Merger with Trxade

September 26, 2008, Mark Fingarson, the former President, sole Director and controlling shareholder of XCEL, sold 80,000,000 shares of

XCEL (prior to the Merger Reverse Split and Reverse Stock Splits (each discussed and defined below)).

On November 22, 2013, Trxade Nevada

McIntyre’s controlling interest of 80,000,000 shares in XCEL pursuant to a Purchase and Sale Agreement dated November

At the time of the sale, XCEL had 104,160,000 shares of common stock issued and outstanding, including the 80,000,000 shares

of stock acquired by Trxade Nevada (prior to the Merger Reverse Split and Reverse Stock Split(s) (each discussed and defined below)).

December 16, 2013, Trxade Nevada and XCEL entered into a definitive merger agreement (the “ Merger Agreement ”) providing

for the merger (the “ Merger ”) of Trxade Nevada with and into XCEL, with XCEL continuing as the surviving corporation.

The Merger closed on January 8, 2014.

Under the terms of the Merger Agreement, we amended our certificate of incorporation and changed

our name to “ Trxade Group, Inc., ” and changed our trading symbol to “ TRXD ”.

Recapitalization

of Common Stock by a Reverse Split and Increase of Authorized Shares of Stock

also reversed our issued and outstanding stock at the ratio of one for one thousand (1:1,000) shares effective upon the closing of the

Merger (the “ Merger Reverse Split ”).

In connection with the Merger Reverse Split, 104,160,000 outstanding shares of

our common stock, including the 80,000,000 shares held by Trxade Nevada, were exchanged for 104,160 post-Merger Reverse Split shares

of common stock.

As a result of the Merger, Trxade Nevada stockholders holding 28,800,000 shares of common stock and 670,000 shares of

Series A Preferred Stock converted their shares on a one-to-one basis into 28,800,000 shares of our common stock and 670,000 shares of

our Series A Preferred Stock, for an aggregate total of 29,470,000 shares.

Further, 100,000 shares of our common stock (on a post-Reverse

Split basis and considering the Reverse Stock Split(s) (discussed below)) were issued following the Merger in connection with the conversion

of our promissory notes.

The 80,000,000 pre-Merger shares held by Trxade Nevada, which amounted to 13,334 shares (on a post-Reverse Split

basis and taking into account the Reverse Stock Split(s)), reverted to treasury stock of the Company.

Except as otherwise disclosed,

the share amounts in the paragraph above have not been adjusted for the Merger Reverse Split or the Reverse Stock Split.

2020 Reverse Stock Split and NASDAQ Capital Market Listing

February 2020, the Company effected a 1-for-6 reverse stock split of the then outstanding common stock in order to allow us to meet the

initial listing criteria of The NASDAQ Capital Market.

common stock was approved for listing on The NASDAQ Capital Market under the symbol “ MEDS ”, on February 13, 2020.

2023 Reverse Stock Split.

June 2023 the Company effected a 1-for-15 reverse stock split of its issued and outstanding common stock.

own 100% of Trxade Inc.

(a Florida corporation).

was the subsidiary through which we previously operated a web-based market

platform to enable commerce among healthcare buyers and sellers of pharmaceuticals, accessories and services.

On February 16, 2024, we

entered into an asset purchase agreement with Trxade, Inc.

and Micro Merchant Systems, Inc.

(“MMS”), under which MMS purchased

for cash substantially all of the assets of Trxade, Inc.

in a transaction that closed on February 16, 2024.

own 100% of Integra Pharma Solutions, LLC (formerly Pinnacle Tek, Inc., a Florida corporation) founded by Mr.

Suren Ajjarapu, our CEO,

in 2011 (“ Integra ”).

Until the end of 2016, Integra served as our technology consultant provider, but we discontinued

that line of business in 2016.

Integra now serves as our logistics company for pharmaceutical distribution.

February of 2022 we entered into an agreement with Exchange Health to own 51% of SOSRx, LLC a Delaware limited liability company.

December of 2022 management determined that the subsidiary did not generate significant revenue and the assets were 100% impaired.

February of 2023 we voluntarily withdrew from the agreement with Exchange Health.

previously owned 100% of Community Specialty Pharmacy, LLC (“CSP”) and Alliance Pharma Solutions, LLC (d.b.a.

Our interests in CSP and APS were sold in September 2023 and have been included in discontinued operations.

of December 31, 2023 we owned 100% of Superlatus, Inc.

(“Superlatus”), and its wholly owned subsidiary Sapientia

Technologies, LLC.

Superlatus is a diversified food technology company with distribution capabilities and systems to optimize

food security and population health via innovative Consumer Packaged Goods products, agritech, foodtech, plant-based proteins and alt-protein

and includes, Sapientia, a food tech business.

In March 2024 we divested our entire interest in Superlatus.

We previously owned 100% of The

Urgent Company, Inc.

(“The Urgent Company” or “TUC”), a retail and distribution provider of prepackaged, prepared foods.

We divested our interest in The Urgent Company in connection

with our divestiture of Superlatus.

are a health services IT company focused on digitalizing the retail pharmacy experience by optimizing drug procurement, the prescription

journey and patient engagement in the U.S.

and have designed and developed, and now own and operate, a business-to-business web-based

Our core service brings the nation’s independent pharmacies, accredited national suppliers, and manufacturers of pharmaceuticals

together to provide efficient and transparent buying and selling opportunities.

began operations as Trxade Group, Inc., a Nevada corporation (“ Trxade Nevada ”) in August of 2010 and spent over two

years creating and enhancing our web-based services.

The Company changed its name on June 1, 2021, from “Trxade Group, Inc”

to “TRxADE HEALTH, INC.” Our services provided pricing transparency, purchasing capabilities and other value-added services

this Annual Report.

Our website addresses are www.scientureholdings.com, www.scienture.com, www.trxadehealth.com and www.rxintegra.com.

Information on our websites is not incorporated by reference into this Annual Report.

The information on, or that may be accessed through,

our websites not incorporated by reference into this Annual Report and should not be considered a part of this Annual Report.

Business – Scienture LLC

LLC was originally incorporated in Delaware and commenced operations in 2019.

In connection with our acquisition in July 2024, Scienture

LLC became a wholly owned subsidiary of the Company.

Scienture’s principal executive offices are located in Commack, New York.

LLC is a specialty pharmaceutical company focused on developing and commercializing products for the treatment of CNS and CVS diseases.

Scienture LLC is developing a broad range of novel product candidates including new potential treatments for hypertension, migraine,

pain and thrombosis and other related disorders.

LLC’s Strategy

LLC’s mission is to improve the lives of patients suffering from CNS and CVS diseases.

Scienture LLC’s vision is to be a

leader in the industry by developing and commercializing new medicines for the treatment of CNS and CVS diseases.

Key elements of Scienture

LLC’s strategy to achieve this vision include:

product candidates through clinical studies and toward commercialization.

Scienture LLC 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.

Food and Drug Administration (the “FDA”).

Scienture LLC has obtained regulatory

approval of its first product candidate, SCN-102.

growth and profitability.

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

building, Scienture LLC will seek to drive the revenue growth of its product candidates approved for marketing by the FDA.

to grow pipeline.

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

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

strategic business development opportunities.

Scienture LLC 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 LLC’s product candidates,

although no agreements have been reached.

and Development and Product Portfolio

LLC is committed to the development of innovative product candidates in the CNS and CVS therapeutic areas.

The process by which Scienture

LLC intends to bring its product candidates to market and the anticipated launch dates of its product candidates is depicted in the following

The progress of Scienture LLC’s products through this process is represented by checkmarks in the table.

LLC does not have any product candidates approved for sale and has not generated any revenue from product sales.

Scienture LLC

will not generate revenue from product sales unless and until it successfully obtains regulatory approval for its product candidates.

Scienture LLC is engaged in a variety of research and development efforts including development of a pipeline of novel product candidates

for the treatment of various disease conditions.

Scienture LLC has devoted and will continue to devote significant resources to research

and development activities, and expects to incur significant expenses as Scienture LLC continues advancing its product candidates towards

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

Scienture LLC’s expectations

regarding its research and development programs are subject to risks, including the risk that Scienture LLC’s financial condition

and results of operations for fiscal year 2024 and beyond 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.

(ARBLI TM - Losartan Oral Suspension)

is an oral liquid formulation of losartan potassium in development under the 505(b)(2) pathway, 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 left ventricular hypertrophy, and (iii) treatment of diabetic nephropathy with an elevated serum creatinine and proteinuria in patients

with type 2 diabetes and a history of hypertension.

Currently, there are no FDA-approved liquid formulations of losartan potassium.

Phase I PK study has shown that SCN-102 has close comparability to the immediate-release tablet as depicted in the data below:

of Statistical Results for Losartan Potassium Oral Liquid 10 mg/ml (T) versus Losartan Potassium Immediate Release Tablets 100 mg

(R) – For Losartan

Means of treatment:

Intra-subject

C max (ng/ml)

of Statistical Results for Losartan Potassium Oral Liquid 10 mg/ml (T) versus Losartan Potassium Immediate Release Tablets 100 mg

(R) – For Carboxylic Acid Metabolite

Means of treatment:

Intra-subject

C max (ng/ml)

Specifically,

the Phase I PK study showed that SCN-102 was comparable to immediate release tablets based on the following:

overall exposure for the Carboxylic Acid metabolite (EXP-3174) meet the confidence interval 80-125% range.

overall exposure for Losartan were within the 90% confidence interval.

Cmax for Losartan analyte, a pro-drug, for SCN-102 was slightly higher than the immediate release tablets (122.19 - 149.58%).

is due to the fact that the SCN-102 (oral liquid) and the reference product are two different dosage forms.

SCN-102 is an oral liquid

formulation and therefore it is expected to have an earlier Cmax than the immediate release tablet.

Based on the discussion above,

we believe that the impact of this Cmax difference will be minimal.

data obtained in the study is similar to the PK study data for the immediate release tablet.

approved, SCN-102 would be the first FDA approved oral liquid formulation of losartan on the market.

Scienture LLC submitted an Investigational New Drug (“IND”)

application to the FDA in September 2022.

Multiple human pharmacokinetics studies were performed, showing close comparability with the

oral solid dosage form.

In October 2023, Scienture LLC submitted an NDA for losartan potassium oral suspension to the FDA.

2023, the FDA accepted the NDA for review and assigned a Prescription Drug User Fee Act (“PDUFA”) target action date of August

Despite responding during the FDA’s review to information requests related to chemistry, manufacturing, and controls (“CMC”),

pharmacovigilance, clinical, microbiology and labeling, the FDA issued a Complete Response Letter to Scienture LLC focused on the CMC

information submitted.

Scienture LLC prepared the requested information and resubmitted the NDA to the FDA on September 17, 2024.

2024, the FDA accepted the resubmitted NDA for review and assigned a PDUFA target action date of March 17, 2025.

On March 13, 2025, the

FDA approved the SCN-102 NDA to be launched as ARBLI TM (losartan potassium) Oral Suspension, 10mg/mL Scienture LLC anticipates

that it will commercially launch and bring to market SCN-102 during the third quarter of 2025.

SCN-102 will be the first FDA approved

oral liquid formulation of losartan on the market.

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

SCN-104 injection pen is a disposable, multiple fixed dose, single entity combination product comprised of a small molecule drug, SCN-104,

which is administered using a customized injection pen.

SCN-104 is a drug product containing DHE as the active ingredient.

The mechanism

of action of SCN-104 is mediated through DHE and is exactly the same as that of DHE.

DHE is available in the market as a single dose

nasal spray, which has a high degree of variability in clinical outcomes.

DHE is also available in the market as single dose ampoules

for injection, however, Scienture LLC believes that the process of dose withdrawal from the ampoule followed by self-injection at the

time of intense need is cumbersome and difficult for the patient.

LLC believes that the SCN-104 multi-dose self-injection pen is easy to use and provides enhanced patient convenience.

Furthermore, Scienture

LLC believes that the SCN-104 injection pen provides for consistent and accurate delivery of every dose which results in better exposure

compared to the nasal spray formulation.

The SCN-104 injection pen is being developed via the 505(b)(2) regulatory pathway.

injection pen is in development for the acute treatment of migraine headaches with or without aura and the acute treatment of cluster

headache episodes.

shown in third party studies of DHE, SCN-104’s mechanism of action for its antimigraine effect is due to its potential action as

an agonist at the serotonin 5-HT1D receptors.

SCN-104 is intended for subcutaneous administration.

SCN-104 is also intended for acute

use and is not intended for chronic administration.

LLC has conducted two preclinical studies of SCN-104 and the SCN-104 injection pen:

(i) a 30-day repeated dose toxicity study of dimethyl

sulfoxide and caffeine following thrice daily, 3 times per week subcutaneous administration in Sprague-Dawley rats and (ii) a 30-day

repeated dose toxicity study of dimethyl sulfoxide and caffeine following thrice daily, 3 times per week subcutaneous administration

in Göttingen minipigs.

The objective of each study was to evaluate the safety and tolerability of the test items with and without

DHE to the subject animals, providing information on important potential toxic effects, target organs, progressive toxic effects, characterization

of a possible dose-response relationship, and an estimate the No-Observed-Adverse-Effect Level.

Both studies were designed for the qualification

of the excipients.

The animals treated either with DHE + DMSO + caffeine or DMSO + Caffeine formulations did not reveal any changes attributable

to treatment at the end of the treatment/recovery periods.

As such, both studies support a conclusion that SCN-102 is considered to have

no toxicological significance across the following attributes – Hematology, Coagulation Parameters, Clinical Chemistry and Urinalysis.

LLC believes the SCN-104 injection pen may offer a significant improvement, in terms of usability and patient acceptability, to the current

standard of care in the market (ampoules for injection).

The intended pen delivery system was designed with patients in mind to carry

multiple doses, have a lower volume of injection, and utilize shielded needles to avoid unnecessary exposure.

LLC has had initial discussions with the FDA to align on a path forward for this development program.

As a result of these discussions,

Scienture LLC learned that its proposed plan for manufacturing NDA registration batches and that the reference product and dose selection

of the reference product that Scienture LLC selected for a comparative regulatory study are acceptable.

Scienture LLC also received guidance

from the FDA on nonclinical safety studies and stability testing.

The formulation has been scaled up to enable future commercial scale

production and the pen has been optimized for commercial use.

As shown below, several pharmacokinetics studies have shown comparability

between SCN-104 and the currently available marketed injection product.

LLC is initiating manufacturing activities and planning to conduct bioequivalence studies.

Scienture LLC plans to initiate a Phase 1

single dose study in healthy adults in 2025, following submission of an IND, if the IND is cleared by the FDA.

(Potential Biosimilar)

LLC is 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.

SCN-106 is a sterile, purified glycoprotein that is synthesized using

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

LLC is working with Anthem Biosciences Pvt, Ltd.

(“Anthem”) 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.

In this regard, Scienture LLC entered into a Master Services Agreement with Anthem on October 29, 2024 (the “Anthem Agreement”).

The following is a summary of the Anthem Agreement, which is qualified in its entirety by the full text of the Anthem Agreement,

which is filed as an exhibit to this Annual Report.

the Anthem Agreement, Anthem has agreed to diligently complete the services associated with SCN-106 as included in work orders to be

attached to the Anthem Agreement.

In performing these services, Anthem has agreed to strictly comply with the specifications in the Anthem

Agreement, the work order, standard operating procedures approved in writing by Scienture LLC, and relevant professional standards, and

any regulatory authority requirements, including current Good Laboratory Practices (“GLPs”) and current Good Manufacturing

Practices (“GMPs”) promulgated by the FDA, and any other applicable laws, rules, and regulations.

In carrying-out its services,

Anthem will only allow those employees and personnel under Anthem’s direct control to perform such services and will obtain the

Scienture LLC’s consent prior to delegating or subcontracting any portion of the services.

Anthem is required to provide prompt

written reports to Scienture LLC the status of the services provided by Anthem under the Anthem Agreement and any work order.

Anthem Agreement, Scienture LLC is responsible for paying Anthem the amounts designated on any attached work order.

These amounts are

to be paid on the schedule stated on the work order and Anthem is responsible for invoicing Scienture LLC for such amounts.

late payments incur interest at the rate of 18% per annum payable until the date of actual payment.

project or work order in effect under the Anthem Agreement may be terminated by Scienture LLC without cause upon thirty (30) days’

prior notice to Anthem.

Anthem may terminate the Anthem Agreement without cause upon thirty (30) days’ prior notice to Scienture

However, Anthem is responsible for delivering all services and deliverables under the Anthem Agreement then required to be performed

by Anthem under a work order prior to any such termination.

Either party may terminate the Anthem Agreement upon the breach of the Anthem

Agreement by the other party if the breach remains uncured for a period of thirty (30) days.

In the event that performance by Anthem

or Scienture LLC under the Anthem Agreement is delayed due to an event beyond the control of Anthem or Scienture LLC for a period of

ninety (90) days, then the other party can terminate the Anthem Agreement upon written notice.

respect to projects to be performed by Anthem under the Anthem Agreement, any and all materials relating to such projects are the property

of Scienture LLC, and are to be protected as such by Anthem.

Furthermore, Anthem has agreed to irrevocably assign to Scienture LLC all

right, title, and interest in and to any “Program Technology” (as defined in the Anthem Agreement) and to make any assignments

necessary to ensure that Scienture LLC has such ownership interest.

The Anthem Agreement also contains customary confidentiality obligations,

representations and warranties, indemnification provisions, and anti-assignment provisions.

The Anthem Agreement may only be amended

upon the written consent of both parties.

CMC 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.

LLC 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 LLC learned that its analytical strategy for initiating analytical

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

Scienture LLC 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.

(Bupivacaine Long-Acting Injection)

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

Scienture LLC’s 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.

The product candidate is designed to 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 LLC believes this product candidate would require at least one Phase

3 clinical trial to support submission of a marketing application.

LLC 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.

and Marketing

LLC intends to market its products through its own sales forces in the U.S.

and seek strategic collaborations with other pharmaceutical

companies to commercialize its products outside of the U.S.

Scienture LLC is in the process of building a commercial sales and marketing

operation in the U.S., through a partnership with a Contract Sales Organization, to support sales of Scienture

LLC’s products .

Once approved , this sales

and marketing organization will include a combination of field teams, virtual sales representatives and omnichannel marketing to effectively

reach health care providers and offer patient education.

Scienture LLC’s promotional efforts are expected to further include developing

a market access strategy to obtain commercial and government payor coverage for its products.

In addition, Scienture LLC intends to partner

with a third-party logistics provider ( “ 3PL ” )

and have internal sales operations and analytics teams to provide state-of-the-art distribution capabilities to wholesalers, pharmacies,

institutional buying groups and hospitals.

Scienture LLC believes its commercial operations infrastructure,

once established, will enable it to effectively target healthcare providers to support and grow its products subsequent to market entry.

majority of Scienture LLC’s product sales, if its products are approved by the FDA, are expected to be to pharmaceutical wholesalers,

specialty pharmacies, and distributors who, in turn, would sell such products to pharmacies, hospitals, long term care institutions and

other customers, potentially including federal and state entities.

and Competition

LLC is engaged in segments of the pharmaceutical industry

that are highly competitive and rapidly changing.

Many large pharmaceutical and biotechnology companies, academic institutions, governmental

agencies, and other public and private research organizations are commercializing or pursuing the development of products utilizing the

same molecules or compounds or for the same indications that Scienture LLC is currently pursuing or may target in the future.

(high blood pressure) is a CVS condition, when the pressure in the blood vessels is too high (140/90 mmHg or higher).

According to the

Centers for Disease Control, hypertension, or high blood pressure, affects nearly half of adults in the United States, or 119.9 million

Hypertension is defined as a systolic blood pressure of 140 mmHg or higher, and diastolic blood pressure of 90 mmHg or higher.

Hypertension is a risk factor for stroke and heart disease, which are leading causes of death in the U.S.

Factors that increase the risk

of having high blood pressure include:

older age, genetics, being overweight or obese, not being physically active, high-salt diet and

drinking too much alcohol.

Hypertension is clinically diagnosed if, when blood pressure is measured on two different days, the systolic

blood pressure readings on both days is ≥140 mmHg and/or the diastolic blood pressure readings on both days is ≥ 90 mmHg.

hypertension market has increased with the commercial launch of several branded products in recent years, as well as the launch of generic

versions of branded drugs, such as Prinvil, Lotensin, Cozaar, Cardizem, Apresoline, Nitrostat and Toprol-XL.

Treatment options for hypertension

market can be broadly classified across the following product classes, Angiotensin-converting enzyme (ACE) inhibitors, Angiotensin

II receptor blockers (ARBs), Beta-Blockers, Diuretics and Calcium Channel Blockers.

LLC’s product candidate SCN-102, ARBLI TM (Losartan Oral Suspension 10mg/mL), is a ready to use oral suspension of losartan

for increased patient convenience and ease of dosing.

Losartan is classified as an ARB for treating hypertension and is one of the highest

prescribed molecules for this indication.

Current products in the market containing losartan are available only as oral solids, which

can be further compounded to a liquid formulation.

Scienture LLC believes that ARBLI TM is the first liquid formulation of losartan on

the market that does not require compounding and has reduced dosing volume and long-term shelf life at room temperature storage.

is a painful, complex neurological disorder consisting of recurring painful attacks that can significantly impact quality of life.

headaches are often characterized by throbbing pain, extreme sensitivity to light or sound, and potentially nausea and vomiting.

World Health Organization categorizes migraine as one of the most disabling medical illnesses worldwide.

The American Research Foundation

categorizes migraine as the third most prevalent illness in the world, and nearly 1 in 4 U.S.

households includes someone with migraines.

Migraine is estimated to affect over 39 million individuals in the U.S.

products in the market that are available to treat migraine headaches, include CGRP antagonists (calcitonin gene related peptide), which

is a class of products first introduced in 2018 (Nurtec, Ubrelvy), Botox, branded and generic versions of triptans (Imitrex, Maxalt,

Relpax), and ergot alkaloids (Ergotamine and Dihydroergotamine (DHE)).

LLC’s product candidate, SCN-104, is supplied in a multi-dose pen-based delivery system for self-injection and increased patient

The product candidate is in development for the acute treatment of migraine headaches with or without aura and the acute

treatment of cluster headache episodes.

Thrombotically

Occluded Catheter (CVAD) Management

which are a type of a Central Venous Access Device (“CVAD”), are employed to deliver life-sustaining therapies.

be used for short-term or long-term infusion of antibiotics, parenteral nutrition, chemotherapy, blood and blood products in patients

with limited peripheral access.

More than 7 million CVADs are inserted each year in patients in the United States.

Occlusion of catheters

while in use can complicate patient care by interrupting the administration of medications and solutions, delaying or disrupting therapies

and leading to additional procedures such as catheter replacement.

Occlusion is the most common noninfectious complication in the long-term

use of CVADs and may occur soon after insertion of a device or develop at any time.

About 58% of catheter occlusions are thrombotic,

resulting from the formation of a thrombus within, surrounding, or at the tip of the catheter.

LLC’s product candidate, SCN-106, is a thrombolytic agent currently in development.

Scienture LLC plans to develop SCN-106 through

the FDA’s 351(k) pathway for biosimilars.

Postoperative

pain, also known as postoperative pain, is pain that a patient experiences after a surgical procedure.

Pain can be caused by a number

of factors, including:

the type of procedure, the size of the operation, and medications used during surgery.

Chronic pain can negatively

impact a patient’s rehabilitation, quality of life, and the results of the procedure.

drug product treatments available in the market for treating postoperative pain include IV and oral opioids, injectable local anesthetics,

and steroidal and non-steroidal analgesics.

Marketed products include branded and generic versions of Celebrex, Ketalar, Exparel, Lyrica,

Neurontin and Astromorph.

LLC’s product candidate, SCN-107, is a microsphere based long-acting injection of Bupivacaine, a local anesthetic, in development

for postsurgical analgesia.

SCN-107 is designed to be a non-opioid treatment regimen with rapid onset of action and analgesia that is

intended to provide coverage over a period of 5-7 days.

Manufacturing

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

the production of raw materials, finished dosage form product, and product packaging for both its planned commercial scale manufacturer

and the products used in its preclinical and clinical research.

Scienture LLC does not own or operate manufacturing facilities for the

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

future to support clinical trials or commercial production.

Scienture LLC currently employs internal resources to manage its manufacturing

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

These CMOs offer

a comprehensive range of commercial contract manufacturing and packaging services.

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

to comply with stringent regulations applicable to pharmaceutical drug manufacturers, Scienture LLC 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.

May 26, 2020, Scienture LLC entered into Feasibility Study and Animal Trial Material Manufacturing Agreement with Innocore Technologies,

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

Under the Innocore License, Innocore granted Scienture LLC 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 LLC 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.

Scienture LLC is required to remunerate Innocore for the development of the licensed product,

subject to a limit of $0.4 million for certain safety and toxicity studies which will be deducted from certain development and regulatory

milestones as described below.

Scienture LLC is required to make development and regulatory milestone payments up to €2.7 million

in the aggregate, commercial sale milestone payments of up to €18.875 million in the aggregate, and maintenance fees of €0.25

million annually, subsequent to the first regulatory filing, until the date that Scienture LLC begins making royalty payments based on

annual net sales, up to €0.5 million of which may be credited toward the regulatory milestone payments.

As of October 25, 2024,

the Company had made aggregate payments to Innocore of $1,021,089.37 in connection with the Innocore License.

Innocore License is terminable by either the Company or Innocore on thirty (30) days’ prior written notice if the terminating party

determines in good faith, that it is technically or legally not feasible, or commercially not viable to jointly develop a formulation

which meets the specifications described in the Innocore License.

The Innocore License can also be terminated for any material breach

of the Innocore License that remains uncured after thirty (30) days and if either party files for insolvency under any applicable foreign,

federal or state law.

LLC continues to build its intellectual property portfolio to provide protection for its technologies,

products, and pr oduct candidates.

Scienture LLC seeks patent protection, where appropriate, both in the U.S.

and internationally

for products and product candidates.

LLC’s intended objective is to protect its innovations and proprietary products by, among other things, filing patent applications

and abroad, including Europe, Canada, and other countries when appropriate.

Scienture LLC also relies on trade secrets, know-how,

proprietary knowledge, continuing technological innovation, and in-licensing opportunities to develop and maintain its proprietary position.

Scienture LLC cannot be sure that patents will be granted with respect to its pending patent applications or with respect to any patent

applications filed by it in the future, nor can Scienture LLC be sure that any of its existing patents or any patents that may be granted

to it in the future will be commercially useful in protecting its technology or its products.

Scienture LLC cannot be sure that any patents,

if granted, will sustain a legal challenge.

SCN-102 will soon have two orange book listable formulation composition and method of use patents in the U.S.

of them are already issued (Patent #:

11,890,273, Issue Date:

February 6, 2024, titled “LOSARTAN LIQUID FORMULATIONS AND METHODS

OF USE”, Expiration Date:

October 7, 2041) and (Patent #:

12,156,869, Issue Date:

December 03, 2024, titled “LOSARTAN LIQUID

FORMULATIONS AND METHODS OF USE”, Expiration Date:

October 7, 2041).

A third application is pending (Appl.

December 5, 2022;

on or after October 7, 2041).

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

June 23, 2022;

June 15, 2035).

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

patent protection for this product.

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

October 24, 2022;

Expiration Date:

on or after April 22, 2041).

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.

Collaborations

and Licensing Arrangements

Pharma Corporation (“Kesin”)

LLC entered into exclusive license and commercial agreements on August 28, 2022 and April 24, 2023, with Kesin, a related party, pursuant

to which Scienture LLC granted the exclusive license rights to commercialize SCN-102 and SCN-104, respectively to Kesin for use in the

United States of America (together, the “Kesin Agreement”).

In consideration of the rights granted, Scienture LLC received

milestone payments and reimbursement of costs actually incurred related to SCN-102 and SCN-104.

March 13, 2024, the parties terminated the Kesin Agreement by entering a Confidential Termination Agreement (the “Kesin Termination

Agreement”), and the parties agreed that Scienture LLC would pay Kesin a total gross amount of $1.285 million upon commercialization

of either SCN-102 or SCN-104 via a royalty arrangement.

The Kesin Termination Agreement also requires that if the full $1.285 million

has not been repaid within two years of the earlier of (i) commercial launch of a product or (ii) 120 days after FDA approval of a product,

then interest will accrue prospectively at a rate of 8% annually on the unpaid balance.

August 2024, Kesin demanded immediate payment of the full amount under the Kesin Termination Agreement, alleging the full amount is payable

in connection with the consummation Scienture LLC’s business combination with the Company.

Scienture LLC has disputed that the

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

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

seeking payment of the disputed $1.285 million.

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

Scienture LLC

intends to vigorously defend itself in the litigation.

Drug Delivery L.P.

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

a wholly-owned subsidiary of Kindeva, a company engaged in the research, development, and manufacturing of pharmaceutical products, on

March 4, 2025, pursuant to which Kindeva granted Scienture LLC an exclusive, non-transferrable, non-sublicensable right and license to

commercialize REZENOPY® (Nalaxone HCI Nasal spray 10mg/0.11mL) (the “Product”) 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

earlier terminated, the term of the Kindeva Agreement will remain in effect for 10 years from the date of first commercial sale of the

Product in the United States and its territories to an unaffiliated third-party.

The Kindeva Agreement will automatically renew for successive

1-year periods unless either party terminates the agreement in accordance with its terms.

Either party may terminate the Agreement if

(i) the other party materially breaches the Kindeva Agreement and has not cured such breach during a period of 90 days following notice

of the breach, (ii) the Product is withdrawn from the market as a result of any ruling or requirement by the FDA, a voluntary recall

by the FDA is issued, or there are material safety concerns that could significantly impact the commercial viability of the Product,

or (iii) the Product is the subject of a mass tort liability action or is subject to material health and public safety concerns.

LLC may terminate the Kindeva Agreement upon 120 days prior written notice if Scienture LLC determines that the Product is compromised

by an adverse and material change in the market or other adverse and material business conditions.

The Kindeva Agreement is also terminable

by either party upon the occurrence of certain bankruptcy related events pertaining to the other party.

to the Kindeva Agreement, Scienture LLC is exclusively responsible, at its expense, for the commercializing the Product in the United

States and its territories in a manner that maximizes the net sales of the Product.

Scienture LLC has final and sole authority for the

pricing of the Product, but has agreed to not reduce the sale price of the Product for reasons other than the impact of market demand

for the Product, after taking into account all relevant factors.

to the Kindeva Agreement, Kindeva will retain control of all activities associated with manufacturing the Product, and be responsible

for any non-clinical or clinical studies regard the Product.

Kindeva will provide a copy of the NDA for the Product to Scienture LLC

as well as all related information and data necessary for Scienture LLC to commercialize the Product.

Once the NDA is transferred to

Scienture LLC, Scienture LLC will be responsible for maintaining the NDA and deal with any regulatory authorities regarding the advertising

and marketing of the Product as well as any adverse drug experience reports for the Product that Scienture LLC directly receives.

initial supply price for the Product to Scienture LLC is $9.20 per unit.

Kindeva may increase that price not more than once each calendar

year after the launch of the Product to account for any increased manufacturing costs.

the Kindeva Agreement, Scienture LLC and Kindeva agreed to form a joint steering committee within 30 days to oversee and coordinate their

respective activities under the Kindeva Agreement with respect to any additional regulatory or development requirements needed to obtain

any regulatory approvals needed for Scienture LLC to fulfill its commercialization responsibilities.

The joint steering committee will

be comprised of four members, with 2 members to be appointed by each of Scienture LLC and Kindeva.

The joint steering committee is responsible

for establishing timelines for the launch of the Product, overseeing the development and commercialization of the Product, providing

strategic direction and performance criteria, and resolving disputes that might arise under and in connection with the KindevaAgreement.

The joint steering committee will meet 4 times per year, unless Scienture LLC and Kindeva agree to a different schedule.

The joint steering

committee must act by unanimous vote of the members present at a meeting, provided that at least 1 member from each of Scienture LLC

and Kindeva must be present at such meeting, or may otherwise act by a written consent signed by all members.

exchange for the exclusive rights to develop and commercialize the Products, Scienture LLC agreed to pay Kindeva certain milestone payments,

net sales share payments, and NDA cost reimbursements, including:

one-time commercial milestone payment of between $2.5 million and $10 million based on the achievement of certain pre-defined annual

net sales targets;

payments totaling $1 million, $200,000 of which was due upon executing the Kindeva Agreement, $300,000 of which is due within 3 months

of executing the Kindeva Agreement, $250,000 of which is due upon delivery of the initial commercial supply of the Product, and $250,000

of which is due 3 months after receipt of such commercial supply;

Profit-sharing

payments representing 10% of the net sales by Scienture LLC of the Product, which will be reduced to 8% of the net sales on the market

entry of a third party generic ANDA for the Product;

profit-sharing payments representing 5% of the net sales until the total cumulative payments equals Kindeva’s cost of developing

and receiving NDA approval of the Product, which was $12.8 million as of the date of the Agreement.

the Agreement, Scienture LLC agreed to place minimum order quantities of the Product of 3 batches of 450,000 units per year beginning

in 2027 or, alternatively, pay Kindeva $1.242 million per year unless Scienture LLC elects to terminate the Agreement pursuant to its

Drug Development Process

the United States, pharmaceutical products are subject to extensive regulation by the FDA.

The Federal Food, Drug, and Cosmetic Act (the

“FDCA”) and other federal and state statutes and regulations, govern, among other things, the research, development, testing,

manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting,

sampling, and import and export of pharmaceutical products.

Scienture LLC, along with third-party contractors, will be required to navigate

the various preclinical, clinical and commercial approval requirements of the governing regulatory authorities of the countries in which

Scienture LLC wishes to conduct studies or seek approval of its product candidates.

Failure to comply with applicable United States requirements

may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending applications, withdrawal

of an approval, warning or untitled letters, clinical holds, product recalls or withdrawals from the market, product seizures, total

or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement

of profits, civil penalties, and criminal prosecution.

approval is required before any new unapproved product or a product with certain changes to a previously approved product, including

a new use of a previously approved drug, can be marketed in the United States.

The steps required to be completed by the FDA before a

drug may be marketed in the United States generally include the following:

of preclinical laboratory tests, animal studies, and formulation studies performed in accordance with the FDA’s Good Laboratory

Practice (“GLP”) regulations;

to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials may begin and

must be updated annually or when significant changes are made;

by an independent institutional review board (“IRB”) or ethics committee at each clinical site before the clinical trial

is commenced;

of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, good clinical practices (“GCPs”)

requirements and other clinical-trial related regulations to establish the safety and efficacy of the proposed drug for each indication;

and submission to the FDA of an NDA or biologics license application (“BLA”), after completion of all pivotal clinical

trials, which includes not only the results of the clinical trials, but also, detailed information on the chemistry, manufacture

and quality controls for the product candidate and proposed labeling;

completion of an FDA Advisory Committee review, if applicable;

determination by the FDA within 60 days of its receipt of an NDA or BLA to file the application for review;

completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed drug is produced to

assess compliance with current good manufacturing practices (“GMPs”) regulations and of selected clinical trial sites

to assess compliance with GCPs;

review and approval of the NDA or BLA to permit commercial marketing of the product for particular indications for use in the United

of FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the

type, complexity, and novelty of the product or disease.

and Clinical Development

tests include laboratory evaluation of product chemistry, formulation, and toxicity, as well as animal trials to assess the characteristics

and potential safety and efficacy of the product candidate.

The conduct of the preclinical tests must comply with federal regulations

and requirements, including GLP.

The results of preclinical testing are submitted to the FDA as part of an IND application along with

other information, including information about the product candidate, chemistry, manufacturing and controls, any available human data

or literature to support the use of the product candidate and a proposed clinical trial protocol.

Long term preclinical tests, such as

animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.

IND application must become effective before human clinical trials may begin.

The IND application automatically becomes effective 30

days after receipt by the FDA, unless the FDA, within the 30-day period, raises safety concerns or questions relating to one or more

proposed clinical trials and places the clinical trial on clinical hold.

In such a case, the IND sponsor and the FDA must resolve any

outstanding concerns or questions before the clinical trial can begin.

The FDA may also impose clinical holds on a product candidate

at any time before or during clinical trials due to safety concerns, non-compliance or other issues affecting the integrity of the trial.

Accordingly, submission of an IND application may or may not result in the FDA allowing clinical trials to commence and, once begun,

issues may arise that could cause the trial to be suspended or terminated.

trials involve the administration of the investigational drug product to human subjects under the supervision of a qualified investigator.

Clinical trials must be conducted:

(i) in compliance with federal regulations;

(ii) in compliance with GCP, an international standard

meant to protect the rights and health of clinical research participants and to define the roles of clinical trial sponsors, administrators,

and monitors;

as well as (iii) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety,

and the effectiveness criteria to be evaluated.

Each protocol involving testing on United States patients and subsequent protocol amendments

must be submitted to the FDA as part of the IND.

Furthermore, an independent IRB or ethics committee for each site proposing to conduct

the clinical trial must review and approve the plan for any clinical trial and its informed consent form before the clinical trial begins

at that site, and must monitor the study until completed.

An IRB is charged with protecting the welfare and rights of trial participants

and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in

relation to anticipated benefits.

authorities, the IRB or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects

are being exposed to an unacceptable health risk or that the trial is unlikely to meet its stated objects.

The FDA may order the temporary,

or permanent, discontinuation of a clinical trial at any time, or impose other sanctions, if it believes that the clinical trial is not

being conducted in accordance with FDA requirements.

Further, an IRB may also require the clinical trial at the site to be halted, either

temporarily or permanently, for failure to comply with the IRB’s requirements, or may impose other conditions.

Some trials also

include oversight by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring

board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain

data from the study and may recommend a clinical trial to be halted if it determines that there is an unacceptable safety risk for subjects

or other grounds, such as futility.

trials to support an NDA or BLA for marketing approval are typically conducted in three sequential phases, but the phases may overlap

or be combined.

In Phase 1 clinical trials, the investigational product is typically introduced into a limited population of healthy

human subjects or patients with the target disease or condition.

These trials are designed to test the safety, dosage tolerance, pharmacokinetics

and pharmacological actions of the investigational product, to identify side effects associated with increasing doses, and, if possible,

to gain early evidence on effectiveness.

Phase 2 clinical trials usually involve administering the investigational product to a limited

patient population with the specified disease or condition to evaluate the preliminarily efficacy, dosage tolerance, and optimum dosage,

and to identify possible adverse effects and safety risks.

Phase 3 clinical trials are typically undertaken in a larger number of patients,

typically at geographically dispersed clinical trial sites, to provide substantial evidence of clinical efficacy and to further test

for safety in an expanded and diverse patient population.

These clinical trials are intended to permit the FDA to evaluate the overall

benefit-risk relationship of the investigational product and to provide adequate information for the labeling of the product candidate.

reviewing an NDA or BLA, the FDA will consider all information submitted in the application, including the results of all clinical trials

In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved

to gain more information about the product.

These so-called Phase 4 studies may be made a condition to approval of the NDA or BLA.

trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication and further document

clinical benefit in the case of drugs approved under accelerated approval regulations.

Failure to exhibit due diligence with regard to

conducting Phase 4 clinical trials could result in the withdrawal of approval for products.

with clinical trials, companies may complete additional animal studies and develop additional information about the biological characteristics

of the product candidate, and must finalize a process for manufacturing the product in commercial quantities in accordance with current

GMP requirements.

The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among

other things, must develop methods for testing the identity, strength, quality and purity of the final product.

Additionally, appropriate

packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo

unacceptable deterioration over its shelf life.

all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical

data, and clinical study investigators.

Progress reports detailing the results of the clinical trials, among other information, must

be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and the investigators for serious

and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the product candidate,

findings from animal or in vitro testing that suggest a significant risk for human subjects, and any clinically important increase in

the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.

and BLA Submission and Review

successful completion of the required clinical testing in accordance with all applicable regulatory requirements, an NDA or BLA application

which includes, among other information, the results of product development, preclinical studies and clinical trials is submitted to

FDA approval of the application is required before marketing of the product may begin in the United States.

The application

must include, among other things, the results of all trials and preclinical testing, and other testing and a compilation of data relating

to the product’s pharmacology, chemistry, manufacture, controls and proposed labeling.

The cost of preparing and submitting an

NDA or BLA is substantial.

FDA has 60 days from its receipt of an NDA or BLA to either issue a Refuse to File Letter or accept the NDA or BLA for filing, indicating

that it is sufficiently complete to permit substantive review.

Once the submission is accepted for filing, the FDA begins an in-depth

The FDA has agreed to certain performance goals in the review of NDAs and BLAs.

Under applications subject to the performance

goals of the PDUFA, the FDA has a goal of responding to standard review NDAs and BLAs within ten months after it accepts the application

for filing, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing, but this

timeframe can be extended, such as by the submission of major amendments by applicants during the review period.

The FDA reviews an application

to determine, among other things, whether the product is safe and effective and the facility in which it is manufactured, processed,

packed or held meets standards designed to assure the product’s continued safety, purity and potency.

FDA may refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an advisory

committee—typically a panel that includes clinicians and other experts—for review, evaluation, and a recommendation as to

whether the application should be approved.

The FDA is not bound by the recommendation of an advisory committee, but it generally follows

such recommendations.

Before approving an application, the FDA will typically inspect one or more clinical sites to assure compliance

Additionally, the FDA will inspect the facility or the facilities at which the proposed product is manufactured.

determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies

in the submission and often will request additional testing or information.

Notwithstanding the submission of any requested additional

information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

the FDA evaluates the application and conducts inspections of the manufacturing facilities where the investigational product and/or its

drug substance will be produced, it issues either an approval letter or a Complete Response Letter.

An approval letter authorizes commercial

marketing of the drug with approved prescribing information for specific indications.

A Complete Response Letter indicates that the review

cycle of the application is complete and the application is not ready for approval.

A Complete Response Letter generally outlines the

deficiencies in the submission, except that where the FDA determines that the data supporting the application are inadequate to support

approval, the FDA may issue the Complete Response Letter without first conducting required inspections or reviewing proposed labeling.

In issuing the Complete Response Letter, the FDA may require substantial additional clinical data and/or other significant, expensive,

and time-consuming requirements related to clinical trials, preclinical studies and/or manufacturing.

If a Complete Response Letter is

issued, the applicant may either resubmit the NDA or BLA, addressing all of the deficiencies identified in the letter, withdraw the application

or request a hearing.

The FDA has committed to reviewing resubmissions of the NDA or BLA addressing such deficiencies in two or six months

depending on the type of information included.

Even if such data are submitted, however, the FDA may ultimately decide that the NDA or

BLA does not satisfy the criteria for approval.

regulatory approval of a product is granted, such approval will be granted for a particular indication(s) and may include limitations

on the indicated use(s) for which such product may be marketed.

Further, the FDA may require that certain contraindications, warnings

or precautions be included in the product labeling or may condition the approval of the application on other changes to the proposed

labeling, development of adequate controls and specifications, or a commitment to conduct post-market testing or clinical trials and

surveillance to monitor the effects of approved products.

As a condition of NDA or BLA approval, the FDA may require a risk evaluation

and mitigation strategy (“REMS”) to help ensure that the benefits of the drug outweigh the potential risks.

REMS can include

medication guides, communication plans for healthcare professionals, and elements to assure safe use (“ETASU”).

include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances,

special monitoring, and the use of patient registries.

The requirement for REMS can materially affect the potential market and profitability

of the product.

Moreover, product approval may also be conditioned on substantial post-approval testing, such as Phase 4 post-market

studies, and surveillance to monitor the product’s safety or efficacy, and the FDA may limit further marketing of the product based

on the results of these post-approval studies.

Once granted, product approvals may be withdrawn if compliance with regulatory standards

is not maintained or problems are identified following initial marketing.

to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes

or facilities, require submission and FDA approval of a new NDA or BLA, or NDA or BLA supplement before the change can be implemented.

An NDA or BLA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA

uses the same procedures and actions in reviewing NDA and BLA supplements as it does in reviewing NDAs and BLAs.

As with new NDAs and

BLAs, the review process is often significantly extended by requests for additional information or clarification.

NDA Approval Process

505(b)(2) of the FDCA provides an alternate regulatory pathway for the FDA to approve a new product and permits reliance for such approval

on published literature or an FDA finding of safety and effectiveness for a previously approved drug product.

Specifically, section 505(b)(2)

permits the filing of an NDA where one or more of the investigations relied upon by the applicant for approval were not conducted by

or for the applicant and for which the applicant has not obtained a right of reference.

Typically, 505(b)(2) applicants must perform

additional trials to support the change from the previously approved drug and to further demonstrate the new product’s safety and

effectiveness.

The FDA may then approve the new product candidate for all or some of the labeled indications for which the referenced

product has been approved, as well as for any new indication sought by the section 505(b)(2) applicant.

of Combination Products in the United States

products may be comprised of components, such as drug components and device components, that would normally be regulated under different

types of regulatory authorities, and frequently by different centers at the FDA.

These products are known as combination products.

Specifically,

under regulations issued by the FDA, a combination product may be:

product comprised of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced

as a single entity;

or more separate products packaged together in a single package or as a unit and comprised of drug and device products, device and

biological products, or biological and drug products;

drug, or device, or biological product packaged separately that according to its investigational plan or proposed labeling is intended

for use only with an approved individually specified drug, or device, or biological product where both are required to achieve the

intended use, indication, or effect and where upon approval of the proposed product the labeling of the approved product would need

to be changed, e.g., to reflect a change in intended use, dosage form, strength, route of administration, or significant change in

investigational drug, or device, or biological product packaged separately that according to its proposed labeling is for use only

with another individually specified investigational drug, device, or biological product where both are required to achieve the intended

use, indication, or effect.

the FDCA and its implementing regulations, the FDA is charged with assigning a center with primary jurisdiction, or a lead center, for

review of a combination product.

The designation of a lead center generally eliminates the need to receive approvals from more than one

FDA component for combination products, although it does not preclude consultations by the lead center with other components of FDA.

The determination of which center will be the lead center is based on the “primary mode of action” of the combination product.

Thus, if the primary mode of action of a drug-device combination product is attributable to the drug product, the FDA center responsible

for premarket review of the drug product would have primary jurisdiction for the combination product.

The FDA has also established an

Office of Combination Products to address issues surrounding combination products and provide more certainty to the regulatory review

That office serves as a focal point for combination product issues for agency reviewers and industry.

It is also responsible

for developing guidance and regulations to clarify the regulation of combination products, and for assignment of the FDA center that

has primary jurisdiction for review of combination products where the jurisdiction is unclear or in dispute.

combination product with a drug primary mode of action generally would be reviewed and approved pursuant to the drug approval processes

under the FDCA.

In reviewing the NDA application for such a product, however, FDA reviewers in the drug center could consult with their

counterparts in the device center to ensure that the device component of the combination product met applicable requirements regarding

safety, effectiveness, durability and performance.

In addition, under FDA regulations, combination products are subject to current GMP

requirements applicable to both drugs and devices, including the Quality System regulations applicable to medical devices.

Post-Approval

an NDA or BLA is approved, a product will be subject to pervasive and continuing regulation by the FDA including, among other things,

requirements relating to current GMPs, quality controls, record-keeping, reporting of adverse experiences, periodic reporting, product

sampling and distribution, and advertising and promotion of the product.

For instance, the FDA closely regulates the post-approval marketing

and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored

scientific and educational activities and promotional activities involving the internet.

Drugs may be marketed only for the approved

indications and in accordance with the provisions of the approved labeling.

Failure to comply with these requirements can result in adverse

publicity, warning letters, corrective advertising, and potential civil and criminal penalties.

Physicians may prescribe legally available

products for uses that are not described in the product’s labeling and that differ from those tested by Scienture LLC and approved

Such off-label uses are common across medical specialties.

Physicians may believe that such off-label uses are the best treatment

for many patients in varied circumstances.

The FDA does not regulate the practice of medicine by physicians or their choice of treatments.

The FDA does, however, regulate manufacturer’s communications on the subject of off-label use of their products.

addition, quality control, drug manufacture, packaging, and labeling procedures must continue to conform to current GMPs after approval.

Drug manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies,

and are subject to periodic unannounced inspections by the FDA, and certain state agencies for compliance with current GMPs, which impose

certain organizational, procedural and documentation requirements with respect to manufacturing and quality assurance activities.

to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval

before being implemented.

FDA regulations also require investigation and correction of any deviations from current GMPs and impose reporting

requirements upon Scienture LLC and any third-party manufacturers that Scienture LLC may decide to use.

NDA or BLA holders using contract

manufacturers, laboratories or packagers are responsible for the selection and monitoring of qualified firms, and, in certain circumstances,

qualified suppliers to these firms.

Drug manufacturers and other parties involved in the drug supply chain for prescription drug products

must also comply with product tracking and tracing requirements and notify the FDA of counterfeit, diverted, stolen and intentionally

adulterated products or products that are otherwise unfit for distribution in the United States.

The discovery of violative conditions,

including failure to conform to current GMPs, could result in enforcement actions that interrupt the operation of any such facilities

or the ability to distribute products manufactured, processed or tested by them.

Accordingly, manufacturers must continue to expend time,

money, and effort in the areas of production and quality-control to maintain compliance with current GMPs.

FDA may withdraw product approvals or request product recalls if a company fails to comply with regulatory standards or is not maintained,

if problems occur following initial marketing, or if previously unrecognized problems are subsequently discovered.

Later discovery of

previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes,

or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information;

of post-market studies or clinical trials to assess new safety risks;

or imposition of distribution restrictions or other restrictions

under a REMS program.

Other potential consequences include, among other things:

on the marketing or manufacturing of a product, complete withdrawal of the product from the market or product recalls;

warning letters or holds on post-approval clinical trials;

of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product

seizure or detention, or refusal of the FDA to permit the import or export of products;

decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs;

modification of promotional materials and labeling and the issuance of corrective information;

issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other

safety information about the product;

or the imposition of civil or criminal penalties.

Patent Term Restoration

upon the timing, duration and specifics of the potential FDA approval of Scienture LLC’s product candidates, some of its U.S.

may be eligible for limited patent term extension.

The Hatch-Waxman Amendments permit a patent restoration term, often referred to as

patent term extension, of up to five years as compensation for patent term lost during product development and the FDA regulatory review

However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s

approval date.

The patent term restoration period is generally one-half the time between the effective date of an IND and the submission

date of an NDA plus the time between the submission date of an NDA and the approval of that application.

Only one patent applicable to

an approved drug is eligible for the extension and the application for the extension must be submitted prior to the expiration of the

Patent and Trademark Office, in consultation with the FDA, reviews and approves or denies the application for any patent

term extension or restoration.

Marketing Exclusivity

exclusivity provisions under the FDCA can also delay the submission or the approval of certain marketing applications, including 505(b)(2)

applications.

The FDA provides three years of marketing exclusivity for an NDA (including a 505(b)(2) application), or supplement to

an existing NDA, if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant

are deemed by the FDA to be essential to the approval of the application.

Three-year exclusivity is typically awarded to innovative changes

to a previously-approved drug product, such as new indications, dosage forms or strengths.

This three-year exclusivity covers only the

modification for which the drug received approval on the basis of the new clinical investigations and does not prohibit the FDA from

approving applications for drugs that do not have the innovative change, such as generic copies of the original, unmodified drug product.

Three-year exclusivity blocks approval of 505(b)(2) applications and Abbreviated New Drug Applications, but will not delay the submission

or approval of a full NDA.

However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to

all of the nonclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.

drug exclusivity, as described above, may offer a seven-year period of marketing exclusivity, except in certain circumstances.

exclusivity is another type of regulatory market exclusivity in the United States.

Pediatric exclusivity, if granted, adds six months

to existing exclusivity periods, including exclusivity attaching to certain patent certifications.

This six-month exclusivity, which

runs from the end of other exclusivity protection and patent terms, may be granted based on the voluntary completion of a pediatric trial

in accordance with an FDA-issued “Written Request” for such a trial, provided that at the time pediatric exclusivity is granted

there is not less than nine months of term remaining.

and Exclusivity

ACA, which was signed into law in March 2010, included a subtitle called the Biologics Price Competition and Innovation Act of 2009 (the

The BPCIA established a regulatory scheme authorizing the FDA to approve biosimilars and interchangeable biosimilars.

A biosimilar is a biological product that is highly similar to an existing FDA-licensed “reference product.” The FDA has

issued multiple guidance documents outlining an approach to review and approval of biosimilars.

Under the BPCIA, a manufacturer may submit

an application for licensure of a biologic product that is “biosimilar to” or “interchangeable with” a previously

approved biological product or “reference product.” In order for the FDA to approve a biosimilar product, it must find that

there are no clinically meaningful differences between the reference product and proposed biosimilar product in terms of safety, purity

For the FDA to approve a biosimilar product as interchangeable with a reference product, the agency must find that the biosimilar

product can be expected to produce the same clinical results as the reference product, and (for products administered multiple times)

that the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks

or risks of diminished efficacy relative to exclusive use of the reference biologic.

the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date of approval of

the reference product.

The FDA may not approve a biosimilar product until 12 years from the date on which the reference product was approved.

Even if a product is considered to be a reference product eligible for exclusivity, another company could market a competing version

of that product if the FDA approves a full BLA for such product containing the sponsor’s own preclinical data and data from adequate

and well-controlled clinical trials to demonstrate the safety, purity and potency of their product.

The BPCIA also created certain exclusivity

periods for biosimilars approved as interchangeable products.

Since the passage of the BPCIA, many states have passed laws or amendments

to laws, including laws governing pharmacy practices, which are state regulated, to regulate the use of biosimilars.

Drug Designation

the Orphan Drug Act, the FDA may grant orphan drug designation to a drug intended to treat a rare disease or condition—generally

a disease or condition with either a patient population that affects fewer than 200,000 individuals in the United States or a patient

population greater than 200,000 individuals in the United States and there is no reasonable expectation that the cost of developing and

making available the drug will be recovered from sales of the drug in the United States.

Orphan drug designation must be requested before

submitting an NDA or BLA.

After the FDA grants orphan drug designation, the generic identity of the product and its potential orphan

use are disclosed publicly by the FDA.

Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory

review and approval process.

first applicant to receive FDA approval for a particular active ingredient to treat a particular disease with FDA orphan drug designation

is entitled to a seven-year exclusive marketing period in the United States for that product, for that indication.

During the seven-year

exclusivity period, the FDA may not approve any other applications to market the same product for the same disease, except in limited

circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder

of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet

the needs of the patients with the disease or condition for which the product was designated.

Orphan drug exclusivity does not prevent

the FDA from approving a different product for the same disease or condition, or the same product for a different disease or condition.

Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA or BLA application user

designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which

it received orphan drug designation.

In addition, orphan drug exclusive marketing rights in the United States may be lost if the FDA

later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities

of the product to meet the needs of patients with the rare disease or condition.

Track Designation and Breakthrough Therapy Designation

FDA is required to facilitate the development, and expedite the review, of drugs that are intended for the treatment of a serious or

life-threatening disease or condition which demonstrate the potential to address unmet medical needs for the condition, and accordingly,

the FDA has established the fast track designation and breakthrough therapy designation programs.

product candidate is eligible for fast track designation if it is intended to treat a serious or life-threatening disease or condition

and demonstrates the potential to address unmet medical needs for such disease or condition.

Fast track designation applies to the combination

of the product and the specific indication for which it is being studied.

Under the fast track program, the sponsor of a drug candidate

may request that the FDA designate the candidate for a specific indication as a fast track product concurrent with, or after, the filing

of the IND for the candidate.

The FDA must determine if the product candidate qualifies for fast track designation within 60 days of

receipt of the sponsor’s request.

Fast track designation provides increased opportunities for sponsor interactions with the FDA

during preclinical and clinical development, in addition to the potential for rolling review of sections of the applicant’s NDA

or BLA before the application is complete.

This rolling review is available if the applicant provides, and the FDA approves, a schedule

for the submission of the remaining information and the applicant pays applicable user fees.

However, the FDA’s time period goal

for reviewing an application does not begin until the last section of the application is submitted.

Additionally, the fast track designation

may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

the FDA’s breakthrough therapy program, a sponsor may seek FDA designation of its product candidate as a breakthrough therapy if

the product candidate is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening

disease or condition and preliminary clinical evidence indicates that it may demonstrate substantial improvement over existing therapies

on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

therapy designation comes with all of the benefits of fast track designation.

The FDA may take other actions appropriate to expedite

the development and review of the product candidate, including intensive guidance on an efficient product development program beginning

as early as Phase 1, and FDA organizational commitment to expedited development, including involvement of senior managers and experienced

review staff in a cross-disciplinary review, where appropriate.

product is eligible for priority review if it has the potential to provide a significant improvement in safety or effectiveness in the

treatment, diagnosis or prevention of a serious disease or condition.

A priority review means that the goal for the FDA to review an

application is six months, rather than the standard review of ten months under current PDUFA guidelines.

Under the current PDUFA agreement,

these six-and ten-month review periods are measured from the “filing” date rather than the receipt date for NDAs for new

molecular entities, which typically adds approximately two months to the timeline for review and decision from the date of submission.

Most products that are eligible for fast track designation are also likely to be considered appropriate to receive a priority review.

the Pediatric Research Equity Act (the “PREA”), NDAs and BLAs, or supplements to NDAs and BLAs, must contain data to assess

the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and

administration for each pediatric subpopulation for which the drug is safe and effective.

The FDA may grant full or partial waivers,

or deferrals, for submission of data.

Unless otherwise required by regulation, PREA does not apply to any drug for an indication for

which orphan designation has been granted.

of Clinical Trial Information

of clinical trials of FDA-regulated products, including drugs and combination products, are required to register and disclose certain

clinical trial information.

Information related to the product, patient population, phase of investigation, trial sites and investigators,

and other aspects of the clinical trial is then made public as part of the registration.

Sponsors are also obligated to disclose the

results of their clinical trials after completion.

Competitors may use this publicly available information to gain knowledge regarding

the progress of development programs.

Disclosure of the results of these trials can be delayed until the new product or new indication

being studied has been approved.

Failure to timely register a covered clinical study or to submit study results as provided for in the

law can give rise to civil monetary penalties and also prevent the non-compliant party from receiving future grant funds from the federal

The Final Rule on ClinicalTrials.gov registration and reporting requirements became effective in 2017, and both the National

Institutes of Health and the FDA have signaled the government’s willingness to begin enforcing those requirements against non-compliant

clinical trial sponsors.

Regulatory Requirements

Pharmaceutical

companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states

and foreign jurisdictions in which they conduct their business that may constrain the financial arrangements and relationships through

which Scienture LLC researches, as well as sell, market and distribute any products for which Scienture

LLC obtains marketing authorization.

Such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims,

and transparency laws and regulations related to drug pricing and payments and other transfers of value made to physicians and other

healthcare providers.

If Scienture LLC’s operations are found to be in violation of any of

such laws or any other governmental regulations that apply, Scienture LLC may be subject to penalties, including, without limitation,

administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, integrity

oversight and reporting obligations, exclusion from participation in federal and state healthcare programs and responsible individuals

may be subject to imprisonment.

Scienture LLC may be subject to:

federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting,

receiving, offering or paying any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly,

in cash or in kind, to induce, or in return for, the purchase, lease, order, arrangement, or recommendation of any good, facility,

item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and

Medicaid programs.

The Medicare program is a national health insurance program that primarily provides health insurance for Americans

aged 65 and older as well as some younger people with disability status as determined by the Social Security Administration and people

with end stage renal disease and amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease).

The Medicaid program is a federal

and state health insurance program that helps with medical costs for some people with limited income and resources, and offers benefits

not normally covered by Medicare, including nursing home care and personal care services.

A person or entity does not need to have

actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation.

are subject to civil and criminal fines and penalties for each violation, plus up to three times the remuneration involved, imprisonment,

and exclusion from government healthcare programs.

In addition, the government may assert that a claim including items or services

resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal

False Claims Act or federal civil monetary penalties;

federal civil and criminal false claims laws and civil monetary penalty laws, such as the federal False Claims Act, which impose

criminal and civil penalties and authorize civil whistleblower or qui tam actions, against individuals or entities for, among other

knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent;

knowingly making, using or causing to be made or used, a false statement of record material to a false or fraudulent claim or obligation

to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing

an obligation to pay money to the federal government.

Manufacturers can be held liable under the federal False Claims Act even when

they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent

The federal False Claims Act also permits a private individual acting as a “whistleblower” to bring actions on

behalf of the federal government alleging violations of the federal False Claims Act and to share in any monetary recovery;

federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created new federal criminal statutes

that prohibit a person from knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit

program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by,

or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly

and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false, fictitious,

or fraudulent statements or representations in connection with the delivery of, or payment for, healthcare benefits, items or services

relating to healthcare matters;

similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge

of the statute or specific intent to violate it in order to have committed a violation;

as amended by the Health Information Technology for Economic and Clinical Health Act of 2009

(“HITECH”) and their respective implementing regulations, including the Final

Omnibus Rule published in January 2013, which impose requirements on certain covered healthcare

providers, health plans, and healthcare clearinghouses as well as their respective business

associates, independent contractors or agents of covered entities, that perform services

for them that involve the creation, maintenance, receipt, use, or disclosure of, individually

identifiable health information relating to the privacy, security and transmission of individually

identifiable health information.

Individually identifiable information means information

that is a subset of health information, including demographic information collected from

an individual, and:

(1) is created or received by a health care provider, health plan, employer,

or health care clearinghouse;

and (2) relates to the past, present, or future physical or

mental health or condition of an individual;

the provision of health care to an individual;

or the past, present, or future payment for the provision of health care to an individual;

and (a) that identifies the individual;

or (b) with respect to which there is reasonable

basis to believe the information can be used to identify the individual.

also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business

associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to

enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.

there may be additional federal, state and non-U.S.

laws which govern the privacy and security of health and other personal

information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect,

thus complicating compliance efforts;

federal transparency requirements under the ACA, including the provision commonly referred to as the Physician Payments Sunshine

Act, and its implementing regulations, which requires applicable manufacturers of drugs, devices, biologics and medical supplies

for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the

Centers for Medicare & Medicaid Services (“CMS”), information related to payments or other transfers of value made

to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other licensed health

care practitioners and teaching hospitals, as well as ownership and investment interests held by the physicians described above and

their immediate family members;

price reporting laws, which require manufacturers to calculate and report complex pricing metrics to government programs, where such

reported prices may be used in the calculation of reimbursement and/or discounts on approved products;

consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm

Additionally,

Scienture LLC is subject to state and foreign equivalents of each of the healthcare laws and regulations described above, among others,

some of which may be broader in scope and may apply regardless of the payor.

states have adopted laws similar to the federal

Anti-Kickback Statute and False Claims Act, and may apply to Scienture LLC’s business practices, including, but not limited to,

research, distribution, sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental

payors, including private insurers.

In addition, some states have passed laws that require pharmaceutical companies to comply with the

April 2003 Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research

and Manufacturers of America’s Code on Interactions with Healthcare Professionals.

Several states also impose other marketing restrictions

or require pharmaceutical companies to make marketing or price disclosures to the state and require the registration of pharmaceutical

sales representatives.

There are ambiguities as to what is required to comply with these state requirements and if Scienture LLC fails

to comply with an applicable state law requirement Scienture LLC could be subject to penalties.

State and foreign laws, including for

example the European Union General Data Protection Regulation, which became effective in May 2018, also govern the privacy and security

of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by

HIPAA, thus complicating compliance efforts.

There are ambiguities as to what is required to comply with these state requirements and

if Scienture LLC fails to comply with an applicable state law requirement Scienture LLC could be subject to penalties.

scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform.

Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare

providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.

that Scienture LLC’s internal operations and future business arrangements with third parties comply with applicable healthcare

laws and regulations will involve substantial costs.

It is possible that governmental authorities will conclude that Scienture LLC’s

business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud

and abuse or other healthcare laws and regulations.

If Scienture LLC’s operations are found to be in violation of any of the laws

described above or any other governmental laws and regulations that may apply to us, Scienture LLC may be subject to significant penalties,

including administrative, civil and criminal penalties, damages, fines, disgorgement, the exclusion from participation in federal and

state healthcare programs, individual imprisonment, reputational harm, and the curtailment or restructuring of Scienture LLC’s

operations, as well as additional reporting obligations and oversight if Scienture LLC becomes subject to a corporate integrity agreement

or other agreement to resolve allegations of non-compliance with these laws.

Further, defending against any such actions can be costly

and time consuming, and may require significant financial and personnel resources.

Therefore, even if Scienture LLC is successful in

defending against any such actions that may be brought against it, its business may be impaired.

If any of the physicians or other providers

or entities with whom Scienture LLC expects to do business are found to not be in compliance with applicable laws, they may be

subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and imprisonment.

If any of the above occur, Scienture LLC’s ability to operate its business and its results of operations could be adversely affected.

whether domestic or foreign, or governmental or private, are developing increasingly sophisticated methods of controlling healthcare

costs and those methods are not always specifically adapted for new technologies such as gene therapy and therapies addressing rare diseases

such as those Scienture LLC is developing.

In both the United States and certain foreign jurisdictions, there have been a number of legislative

and regulatory changes to the health care system that could impact Scienture LLC’s ability to sell its products profitably.

particular, in 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of

2010 (collectively, the “ACA”) was enacted, which, among other things, subjected biologic products to potential competition

by lower-cost biosimilars;

increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program;

extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations;

subjected manufacturers to new annual fees and taxes for certain branded prescription drugs;

created a Medicare Part D coverage gap discount

program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs

to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered

under Medicare Part D;

and provided incentives to programs that increase the federal government’s comparative effectiveness research.

addition, other legislative and regulatory changes have been proposed and adopted in the United States since the ACA was enacted.

Budget Control Act of 2011 and subsequent legislation, among other things, created measures for spending reductions by Congress

that include aggregate reductions of Medicare payments to providers of 2% per fiscal year, which remain in effect through 2031.

to the Statutory Pay-As-You-Go Act of 2010, estimated budget deficit increases resulting from the American Rescue Plan Act of 2021,

and subsequent legislation, Medicare payments to providers will be further reduced starting in 2025 absent further legislation.

American Taxpayer Relief Act of 2012 further reduced Medicare payments to several types of providers and increased the statute

of limitations period for the government to recover overpayments to providers from three to five years.

April 13, 2017, CMS published a final rule that gives states greater flexibility in setting benchmarks for insurers in the individual

and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans

sold through such marketplaces.

May 30, 2018, the Right to Try Act, was signed into law.

The law, among other things, provides a federal framework for certain patients

to access certain investigational new drug products that have completed a Phase 1 clinical trial and that are undergoing investigation

for FDA approval.

Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without

obtaining FDA permission under the FDA expanded access program.

There is no obligation for a pharmaceutical manufacturer to make

its drug products available to eligible patients as a result of the Right to Try Act.

23, 2019, CMS published a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs.

Additionally,

there has been increasing legislative and enforcement interest in the United States with respect to drug pricing practices.

Specifically,

there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which

has resulted in several U.S.

Congressional inquiries and proposed and enacted federal and state legislation designed to, among other

things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, and review the relationship between

pricing and manufacturer patient programs.

August 2022, the Inflation Reduction Act of 2022 (the “IRA”), was signed into law.

The IRA includes several provisions that

may impact Scienture LLC’s business, depending on how various aspects of the IRA are implemented.

Provisions that may impact Scienture

LLC’s business include a $2,000 out-of-pocket cap for Medicare Part D beneficiaries, the imposition of new manufacturer financial

liability on most drugs in Medicare Part D, permitting the U.S.

government to negotiate Medicare Part B and Part D pricing for certain

high-cost drugs and biologics without generic or biosimilar competition, requiring companies to pay rebates to Medicare for drug prices

that increase faster than inflation, and delay until January 1, 2032 the implementation of the U.S.

Department of Health and Human

Services (“HHS”) rebate rule that would have limited the fees that pharmacy benefit managers can charge.

Further, under the

IRA, orphan drugs are exempted from the Medicare drug price negotiation program, but only if they have one orphan designation and for

which the only approved indication is for that disease or condition.

If a product receives multiple orphan designations or has

multiple approved indications, it may not qualify for the orphan drug exemption.

The implementation of the IRA is currently subject to

ongoing litigation challenging the constitutionality of the IRA’s Medicare drug price negotiation program.

The effects of the IRA

on Scienture LLC’s business and the healthcare industry in general is not yet known.

President Biden issued multiple executive orders that sought to reduce prescription drug costs.

In February 2023, HHS also issued

a proposal in response to an October 2022 executive order from former President Biden that includes a proposed prescription drug pricing

model that will test whether targeted Medicare payment adjustments will sufficiently incentivize manufacturers to complete confirmatory

trials for drugs approved through FDA’s accelerated approval pathway.

A number of these and other proposed measures may require

authorization through additional legislation to become effective, and the Trump administration may reverse or otherwise change these

However, Congress has indicated that it will continue to seek new legislative measures to control drug costs.

LLC expects that additional U.S.

federal healthcare reform measures will be adopted in the future, any of which could limit the amounts

that the U.S.

Federal Government will pay for healthcare drugs and services, which could result in reduced demand for Scienture LLC’s

drug candidates or additional pricing pressures.

states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control

pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain

drug access and marketing cost disclosure and transparency measures, and designed to encourage importation from other countries and bulk

Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm Scienture LLC’s

business, financial condition, results of operations and prospects.

In addition, regional healthcare authorities and individual hospitals

are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription

drug and other healthcare programs.

This could reduce the ultimate demand for Scienture LLC’s drugs or put pressure on its drug

pricing, which could negatively affect its business, financial condition, results of operations and prospects.

Pharmaceutical

Coverage, Pricing, and Reimbursement

success of Scienture LLC’s product candidates, if approved, depends on the availability of coverage and adequate reimbursement

from third-party payors.

Scienture LLC cannot be sure that coverage and reimbursement will be available for, or accurately estimate the

potential revenue from, its product candidates or assure that coverage and reimbursement will be available for any product that it may

Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part

of the costs associated with their treatment.

Coverage and adequate reimbursement from governmental healthcare programs, such as Medicare

and Medicaid, and commercial payors is critical to new product acceptance.

authorities and other third-party payors, such as private health insurers and health maintenance organizations, decide which drugs and

treatments they will cover and the amount of reimbursement.

Coverage and reimbursement by a third-party payor may depend upon a number

of factors, including the third-party payor’s determination that use of a product is:

covered benefit under its health plan;

effective and medically necessary;

for the specific patient;

cost-effective;

experimental nor investigational.

the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors.

As a result, obtaining

coverage and reimbursement approval of a product from a government or other third-party payor is a time-consuming and costly process

that could require Scienture LLC to provide to each payor supporting scientific, clinical and cost-effectiveness data for the use of

Scienture LLC’s products on a payor-by-payor basis, with no assurance that coverage and adequate reimbursement will be obtained.

In the United States, the principal decisions about reimbursement for new medicines are typically made by CMS.

CMS decides whether and

to what extent a new medicine will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial degree.

Even if Scienture LLC obtains coverage for a given product, the resulting reimbursement payment rates might not be adequate for Scienture

LLC to achieve or sustain profitability or may require co-payments that patients find unacceptably high.

Additionally, third-party payors

may not cover, or provide adequate reimbursement for, long-term follow-up evaluations required following the use of product candidates,

once approved.

Patients are unlikely to use Scienture LLC’s product candidates, once approved, unless coverage is provided and

reimbursement is adequate to cover a significant portion of their cost.

There is significant uncertainty related to insurance coverage

and reimbursement of newly approved products.

It is difficult to predict at this time what third-party payors will decide with respect

to the coverage and reimbursement for Scienture LLC’s product candidates.

prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by

any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in

the United States.

Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from

list prices and are challenging the prices charged for medical products.

Scienture LLC cannot be sure that reimbursement will be available

for any product candidate that it commercializes and, if reimbursement is available, the level of reimbursement.

In addition, many pharmaceutical

manufacturers must calculate and report certain price reporting metrics to the government, such as average sales price and best price.

Penalties may apply in some cases when such metrics are not submitted accurately and timely.

Further, these prices for drugs may be reduced

by mandatory discounts or rebates required by government healthcare programs.

Payment methodologies may be subject to changes in healthcare

legislation and regulatory initiatives.

LLC expects that healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria and in additional

downward pressure on the price that Scienture LLC receives for any approved product.

The implementation of cost containment measures

or other healthcare reforms may prevent Scienture LLC from being able to generate revenue, attain profitability, or commercialize Scienture

LLC’s products.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and

promotional activities for pharmaceutical products.

Scienture LLC cannot be sure whether additional legislative changes will be enacted,

or whether existing regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals

or clearances of Scienture LLC’s product candidates, if any, may be.

addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.

The requirements

governing drug pricing vary widely from country to country.

For example, the European Union provides options for its Member States to

restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices

of medicinal products for human use.

To obtain reimbursement or pricing approval, some of these countries may require the completion

of clinical trials that compare the cost effectiveness of a particular product candidate to currently available therapies.

A Member State

may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability

of the company placing the medicinal product on the market.

There can be no assurance that any country that has price controls or reimbursement

limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of Scienture LLC’s

product candidates.

Historically, products launched in the European Union do not follow price structures of the United States and generally

prices tend to be significantly lower.

Environmental

LLC’s operations and those of its third-party manufacturers and suppliers are subject to national, state and local environmental

Scienture LLC has made, and intends to continue to make, expenditures and undertake efforts to comply with applicable laws.

LLC believes the safety procedures utilized by it for the handling and disposing hazardous materials comply with the standards prescribed

by applicable laws and regulations.

LLC’s success begins and ends with our people.

Scienture LLC’s solid progress to date reflects the talent and hard work of

all of its employees.

Scienture LLC considers the intellectual capital of its employees to be an essential driver of its business and

key to its future prospects.

Attracting, developing, and retaining talented people in technical, marketing, sales, research, and other

positions is crucial to executing its strategy and its ability to compete effectively.

Acquisition, Retention and Development

LLC’s key human capital objectives are to attract, retain and develop the highest quality talent.

Scienture LLC employs various

human resource programs in support of these objectives.

Scienture LLC’s ability to recruit and retain such talent depends on a

number of factors, including compensation and benefits, talent development and career opportunities, and the work environment.

LLC attracts and rewards its employees by providing market competitive compensation and benefit packages, including incentives and recognition

plans that extend to all levels in its organization.

To that end, Scienture LLC offers a

comprehensive total rewards program aimed at health, home-life, and financial needs of its employees.

Scienture LLC’s total rewards

package includes market-competitive pay, broad-based stock grants, bonuses, healthcare benefits, retirement savings plans, paid time

off and family leave, an Employee Assistance Program, and mental health services.

LLC is committed to the safety, health, and security of its employees.

Scienture LLC believes a hazard-free environment is critical for

the success of its business.

Throughout Scienture LLC’s operations, Scienture strives to ensure that all its employees have access

to safe workplaces that allow them to succeed in their jobs.

Scienture LLC’s experience and

continuing focus on workplace safety has enabled it to preserve business continuity without sacrificing its commitment to keeping its

colleagues and workplace visitors safe.

and Diversity

LLC places a strong value on collaboration, inclusion, and diversity, and believes that working

together leads to better outcomes for its customers.

This extends to the way Scienture LLC employees treat

each other as team members.

Scienture LLC strives to create an environment where innovative

ideas can flourish by demonstrating respect for each other and valuing the diverse opinions, backgrounds, and viewpoints of employees.

Scienture LLC believes a diverse and inclusive workplace results in business growth and

encourages increased innovation, retention of talent, and a more engaged workforce.

LLC’s corporate headquarters is located at 20 Austin Blvd, Commack, NY 11725, which is 2,000 square feet of office space with a

lease termination date of July 31, 2026.

Scienture LLC believes its facilities are sufficient to meet its current needs for the foreseeable

time to time, Scienture LLC may be involved in various claims and legal proceedings.

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

stemming from exclusive license and commercial agreements that Scienture LLC entered into on August 28, 2022 and April 24, 2023, with

Kesin, a related party, pursuant to which Scienture LLC granted the exclusive license rights to commercialize SCN-102 and SCN-104, respectively

to Kesin for use in the United States of America (together, the “Kesin Agreement”).

In consideration of the rights granted,

Scienture LLC received milestone payments and reimbursement of costs actually incurred related to SCN-102 and SCN-104.

March 13, 2024, the parties terminated the Kesin Agreement by entering a Confidential Termination Agreement (the “Kesin Termination

Agreement”), and the parties agreed that Scienture LLC would pay Kesin a total gross amount of $1.285 million upon commercialization

of either SCN-102 or SCN-104 via a royalty arrangement.

The Kesin Termination Agreement also requires that if the full $1.285 million

has not been repaid within two years of the earlier of (i) commercial launch of a product or (ii) 120 days after FDA approval of a product,

then interest will accrue prospectively at a rate of 8% annually on the unpaid balance.

August 2024, Kesin demanded immediate payment of the full amount under the Kesin Termination Agreement, alleging the full amount is payable

in connection with the consummation Scienture LLC’s business combination with the Company.

Scienture LLC has disputed that the

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

Nevertheless, Kesin filed its complaint on March 11,

2025, seeking payment of the disputed $1.285 million.

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

the Company and Scienture LLC collectively employ approximately fourteen (14) full-time employees and five (5) part time employees.

are not a party to any collective bargaining agreements and have not experienced any strikes or work stoppages.

We consider our relations

with our employees and consultants to be satisfactory.

business is not directly affected by seasonal fluctuations but is affected indirectly by the fall and winter flu season, to the extent

it leads to an increased demand for certain generic pharmaceuticals.

currently exist as a holding company directly owning 100% of the equity interests of Scienture LLC, Softell, Bonum Health, and Bonum

and indirectly owning 100% of the equity interests in IPS.

Scienture LLC is a specialty pharmaceutical company focused on

developing and commercializing products for the treatment of central nervous system (“CNS”) and cardiovascular (“CVS”)

Softell is a holding company owning 100% of IPS.

IPS is a licensed pharmaceutical wholesaler and sells brand, generic and non-drug

products to customers that include, but are not limited to, healthcare markets including government organizations, hospitals, clinics

and independent pharmacies nationwide.

Bonum Health, Inc.

and Bonum Health did not engage in business during the year ending December

31, 2024, and we anticipate these entities will be dissolved.

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

January 25, 2025, the Company’s Board of Directors approved the preparation of a divestment and winddown plan for the winddown of

each of Softell, IPS, Bonum Health, Inc., and Bonum.

LLC (“SOSRx”) was formed on February 15, 2022.

The Company entered into a relationship with Exchange Health, LLC (“Exchange

Health”), a technology company providing an online platform for manufacturers and suppliers to sell and purchase pharmaceuticals.

SOSRx, a Delaware limited liability company, was formed, which was owned 51% by the Company and 49% by Exchange Health.

SOSRx did not

generate material revenue and in February 2023, the Company voluntarily withdrew from the joint venture agreement.

Specialty Pharmacy, LLC and Alliance Pharma Solutions, LLC

January 20, 2023, the Company entered into Membership Interest Purchase Agreements to sell 100% of the outstanding membership interests

of the Company’s former subsidiaries, Community Specialty Pharmacy, LLC and Alliance Pharma Solutions, LLC d.b.a DelivMeds.

Company also agreed to enter into a Master Service Agreement to operate the businesses prior to closing.

The transactions contemplated

by the Membership Interest Purchase Agreements closed on August 22, 2023.

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

with Superlatus Inc., a diversified food technology company, and Foods Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary

of the Company (“Merger Sub”).

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

Agreement (the “Superlatus Merger”), pursuant to which the Company acquired Superlatus by way of a merger of the Merger Sub

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

the terms of the Superlatus Merger Agreement, at the closing of the Superlatus Merger (the “Closing”), shareholders of Superlatus

received an aggregate of 136,441 shares of the Company’s common stock and 306,855 shares of the Company’s Series B Preferred

Stock, par value $0.00001 per share (the “Series B Preferred Stock”), convertible into 100 shares of the Company’s

common stock.

At Closing, the value of the Company’s common stock was $7.30 per share, resulting in a total value of $225,000,169.

October 13, 2023, the Company announced that Superlatus PD Holding Company, Inc., a purported subsidiary of Superlatus, entered into

a supplier agreement with Rainforest Distribution Corp, a New York corporation (“Rainforest”), pursuant to which Superlatus

allegedly appointed Rainforest as its exclusive distributor for Superlatus’ portfolio of consumer packaged goods brands in certain

The Company later learned and announced that neither

the Company’s management nor the Company’s Board of Directors authorized or approved the organization of Superlatus PD Holding

Company, Inc.

or the entry into the supplier agreement.

Instead, the Company’s management determined that certain representatives

of a former subsidiary of the Company likely unilaterally took actions related to the supplier agreement.

January 8, 2024, the Company entered into Amendment No.

1 to the Amended and Restated Agreement and Plan of Merger (the “Superlatus

Amendment”) as not all of the closing conditions of the Superlatus Merger Agreement were met.

Under the terms of the Superlatus

Amendment, the merger consideration to the shareholders of Superlatus was adjusted to the aggregate of 136,441 shares of the Company’s

common stock and 15,759 shares of the Company’s Series B Preferred Stock, resulting in a total value of $12,500,089.

Additionally,

the shareholders of Superlatus agreed to surrender back to the Company 291,096 shares of the Company’s Series B Preferred Stock.

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

(the “Buyer”).

Pursuant to the Superlatus SPA, the Company sold all of the issued and outstanding stock of Superlatus to the Buyer.

The $1.00 purchase

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

As a result of the transaction Superlatus is no longer a subsidiary of the Company, and the rights and assets of Superlatus together

with various liabilities and obligations that were specific to Superlatus became rights and obligations of the Buyer.

historically focused on health services IT assets and operations aimed at digitalizing the retail pharmacy experience via an online pharmaceutical

marketplace, with our primary operations conducted through IPS.

began operations as Trxade Group, Inc., a Nevada corporation (“Trxade Nevada”) in August of 2010 and spent over two years

creating and enhancing our web-based services.

The Company changed its name on June 1, 2021, from “Trxade Group, Inc” to

“TRxADE HEALTH, Inc.” Our services provided pricing transparency, purchasing capabilities and other value-added services

on a single platform focused on serving the nation’s approximately 19,397 independent pharmacies with annual purchasing power of

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Our national wholesale supply partners

and manufacturers are able to fulfill orders on our platform in real-time and provide pharmacies and wholesale suppliers with cost-saving

and manufacturers were able to fulfill orders on our platform in real-time and provide pharmacies and wholesale suppliers with cost-saving

payment terms and next-day delivery capabilities in unrestrictive states.

We expanded significantly since 2015 and served approximately

We have expanded significantly since 2015 and served approximately

14,400+ registered members on our sales platform.

Principal Products and Services and their Markets

previously operated the Company’s web-based pharmaceutical marketplace engaged in promoting and enabling commerce among independent

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drugs (OTCs), and drugs available for purchase by pharmacists.

We served approximately 14,400+ registered members, providing access to

Trxade’s proprietary pharmaceutical database and data analytics regarding medication pricing.

We generated revenue from these services

by charging a transaction fee to the seller of the products for sales conducted via the Trxade platform.

The buyers do not bear the cost

of transaction fees for the purchases that they make, nor do they pay a fee to join or register with our platform.

In February 2024 we

divested substantially all of our assets related to our web-based pharmaceutical marketplace previously operated through TRxADE, Inc.

Substantially all of our revenues during Fiscal 2023, Fiscal 2022, and Fiscal 2021 were from platform revenue generated on www.rx.trxade.com ,

product sales through Integra Pharma Solutions, LLC, and prescription sales through Community Specialty Pharmacy, LLC.

of current products and services and business plans;

Status of former business products and initiatives

We previously had a number of

products and services focused on the US market in operation and business assets, which are described below.

In addition, in 2024 we expect

to explore other strategic transactions and acquisitions as a means to monetize and enhance the Company’s current assets and operations,

which transactions may involve effecting acquisitions of new businesses in industries that differ from our legacy operations.

Generic drugs are copies of brand-name drugs that have exactly the same

dosage, intended use, effects, side effects, route of administration, risks, safety, and strength as the original drug.

approximately 14,400+ registered members, providing access to Trxade’s proprietary pharmaceutical database and data analytics regarding

medication pricing.

We generated revenue from these services by charging a transaction fee to the seller of the products for sales conducted

via the Trxade platform.

The buyers did not bear the cost of transaction fees for the purchases that they made, nor did they pay a fee

to join or register with our platform.

In February 2024 we divested substantially all of our assets related to our web-based pharmaceutical

marketplace previously operated through Softell.

Substantially all of our revenues during Fiscal 2023, Fiscal 2022, and Fiscal 2021 were

from platform revenue generated on www.rx.trxade.com , product sales through IPS, and prescription sales through Community Specialty

Pharmacy, LLC.

previously had a number of products and services focused on the US market in operation and business assets, which are described below.

Pharma Solutions, LLC.

Integra is intended to serve as our logistics company for pharmaceutical distribution.

IPS is intended to serve as our logistics company for pharmaceutical distribution.

We currently distribute

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Trxade Prime previously allowed pharmacy members on the Trxade platform to process, consolidate and ship purchase orders that

are placed directly with Trxade suppliers via the Trxade Prime.

were placed directly with Trxade suppliers via Trxade Prime.

This service was provided at no cost, with the goal of offering a single

tool with one low order minimum, one invoice, one package and one delivery from multiple quality wholesalers and distributors.

had been generated from this service through our Integra subsidiary, which provides the consolidation of the orders.

had been generated from this service through our IPS subsidiary, which provided the consolidation of the orders.

Health Application.

The “ Bonum Health app, ” previously provided an overall healthcare experience comparable to

a Primary Care practitioner, and an online portal as a personal electronic medical record and scheduling system was available on a subscription

basis, primarily as a stand-alone telehealth software application that can be licensed on a business-to-business (B2B) model to clients

The “Bonum Health app,” previously provided an overall healthcare experience comparable to a primary

care practitioner, and an online portal as a personal electronic medical record and scheduling system was available on a subscription

basis, primarily as a stand-alone telehealth software application that could be licensed on a business-to-business (B2B) model to clients

as an employment health benefit for the clients’ employees.

Revenue was generated from this service through our Bonum subsidiary.

Revenue was generated from this service through our Bonum Health subsidiary.

Business to Business (B2B).

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(“PPE”) purchasing tool, through a secure mobile dashboard for corporate clients.

The B2B platform eased pressure on employees who were

required to report any relevant health issues daily, centralizing communication and contact tracing to deliver risk scores.

employers to monitor employee COVID-19 risk profiles and streamlined the ordering of new PPE as needed.

An integrated artificial intelligence

(AI) tool offered health recommendations and connects employees with board certified physicians, as needed.

No revenue was generated

from this product.

On February 15, 2022, the Company entered into a relationship with Exchange Health, LLC, a technology company providing an online

platform for manufacturers and suppliers to sell and purchase pharmaceuticals (“ Exchange Health ”).

SOSRx LLC, a Delaware

limited liability company (“ SOSRx ”), was formed, which is owned 51% by the Company and 49% by Exchange Health.

did not generate material revenue and in February of 2023, the Company voluntarily withdrew from the joint venture agreement.

impairment is reflected in the statement of operations for Fiscal 2022 as impairment of intangible asset.

Additionally, the Company contributed

a cash investment of $275,000 in February of 2022 when the joint venture was formed.

The Company did not recover this investment as part

of the withdrawal settlement.

As of December 31, 2023, Superlatus was a wholly owned subsidiary of the Company as a result of a merger transaction that closed in July

Superlatus is a diversified food technology company with distribution capabilities and systems to optimize food security and population

health via innovative Consumer Packaged Goods products, agritech, foodtech, plant-based proteins and alt-protein and includes wholly-owned

subsidiary, Sapientia, Inc., a food tech business.

Subsequent to December 31, 2023, the Company divested its entire interest in Superlatus.

Pharmaceutical Industry

pharmaceutical market is comprised primarily of three wholesalers that control an estimated approximately 92% of the market.

Our management

believes that this concentration has, over the years, led to a lack of price and cost transparency, thereby resulting in severe limitations

on the purchasing choices of industry participants.

These market dynamics have enabled these large wholesalers (McKesson, Cardinal Health

and AmerisourceBergen), known as ADR distributors, to dominate the industry with respect to both generic and brand pharmaceuticals.

fuel this change, insurance companies (Pharmacy Benefits Management (“ PBM ”) and private health payers) and the federal

government have initiated lower medication reimbursement payments to healthcare providers.

We believe that pharmacies face increasing

pressure to source medications as inexpensively as possible and improve operational efficiency.

Trxade Health aims to address these pricing

concerns by providing independent, retail pharmacies with exceptional service and pricing on their most commonly used pharmaceuticals

by partnering with strategic manufacturers and other authorized suppliers.

Business Conditions, Our Competitive Position in our Industry, and our Methods of Competition

expect to face competition from large ADR distributors (including McKesson, Cardinal Health and AmerisourceBergen), other pharmaceutical

distributors, buying groups, software products, and other start-up companies.

Most of our competitors’ operations have substantially

greater financial- and manufacturer-backed resources, longer operating histories, greater name recognition, and more established relationships

in the industry.

Start-up Companies Which Provide Competitive Services

are currently several smaller regional and national secondary distributors of pharmaceuticals such as (Anda Pharmaceutical, Masters Pharmaceutical

etc)as well as other innovative trading platforms such as PharmaBid, RxCherrypick, PharmSaver, MatchRx and GenericBid, that allow

pharmacies to buy from several suppliers.

Integra differentiates itself from these distributors by providing our pharmacies with unique

specialty, brand and generic pharmaceutical products that are in short supply and offered via limited distribution channels.

Groups provide discounted prices to their members by negotiating better pricing with one primary wholesaler, while charging administrative

fees generally ranging from 3 to 5 percent.

Some Buying Groups are structured like co-operatives (such as Independent Pharmacy Cooperative

(IPC) and American Pharmacy Cooperative, Inc.

(APCI)) and offer their members monthly or quarterly rebates.

Although they can function

well to bring pricing competition to the industry, they often offer rebates only after the purchase.

Management does not believe Buying

Groups will provide long-term savings to customers with this model given the increased transparency and competition in the industry.

Pharmaceutical

pharmaceutical software companies compete with us to varying degrees at different levels.

SureCost, for example, provides inventory management

software enabling pharmacies to comply with primary supplier contracts.

This software is fee-based and requires training.

may be reluctant to buy pharmaceuticals on the internet due to the historical negativity and uncertainty with respect to the origin and

purity of drugs purchased off the web.

Trxade management believes that as we continue to develop our brand, our customer base, and our

product offerings, we will gain the trust of the market and overcome the negativity associated with purchasing from multiple distributors

outside of their primary vendor agreements.

advantage that we believe we have over our competition is our ability to be flexible and fast moving in adjusting our business model

to address the needs of our customer base.

previously anticipated facing competition in the telehealth industry (in connection with Bonum Health ) from current and future

health care companies in the telehealth market including, Teladoc Health, Inc., MDLive, Inc., American Well Corporation and Grand Rounds,

Inc., among other smaller industry participants.

and Availability of Raw Materials;

Principal Suppliers

we are not a manufacturing company, we do not need any raw materials.

on One or More Major Customers

of the date of this filing, we have approximately 1600 registered members and over 10 pharmaceutical suppliers as customers, with an

estimated market potential of approximately 20,000+ independent pharmacies.

we believe that our name and brand are protected by applicable state common law trademark laws, we do not currently have any patents,

concessions, licenses, royalty agreements, or franchises.

believe that we have taken all necessary steps to protect our proprietary rights, but no assurance can be given that we will be able

to successfully enforce or protect our rights in the event that they are infringed upon by a third party.

for Government Approval of Products and Services

are required to hold state pharmaceutical business licenses and to follow applicable state and federal government regulations detailed

of Existing or Probable Government Regulations on the Business

Drug Administration Guidelines

April 12, 1988, President Ronald Reagan signed into law the Prescription Drug Marketing Act of 1987 (PDMA), setting the baseline for

wholesale distribution regulations.

The final regulations were published in 1999, establishing the minimum wholesale distribution requirements

for state licensure.

With the intent to prevent the introduction and retail sale of substandard, ineffective, or counterfeit drugs into

the distribution system, state licensing systems moved to update their standards to match those provided federally as guided under FDA’s

Guidelines for State Licensing of Wholesale Prescription Drug Distributors (21 CFR 205).

PDMA established minimum federal pedigree requirements

to trace the ownership of prescription drugs through the supply chain.

The principal goal of the PDMA was to further secure the nation’s

drug supply from counterfeit and substandard prescription drugs.

The law establishes two types of distributors:

distributor[s] of record ” or ADRs;

and “ Unauthorized distributor[s], ” such as wholesalers.

requirement was to require each person engaged in the wholesale distribution of a prescription drug in interstate commerce, who is not

the manufacturer or an authorized distributor of record for that drug, to provide a pedigree to the recipient.

After meeting resistance

from various stakeholders, the FDA delayed the effective date of the regulations several times, until final implementation in December

the federal level the implementation of the track and trace legislation which went into effect in 2018, requires the use of pharmaceutical

pedigree to track the movement of pharmaceuticals along the supply chain.

The costs of complying with this new legislation may be too

burdensome for many of the smaller suppliers.

Drug Administration Guidelines

are a number of national and state-wide regulations that have an effect on our business.

All drug wholesalers must be licensed under

state licensing systems, which must in turn meet the FDA guidelines under State Licensing of Wholesale Prescription Drug Distributors

(21 CFR Part 205).

The regulations set forth minimum requirements for prescription drug storage and security as well as for the treatment

of returned, damaged, and outdated prescription drugs.

Further, wholesale drug distributors must establish and maintain inventories and

records of all transactions regarding the receipt and distribution of prescription drugs and make these available for inspection and

copying by authorized federal, state, or local law enforcement officials.

In most states, wholesale distributor licenses are issued by

the State Boards of Pharmacy and require periodic renewal.

Approximately 40 states also require out-of-state wholesalers that distribute

drugs within their borders to be licensed as well.

February 4, 2022, the FDA published a proposed rule to set national standards for the licensing of prescription drug wholesale distributors

and third-party logistics providers.

The comment period was open until June 6, 2022.

New regulations and requirements for wholesale distributors

and third-party logistics providers could be too burdensome and could impact our registered suppliers on the Trxade platform.

Florida, Nevada, New Mexico and Indiana define the normal distribution channel to not include the lateral sales of pharmaceuticals between

The Supply Chain Act, part of the Quality Drug Act, which was signed into federal law in December 2013, precludes all states

from restricting, investigating or inspecting the distribution channel and transactional history.

Until the federal government provides

guidelines for the new federal law, no state regulation or guideline exists.

warehousing of pharmaceuticals is also restricted and requires additional state licenses.

Some licenses require bonds and written exams

and may take some time to approve.

Currently, Integra Pharma Solutions, LLC, our wholesale distributor, asks for formal pedigrees from

the ADR wholesalers and provides pedigrees to those entities they sell to in the marketplace.

This requirement limits liability and provides

assurance if a recall is warranted that Trxade and its participants will receive value for the commodity.

national wholesale supply partners are able to fulfill orders on our platform in real-time and provide pharmacies with cost-saving payment

terms and next-day delivery capabilities in unrestrictive states under the Model State Pharmacy Act and Model Rules of the National Association

of Boards of Pharmacy (Model Act).

New Regulations;

Price Gouging Rules

addition to the above, regulatory mandates in response to certain unexpected events, such as viral outbreaks, could negatively impact

For example, in December 2019 an outbreak of a coronavirus surfaced in China and resulted in governments around the world adopting

restrictions on public gatherings, travel and restrictions on companies’ (including our) ability to conduct normal business operations.

gouging may be an issue in the coming months due to the continued effects of the coronavirus and responses thereto and supply chain issues

associated therewith and separately;

as of the date of this Report, 42 states have enacted price gouging laws of one kind or another.

The laws vary from state to state, but one constant throughout is a prohibition to charge “excessive” or “unconscionable”

prices for consumer goods.

Some states define “excessive” or “unconscionable” while others define what makes

a prima facie case for price gouging and what constitutes a prima facie defense, shifting the burden of proof to the accuser.

all of the 42 states with price gouging laws on the books, a price is excessive or unconscionable if the price of a good has increased,

in some states by a certain percentage, over the price of the good prior to the onset of the abnormal disruption of the market.

states have clearly excepted from the price gouging definition a rise in prices caused by an increase in the merchant’s cost of

delivering that good for sale – whether it be increased shipping costs, gasoline prices or simply the cost of the good itself.

Other states have less defined exceptions – Virginia for example only treats the fact of increased input costs as a merchant’s

prima facie defense to an accusation of price gouging.

Several states except from the price gouging definition prices that do not exceed

a normal margin (i.e., the merchant’s margin immediately prior to the market disruption) PLUS 10%.

In general, while the law may

not specifically define what constitutes an “unconscionably excessive price,” the statutes typically provide that a price

may be “unconscionably excessive” if:

the amount charged represents a “gross disparity” from the price such goods

or services were sold or offered for sale immediately prior to the onset of the abnormal disruption of the market.

Merchants may provide

evidence that justifies their higher prices were justified by increased costs beyond their control.

We will need to comply with the excessive

price statutes;

as of the date of this Report, we believe we were in compliance with all 42 states’ price gouging laws.

Federal and State Fraud and Abuse Laws

Anti-Kickback Statute

are also subject to the federal Anti-Kickback Statute.

The Anti-Kickback Statute is broadly worded and prohibits the knowing and willful

offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, (i) the referral of a person covered

by Medicare, Medicaid or other governmental programs, (ii) the furnishing or arranging for the furnishing of items or services reimbursable

under Medicare, Medicaid or other governmental programs or (iii) the purchasing, leasing or ordering or arranging or recommending purchasing,

leasing or ordering of any item or service reimbursable under Medicare, Medicaid or other governmental programs.

In addition, a person

or entity does not need to have actual knowledge of this statute or specific intent to violate it to have committed a violation.

the government may assert that a claim including items or services resulting from a violation of the Anti-Kickback Statute constitutes

a false or fraudulent claim for purposes of the False Claims Act, as discussed below.

Violations of the Anti-Kickback Statute can result

in exclusion from Medicare, Medicaid or other governmental programs as well as civil and criminal penalties and fines.

Imposition of

any of these remedies could have a material adverse effect on our business, financial condition and results of operations.

False Claims Act & HIPAA

federal False Claims Act provides, in part, that the federal government may bring a lawsuit against any person whom it believes has knowingly

presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a false

statement or used a false record to get a claim approved.

In addition, amendments in 1986 to the federal False Claims Act have made it

easier for private parties to bring “qui tam” whistleblower lawsuits against companies under the federal False Claims Act.

Penalties include significant civil monetary penalties for each false claim, plus three times the amount of damages that the federal

government sustained because of the act of that person.

Qui tam actions have increased significantly in recent years, causing greater

numbers of healthcare companies to have to defend a false claim action, pay fines, be excluded from Medicare, Medicaid or other federal

or state healthcare programs, or be subject to integrity oversight and reporting obligations to resolve allegations of non-compliance,

as a result of an investigation arising out of such action.

are other federal anti-fraud laws that that prohibit, among other actions, knowingly and willfully executing, or attempting to execute,

a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing

from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully

falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection

with the delivery of or payment for healthcare benefits, items or services.

Additionally,

HIPAA established two federal crimes for healthcare fraud and false statements relating to healthcare matters.

The healthcare fraud statute

prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private payors.

The false statements

statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious

or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

A violation of either

of these statutes is a felony and may result in fines, imprisonment, exclusion from Medicare, Medicaid or other federal or state healthcare

programs, or integrity oversight and reporting obligations to resolve allegations of non-compliance.

Fraud and Abuse Laws

states in which we operate have also adopted similar fraud and abuse laws as described above.

The scope of these laws and the interpretations

of them vary from state to state and are enforced by state courts and regulatory authorities, each with broad discretion.

fraud and abuse laws apply to items or services reimbursed by any payor, including patients and commercial insurers, not just those reimbursed

by a federally funded healthcare program.

A determination of liability under such state fraud and abuse laws could result in fines and

penalties and restrictions on our ability to operate in these jurisdictions.

Healthcare Laws

federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and

Clinical Health Act, or HITECH, and their implementing regulations, which we collectively refer to as HIPAA, established several separate

criminal penalties for making false or fraudulent claims to insurance companies and other non-governmental payors of healthcare services.

Under HIPAA, these two additional federal crimes are:

“Healthcare Fraud” and “False Statements Relating to Healthcare

Matters.” The Healthcare Fraud statute prohibits knowingly and recklessly executing a scheme or artifice to defraud any healthcare

benefit program, including private payors.

A violation of this statute is a felony and may result in fines, imprisonment or exclusion

from government sponsored programs.

The False Statements Relating to Healthcare Matters statute prohibits knowingly and willfully falsifying,

concealing or covering up a material fact by any trick, scheme or device or making any materially false, fictitious or fraudulent statement

in connection with the delivery of or payment for healthcare benefits, items or services.

These provisions are intended to punish some

of the same conduct in the submission of claims to private payors as the federal False Claims Act covers in connection with governmental

health programs.

addition, the Civil Monetary Penalties Law imposes civil administrative sanctions for, among other violations, inappropriate billing

of services to federally funded healthcare programs and employing or contracting with individuals or entities who are excluded from participation

in federally funded healthcare programs.

Moreover, a person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration,

including waivers of copayments and deductible amounts (or any part thereof), that the person knows or should know is likely to influence

the beneficiary’s selection of a particular provider, practitioner or supplier of Medicare or Medicaid payable items or services

may be liable for civil monetary penalties for each wrongful act.

Moreover, in certain cases, providers who routinely waive copayments

and deductibles for Medicare and Medicaid beneficiaries can also be held liable under the Anti-Kickback Statute and civil False Claims

Act, which can impose additional penalties associated with the wrongful act.

One of the statutory exceptions to the prohibition is non-routine,

unadvertised waivers of copayments or deductible amounts based on individualized determinations of financial need or exhaustion of reasonable

collection efforts.

Although this prohibition applies only to federal healthcare program beneficiaries, the routine waivers of copayments

and deductibles offered to patients covered by commercial payers may implicate applicable state laws related to, among other things,

unlawful schemes to defraud, excessive fees for services, tortious interference with patient contracts and statutory or common law fraud.

as a Public Company

are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business

Startups Act of 2012 (the “JOBS Act”).

As such, we are eligible to take advantage of certain exemptions from various reporting

requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited

to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure

obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding

a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the

prices of our securities may be more volatile.

addition, Section 107 of the JOBS Act also provides that an “ emerging growth company ” can take advantage of the extended

transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

words, an “ emerging growth company ” can delay the adoption of certain accounting standards until those standards would

otherwise apply to private companies.

We intend to take advantage of the benefits of this extended transition period.

will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of

the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in

which we are deemed to be a large accelerated filer, which means the market value of our Class A ordinary shares that are held by non-affiliates

equals or exceeds $700 million as of the last business day of the preceding second fiscal quarter, and (2) the date on which we have

issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Additionally,

we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.

Smaller reporting companies may take

advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.

We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares

held by non-affiliates exceeds $250 million as of the last business day of that year’s second fiscal quarter, or (2) our annual

revenues exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates equals

or exceeds $700 million as of the last business day of that year’s second fiscal quarter.

and Development

we do not have any product research and development efforts underway.

In future we may opt to engage in further development of our logistics

model depending on customer feedback.

we have approximately 8 full-time employees.

We are not a party to any collective bargaining agreements and have not experienced any

strikes or work stoppages.

We consider our relations with our employees and consultants to be satisfactory.

business is not directly affected by seasonal fluctuations but is affected indirectly by the fall and winter flu season, to the extent

it leads to an increased demand for certain generic pharmaceuticals.

The B2B platform eased pressure on employees

who were required to report any relevant health issues daily, centralizing communication and contact tracing to deliver risk scores.

This allowed employers to monitor employee COVID-19 risk profiles and streamlined the ordering of new PPE as needed.

An integrated artificial

intelligence (AI) tool offered health recommendations and connects employees with board certified physicians, as needed.

No revenue was

generated from this product.

On February 15, 2022, the Company entered into a relationship with Exchange Health, LLC (“Exchange Health”), a technology

company providing an online platform for manufacturers and suppliers to sell and purchase pharmaceuticals.

SOSRx, LLC (“SOSRx”)

was formed, which was owned 51% by the Company and 49% by Exchange Health.

SOSRx did not generate material revenue and in February of

2023, the Company voluntarily withdrew from the joint venture agreement.

As of December 31, 2023, Superlatus was a wholly owned subsidiary of the Company as a result of a merger transaction that closed

in July 2023.

On January 8, 2024, the Company entered into Amendment No.

1 to the Amended and Restated Agreement and Plan of Merger (the

“Superlatus Amendment”) as not all of the closing conditions of the Superlatus Merger Agreement were met.

Under the terms

of the Superlatus Amendment, the merger consideration to the shareholders of Superlatus was adjusted downward and the shareholders of

Superlatus agreed to surrender back to the Company shares of the Company’s Series B Preferred Stock.

On March 5, 2024, the Company

entered in a Stock Purchase Agreement (“Superlatus SPA”) with Superlatus Foods Inc.

(the “Buyer”).

the Superlatus SPA, the Company sold all of the issued and outstanding stock of Superlatus to the Buyer.

The $1.00 purchase price for

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

of the transaction Superlatus is no longer a subsidiary of the Company, and the rights and assets of Superlatus together with various

liabilities and obligations that were specific to Superlatus became rights and obligations of the Buyer.

and Organizational History

were incorporated in Delaware on July 15, 2005, as “Bluebird Exploration Company” (“Bluebird”).

originally formed to engage in the exploitation of mineral properties.

In December 2008, Bluebird changed its name to “Xcellink

International, Inc.” (“XCEL”), and subsequently announced that its business plan was being expanded to include the

development and marketing of platform-independent customer-centric payment systems and methodologies.

XCEL was unable to raise the funds

necessary to implement its business strategy, and never generated any revenue.

November 22, 2013, Trxade Group, Inc., a Nevada corporation (“Trxade Nevada”) and wholly owned subsidiary of Trxade, Inc.,

a Florida corporation (“Trxade Florida”), acquired a controlling interest of 80,000,000 shares of XCEL common stock pursuant

to a Purchase and Sale Agreement dated November 7, 2013.

At the time of the sale, XCEL had 104,160,000 shares of common stock issued

and outstanding, including the 80,000,000 shares of stock acquired by Trxade Nevada (prior to the Merger Reverse Split and Reverse Stock

Split(s) (each discussed and defined below).

Trxade Florida was formed in August 2010 under the name PharmaCycle LLC, a Nevada limited

liability company (“PharmaCycle”).

PharmaCycle was formed by Prashant Patel, our President, Chief Operating Officer, and

former Interim Principal Financial/Accounting Officer and Director, to serve as a web-based market platform designed to enable trading

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

In January 2013, PharmaCycle converted into a Florida

corporation and changed its name to Trxade, Inc.

In May 2013, Trxade Florida formed Trxade Nevada as a wholly owned subsidiary.

Subsequently,

Trxade Nevada acquired Trxade Florida pursuant to a reverse triangular merger, resulting in Trxade Florida becoming a wholly-owned subsidiary

of Trxade Nevada (the “Nevada-Florida Merger”).

The sole purpose of the Nevada-Florida Merger was to provide for a holding

company to own Trxade Florida, the operating company.

Immediately following the Nevada-Florida Merger, Surendra Ajjarapu, the Company’s

Chairman of the Board, Chief Executive Officer, and Secretary, and Mr.

Patel collectively owned 99% of Trxade Nevada.

December 16, 2013, Trxade Nevada and XCEL entered into a definitive merger agreement providing for the merger of Trxade Nevada with and

into XCEL, with XCEL continuing as the surviving corporation (the “XCEL Merger”).

The XCEL Merger closed in January 2014.

As a result of the XCEL Merger, XCEL acquired Trxade Nevada and Trxade Nevada’s wholly owned subsidiaries, including Integra Pharma

Solutions, LLC, formerly known as Pinnacle Tek, Inc., a Florida corporation (“IPS”).

IPS was founded in 2011 and initially

served as a technology consultant provider supporting programming needs and providing research on pharmaceutical pricing and shortages

in acute care and retail settings.

the terms of the Merger Agreement, XCEL amended its certificate of incorporation, changed its name to “Trxade Group, Inc.,”

and changed our trading symbol to “TRXD”.

In connection with closing of the XCEL Merger, we conducted a reverse stock split

of our issued and outstanding stock at the ratio of one for one thousand (1:1,000) shares (the “XCEL Merger Reverse Split”).

In connection with the XCEL Merger Reverse Split, 104,160,000 outstanding shares of our common stock, including the 80,000,000 shares

held by Trxade Nevada, were exchanged for 104,160 post-Merger Reverse Split shares of common stock.

September 2019, we formed Bonum Health, LLC, a Delaware limited liability company (“Bonum Health”) that was meant to hold

certain telehealth assets.

In October 2020, we formed BONUM HEALTH, INC., a Delaware non-stock corporation (“Bonum”) to provide an overall healthcare experience comparable to a Primary Care

practitioner, and an online portal as a personal electronic medical record and scheduling system was available on a subscription basis,

primarily as a stand-alone telehealth software application that can be licensed on a business-to-business (B2B) model to clients as an

employment health benefit for the clients’ employees.

We anticipate that we will wind-down these entities in the near future.

February 2020, we effected another reverse stock split of our issued and outstanding stock at the ratio of one for six (1-for-6) shares

to allow us to meet the initial listing criteria of The Nasdaq Capital Market tier of The Nasdaq Stock Market LLC (“Nasdaq”).

Our common stock was approved for listing on Nasdaq under the symbol “MEDS”, on February 13, 2020.

June 1, 2021, we changed our corporate name from “Trxade Group, Inc” to “TRxADE HEALTH, Inc.”

June 2023, we effected another reverse stock split of our issued and outstanding stock at the ratio of one for 15 (1-for-15) shares.

February 16, 2024, we, Trxade, Inc., and Micro Merchant Systems, Inc.

(“MMS”) entered into and closed on an asset purchase

agreement (the “MMS APA”) under which MMS agreed to purchase for cash substantially all of the assets of Trxade, Inc.

September 20, 2024, Trxade, Inc.

changed its corporate name to Softell Inc.

On October 4, 2024, we entered into

an Assignment and Assumption of Membership Interests (the “IPS Assignment Agreement”) with Softell, pursuant to which we

transferred, and Softell accepted, 100% of the membership interests of IPS.

As a result, Softell currently exists as a wholly owned subsidiary

of the Company and IPS exists as a wholly owned subsidiary of Softell through which Softell conducts its primary operations.

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.

Today, IPS sells brand, generic and non-drug products to customers as a licensed

pharmaceutical wholesaler.

A wholesaler typically is the first purchaser of a drug product – direct from the manufacturer.

Wholesalers buy large quantities and then resell either direct to provider-purchasers (like a large health system, pharmacy or pharmacy

chain), or resell to smaller, regional distributors for regional or local distribution to retail pharmacies and hospitals.

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

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

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

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

The business of Scienture LLC is described in detail below.

to the Scienture Merger Agreement, (i) Merger Sub I merged with and into Scienture LLC (the “First Merger”), with Scienture

LLC continuing as the surviving entity and a wholly owned subsidiary of the Company, and (ii) Scienture LLC merged with and into Merger

Sub II (the “Second Merger” and, together with the First Merger and all other related transactions, the “Scienture

Merger”), with Merger Sub II continuing as the surviving entity.

In connection with the transactions, the Company changed its name

to “Scienture Holdings, Inc.” and Merger Sub II, as the surviving entity of the Second Merger, changed its name to “Scienture,

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

What changed 10-K

Item 1. Business