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Item 1A. Risk Factors

2025-03-26 compared with 2024-04-22 · 1964 added, 1253 removed, 140 unchanged (96% of the section changed)

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These risks include, among others, the following:

are currently unprofitable, have generated net losses, and we may incur losses in the future;

may need additional financing in the future, which may not be available on favorable terms, if at all;

may not be able to manage our future growth;

relating to implementing our acquisition strategies, and the risk that acquisitions will likely be dilutive to our stockholders and

we may not realize the anticipated benefits of certain strategic transactions that we pursue or effect;

of our competitors are better established and have resources significantly greater than ours;

face risks associated with our operations within the pharmaceutical distribution market;

are dependent on our current management;

rely on third party contracts, which may not be renewed or may be terminated;

may in the future face difficulties in sourcing products and inventory due to a variety of causes;

have in the past, and may in the future, not be able to sell our inventory, at or above the price we acquired such inventory for,

have in the past, and may in the future, be forced to write-down inventory and certain of our other assets which may have a material

adverse effect on our balance sheet;

have in the past, and may in the future, not receive products or receive refunds for deposited amounts and have experienced losses

in connection with such deposits;

may be subject to claims that we violated intellectual property rights of others, which are extremely costly to defend and could

require us to pay significant damages and limit our ability to operate;

business and operations depend on the proper functioning of information systems, critical facilities and distribution networks and

a disruption, cyber-attack, failure or destruction of such networks, systems, or technologies may disrupt our business or result

in liability;

may be losses or unauthorized access to or releases of confidential information, including personally identifiable information, that

could subject the Company to significant reputational, financial, legal and operational consequences;

face numerous risks, including risks associated with legal challenges, relationships with third parties and affiliated professionals,

competition for services;

new technologies, failure to develop widespread brand awareness and regulatory risks from the Office of

Inspector General, U.S.

Department of Health and Human Services (OIG) and the United States Department of Justice (DOJ) and state

regulators around pharmaceutical distribution now and in the future.

certificate of incorporation limits the liability of our officers and directors and provides for indemnification rights, mandatory

forum selection provisions and limits the ability of stockholders to call special meetings of stockholders;

incur significant costs to ensure compliance with U.S.

and NASDAQ Capital Market reporting and corporate governance requirements;

various times we have not been in compliance with NASDAQ’s continued listing requirements, and may not be able to maintain

the listing of our common stock on the NASDAQ Capital Market;

changes that affect our distribution channels could harm our business;

fraud laws are often vague and uncertain, exposing us to potential liability;

and expanded laws or regulations could have a material adverse effect on our business operations, cash flows or future prospects;

public health crisis involving the abuse of prescription opioid pain medication could have a material negative effect on our business

operations and timely reporting to new state regulations.

Consolidation

healthcare industry may negatively impact our results of operations;

have identified material weaknesses in our internal control over financial reporting and controls and procedures;

Related to Our Business

operate a clinical-stage biopharmaceutical company with a limited operating history, which may make it difficult to evaluate its

current business and predict its future success and viability.

executive officers lack experience with the clinical development of therapeutic products for FDA marketing approval.

need additional capital which may not be available when needed or on commercially acceptable terms, thereby casting substantial doubt

on our ability to continue as a going concern.

Raising additional capital may cause dilution to our stockholders, restrict our operations

or require us to relinquish rights to our product candidates.

To the extent outstanding loan conversion rights associated with our

existing indebtedness are exercised, there will be dilution to our stockholders.

and liabilities could limit the cash flow available for our operations, including under Scienture LLC’s outstanding secured

convertible debt, expose us to risks that could adversely affect our business, financial condition, and results of operations.

to the significant resources required to develop our product pipeline, and depending on our ability to access capital, we must prioritize

the development of certain product candidates over others and we may fail to expend our limited resources on product candidates or

indications that may have been more profitable or for which there is a greater likelihood of success.

acquisitions and investments in new businesses and new products, services, and technologies is inherently risky, and could disrupt

our ongoing businesses.

business is highly dependent on the success of certain product candidates.

If we are unable to successfully complete clinical development,

obtain regulatory approval for or commercialize one or more of our product candidates, or if we experience delays in doing so, our

business will be materially harmed.

are dependent upon our current management, who may have conflicts of interest.

Our ability to develop product candidates and our

future growth depends on attracting, hiring and retaining key personnel and recruiting additional qualified personnel.

may seek to collaborate with third parties and may not be able to implement these collaborations on commercially acceptable terms,

The success of certain of our product candidates may depend in significant part on the success of such collaborations.

third-party manufacturing partners may be unable to increase the scale of production or product yield of our product candidates,

resulting in increased manufacturing costs and delays in commercialization of our products.

Furthermore, changes in methods of manufacturing

our product candidates could result in additional costs or delays.

growth depends in part on the success of our strategic relationships with third parties.

Some of these third parties may be located

outside of the United States.

in methods of product candidate manufacturing or formulation may result in additional costs or delay.

may be subject to lawsuits.

successful development of Scienture LLC’s pharmaceutical products involves a lengthy and expensive process and is highly uncertain.

Related to Our Legal and Regulatory Requirements

are subject, directly or indirectly, to federal and state healthcare, fraud, abuse false claims, and other laws and regulations as

well as health data privacy and security laws and regulations, contractual obligations and self-regulatory schemes.

If we are unable

to comply, or have not fully complied, with such laws, we could face investigations and substantial penalties.

Furthermore, it may

be difficult and costly for us to comply with the extensive government regulations to which our business is subject.

may be unable to obtain regulatory approval for our product candidates under applicable regulatory requirements.

The denial or delay

of any such approval would delay commercialization of our product candidates and adversely impact our business and results of operations.

if we obtain regulatory approval for any of our product candidates, we will be subject to ongoing regulatory requirements, which

may result in significant additional expenses.

Additionally, our product candidates, if approved, could be subject to labeling and

other restrictions, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated

problems with our product candidates.

intend to use certain regulatory pathways to seek regulatory approval of several of our product candidates.

If the FDA concludes

that our marketing applications no longer qualify for these regulatory pathways, then our applications may not be accepted by the

FDA for review and approval of our products may be delayed.

may seek priority review designation for our product candidates.

We might not receive such designation, and even if we do, such designation

may not lead to faster regulatory review or approval.

may seek orphan drug designation from the FDA for our product candidates.

We may be unable to obtain such designation or, if obtained,

to maintain the benefits associated with orphan drug status, including the potential for non-patent market exclusivity.

regulatory authorities approve generic versions of our products, or do not grant our products a sufficient period of market exclusivity

before approving a generic version, our ability to generate revenue may be adversely affected.

if we obtain FDA approval for a product candidate in the United States, we may never obtain approval for or successfully commercialize

that candidate outside of the United States, which would limit our ability to realize a product’s full market potential.

if we are able to commercialize any of our product candidates, the third-party payor coverage and reimbursement status of newly-approved

products are uncertain.

Failure to obtain or maintain adequate coverage and reimbursement for our product candidates could limit

our ability to market those products and decrease our ability to generate revenue.

are developing a drug-device combination product, which may result in additional regulatory risks.

third party collaborators and service providers are, or may become, subject to a variety of stringent and evolving privacy and data

security laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to privacy

and data security.

Any actual or perceived failure to comply with such obligations could expose us to significant fines or other

penalties and otherwise harm our business and operations.

FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.

legislative reform measures may have a negative impact on our business and results of operations.

funding for the FDA and other government agencies, including from government shutdowns, or other disruptions to these agencies’

operations, could hinder such agencies’ ability to hire and retain key leadership and other personnel, prevent new products

and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal

business functions on which the operation of our business may rely.

Related to Our Technology and Intellectual Property

may not be able to protect our intellectual property and trade secret rights throughout the world.

If our efforts to protect our

intellectual property rights are inadequate, we may not be able to compete effectively in our market.

depend on in-licensed intellectual property.

If we fail to comply with our obligations under intellectual property licenses with

third parties, we could lose license rights that are important to our business.

we or our licensors are unable to obtain and maintain patent protection for our product candidates, or if the scope of the patent

protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to our

product candidates, and our ability to successfully commercialize our product candidates may be adversely affected.

we do not intend to seek patent protection for one of our products, SCN-106.

and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements

imposed by governmental patent agencies.

Our patent protection could be reduced or eliminated for non-compliance with these requirements.

patents covering our product candidates could be found invalid or unenforceable if challenged in court or the USPTO.

to patent law in the United States and in foreign jurisdictions could diminish the value of our patents in general, thereby impairing

our ability to protect our product candidates.

we do not obtain patent term extension for our current product candidates, our business may be materially harmed.

may become involved in lawsuits to protect or enforce our intellectual property rights, which could be distracting, expensive, time

consuming, and unsuccessful.

may be subject to claims challenging the inventorship or ownership of our intellectual property or asserting that we violated intellectual

property rights of others, the outcome of which would be uncertain.

These claims could be extremely costly to defend, could require

us to pay significant damages and limit our ability to operate, and could distract our personnel from normal responsibilities.

patents and patent applications could be challenged in the recently created Unified Patent Court for the European Union.

use, or the use by our third party collaborators and service providers, of new and evolving technologies, such as artificial intelligence

(“AI”) and machine learning (“ML”), may result in spending additional resources and present new risks and

challenges that can impact our business, including by posing security and other risks to our sensitive data.

As a result, we may

be exposed to reputational harm, other adverse consequences, and liability.

our trademarks and trade names are not adequately protected then we may not be able to build name recognition in our markets of interest

and our business may be adversely affected.

Related to Our Common Stock

may not be able to comply with Nasdaq’s continued listing standards.

common stock has in the past been a “penny stock” under SEC rules, and may be subject to the “penny stock”

rules in the future.

It may be more difficult to resell securities classified as “penny stock.”

exercise of outstanding warrants, options and other securities that are exercisable into shares of our common stock will be dilutive

to our existing stockholders.

have not historically paid or declared any dividends on our common stock and do not expect to pay or declare cash dividends in the

future on a regular basis, if at all.

common stock price is likely to be highly volatile because of several factors, including a limited public float.

may not be sufficient liquidity in the market for our securities in order for investors to sell their shares.

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our common stock may continue to be volatile.

may experience dilution to future equity sales, the exercise or conversion of outstanding convertible securities or future transactions;

results of operations are subject to rising inflation, rising interest rates, governmental responses thereto and possible recessions

caused thereby;

Chief Executive Officer and President are our two largest stockholders and, as a result, they can exert significant control over

us and have actual or potential interests that may differ from yours;

security attacks and website problems;

is substantial doubt regarding our ability to continue as a going concern;

litigation, government investigations, and other proceedings that may adversely affect our business and results of operations.

may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional shares

of our common stock.

should be aware that there are substantial risks for an investment in our common stock.

You should carefully consider these risk factors

before you decide to invest in our common stock.

The reader should not consider this list to be

a complete statement of all risks and uncertainties.

before you decide to invest in our common stock and should not consider this list to be a complete statement of all risks and uncertainties.

any of the following risks were to occur, such as our business, financial condition, results of operations or other prospects, any of

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and prospective investors would lose all or part of their investment in our common stock.

Related to Our Liquidity and Business Operations and Plans

business, financial condition and results of operations are subject to various risks and uncertainties, including those described below.

This section discusses factors that, individually or in aggregate, could cause our actual results to differ materially from expected

and historical results.

Our business, financial condition or results of operations could be materially adversely affected by any of these

It is not possible to predict or identify all such factors.

Consequently, the following description of Risk Factors is not a complete

discussion of all potential risks or uncertainties applicable to our business.

were recently unprofitable, we have recently generated net losses, and we may incur losses in the future.

generated from our consolidated operations for the years ended December 31, 2023 and 2022 were $8,272,214 and $10,250,168, respectively.

incurred a net loss of $13,720,546 for during the year ended December 31, 2023, compared to a net loss of $2,403,442 for the year ended December 31, 2022.

We may incur other losses in

the foreseeable future due to the significant costs associated with our business operations, including costs associated with maintaining

industry regulatory and licensure compliance.

We also incur significant compliance costs associated with maintaining SEC regulatory and

financial reporting requirements;

as well as costs to maintain minimum listing requirements of Nasdaq.

We cannot assure you that our

operations will annually generate sufficient revenues to fund our continuing operations or to fully implement our business plan, and

thereafter sustain profitability in any future period.

likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered

in connection with the start and growth of a business, the implementation and execution of our business plan, and the regulatory environment

affecting the distribution of pharmaceuticals in which we operate.

need additional capital which may not be available on commercially acceptable terms, if at all, which creates substantial doubt about

our ability to continue as a going concern.

Related to Our Business

operate a clinical-stage biopharmaceutical company with a limited operating history, which may make it difficult to evaluate its current

business and predict its future success and viability.

hold a clinical-stage biopharmaceutical company with a limited operating history.

Scienture LLC was formed in 2019 and its operations

to date have been limited to organizing and staffing its company, business planning, raising capital, identifying and developing its

product candidates for the treatment of central nervous system (“CNS”) and cardiovascular (“CVS”) diseases, securing

intellectual property rights, and planning and undertaking preclinical studies and clinical trials.

Scienture LLC has not yet demonstrated

an ability to generate revenues, obtain regulatory approvals, manufacture any product on a commercial scale or arrange for a third party

to do so on its behalf or conduct sales and marketing activities necessary for successful product commercialization.

Scienture LLC’s

limited operating history as a company makes any assessment of its future success and viability subject to significant uncertainty.

LLC will encounter risks and difficulties frequently experienced by early-stage biopharmaceutical companies in rapidly evolving fields,

and Scienture LLC has not yet demonstrated an ability to successfully overcome such risks and difficulties.

If Scienture LLC does not

address these risks and difficulties successfully, its business will suffer.

success of our business depends primarily upon its ability to identify, develop, and commercialize product candidates, including our

existing product candidates:

SCN-102, SCN-104, SCN-106, and SCN-107.

We only have one product candidate, SCN-102, for which it has conducted

pivotal clinical studies to date, and we will be required to similarly perform pivotal clinical studies for the other products in its

pipeline in order to obtain regulatory approval for these earlier stage candidates.

Our business depends heavily on its ability to obtain

FDA approval for SCN-102 and successfully launch this product candidate and do the same for the other products in its pipeline.

not know whether it will be able to develop any products of commercial value.

We do not have any products approved for commercial sale

and have not generated any revenue from product sales to date.

We will continue to incur significant research and development and other

expenses related to its preclinical and clinical development and ongoing operations.

As a result, we are not profitable and has incurred

losses in each period since its inception.

Net losses and negative cash flows have had, and likely will continue to have, an adverse

effect on our financial condition.

We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to

increase as we continue our research and development of, and seek regulatory approvals for, our product candidates.

anticipate that our expenses will increase substantially if, and as, we:

its product candidates through clinical development;

regulatory approvals for Scienture LLC’s product candidates that successfully complete clinical trials;

additional clinical, quality control, medical, scientific and other technical personnel to support the clinical development of Scienture

LLC’s product candidates;

an increase in headcount as Scienture LLC expands its research and development organization and market development and pre-commercial

planning activities;

any pre-commercial or commercial activities to establish sales, marketing and distribution capabilities, including in relation to

its product candidates;

to identify, acquire and develop additional product candidates, including through business development efforts to invest in or in-license

other technologies or product candidates;

expands and protects its intellectual property portfolio;

milestone, royalty or other payments due under any future in-license or collaboration agreements;

milestone, royalty, interest or other payments due under any future financing or other arrangements with third parties.

Biopharmaceutical

product development entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail

to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval, secure market access and reimbursement and

become commercially viable, and therefore any investment in us is highly speculative.

Accordingly, you should consider our prospects,

factoring in the costs, uncertainties, delays and difficulties frequently encountered by companies in clinical development, especially

clinical-stage biopharmaceutical companies such as us.

Any predictions you make about our future success or viability may not be as accurate

as they would otherwise be if it had a longer operating history or a history of successfully developing and commercializing pharmaceutical

We may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving Scienture

LLC’s business objectives.

Additionally,

our expenses could increase beyond our expectations if we are required by the FDA or other comparable regulatory authorities to perform

clinical trials in addition to those that we currently expect, or if there are any delays in establishing appropriate manufacturing arrangements

for or in completing its clinical trials or the development of any of our product candidates.

of our executive officers lack experience with the clinical development of therapeutic products for FDA marketing approval.

primary executive officers, including Suren Ajjarapu, Chairman of the Board, Chief Executive Officer, and Secretary, and Prashant Patel,

President, Chief Operating Officer, Interim Principal Financial/Accounting Officer and Director, lack experience in overseeing the clinical

development of therapeutic products for FDA marketing approval.

While Scienture LLC’s executive officers have extensive experience

in this regard, the lack of such experience at the executive level of the Company presents a risk that the Company may not effectively

oversee the operations of Scienture LLC and Scienture LLC’s comply with applicable laws, rules and regulations.

need additional capital which may not be available when needed or on commercially acceptable terms, thereby casting substantial doubt

on our ability to continue as a going concern.

Raising additional capital may cause dilution to our stockholders, restrict our operations

or require us to relinquish rights to our product candidates.

To the extent outstanding loan conversion rights associated with our existing

indebtedness are exercised, there will be dilution to our stockholders.

historical financial statements have been prepared under the assumption that we will continue as a going concern.

As of December 31,

2023, the Company had an accumulated deficit of $33,245,940.

We have limited financial resources, as of December 31, 2023, we had a

working capital deficit of approximately $8,803,000 and a cash balance of approximately $152,000.

We will need to raise additional

capital or secure debt funding to support on-going operations.

The sources of this capital are expected to be the sale of equity and

debt, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing

stockholders.

If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate future

revenues, our financial position, and liquidity.

These matters, when considered in the aggregate, raise substantial doubt about the

Company’s ability to continue as a going concern for a reasonable period of time, which is defined as within one year after

the date that our condensed financial statements are issued.

The financial statements incorporated by reference herein do not

contain any adjustments to reflect the possible future effects on the classification of assets or the amounts and classification of

liabilities that might result from the outcome of this uncertainty.

After the Company’s

disposed of Micro Merchant Systems, Inc.

(“MMS”), the Company had $3.5 million in cash.

The Company received $7.5 million

in May 2024 pertaining to the final payment of the MMS disposition.

As of December 31, 2024, the Company had an accumulated deficit of

$39.04 million.

We have limited financial resources, as of December 31, 2024, we had a cash balance of $308,096.

LLC’s activities of developing biopharmaceutical products, including conducting preclinical studies and clinical trials, is a very

time-consuming, expensive and uncertain process that takes years to complete.

Moving forward, we expect our expenses to continue to increase

in connection with our ongoing activities, particularly as we conduct clinical trials of, and seek regulatory and marketing approval

for, our product candidates.

Even if our current or future product candidates are approved for commercial sale, we anticipate incurring

significant costs associated with commercializing any approved product candidate.

Because of the numerous risks and uncertainties associated

with research and development of product candidates, we are unable to predict the timing or amount of our working capital requirements.

such time, if ever, as we can generate substantial product revenue, we expect to finance our operations with existing cash, cash equivalents,

short-term investments, and any future equity or debt financings and upfront and milestone and royalty payments, if any, received under

any future licenses or collaborations.

While the Company believes that its cash as of the date of this Registration Statement will be

sufficient to meet its funding requirements during the next 12 months, this belief may prove to be wrong as we could utilize available

capital resources sooner than we expect.

We will eventually need to raise additional capital or secure debt funding to support on-going

This may include raising additional financing on an opportunistic basis in the future.

For example, we may seek to raise

equity capital or obtain additional capital in the near term due to favorable market conditions or strategic considerations even if we

believe we have sufficient funds for current or future operating plans.

to secure additional financing may divert management from day-to-day activities, which may adversely affect our ability to develop product

Our future capital requirements will depend on many factors, including but not limited to:

scope, timing, progress, costs and results of discovery, preclinical development and clinical trials for our current or future product

number of clinical trials required for regulatory approval of our current or future product candidates;

costs, timing and outcome of regulatory review of any of our current or future product candidates;

costs associated with acquiring or licensing additional product candidates, technologies or assets, including the timing and amount

of any milestones, royalties or other payments due in connection with our acquisitions and licenses;

cost of manufacturing clinical and commercial supplies of our current or future product candidates;

costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights

and defending any intellectual property-related claims, including any claims by third parties that we are infringing upon their intellectual

property rights;

effectiveness of our approach at identifying target patient populations and utilizing our approach to enrich our patient population

in our clinical trials;

ability to maintain existing, and establish new, strategic collaborations or other arrangements and the financial terms of any such

agreements, including the timing and amount of any future milestone, royalty or other payments due under any such agreement;

costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our

product candidates for which we receive marketing approval;

revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;

to attract, hire and retain skilled personnel;

ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party

and government payors;

effect of macroeconomic trends including inflation and rising interest rates;

any potential supply chain interruptions or delays;

effect of competing technological and market developments;

extent to which we acquire or invests in business, products and technologies.

anticipate that the sources of capital available to us will be through the sale of equity and debt, which may not be available on favorable

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

Our ability to raise additional funds will depend

on financial, economic, political and market conditions and other factors, over which we may have no or limited control.

of additional securities, whether equity or debt, or the possibility of such issuance, may cause the market price of our shares to decline.

If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate future revenues, our financial

position, and liquidity.

Furthermore, we could be forced to delay, limit, reduce or terminate product development programs, future commercialization

efforts or other operations.

September 2023, Scienture LLC entered into a Loan and Security Agreement dated September 8, 2023, by and between NV Finance LLC, a Nebraska

Limited Liability Company (“NVK”) and Scienture LLC (the “NVK Loan Agreement”) for a principal amount of $2,000,000.

The loan is due upon maturity, together with all unpaid interest expense, in September 2025.

The outstanding balance under the NVK debt

is convertible, at NVK’s option at any time, into common stock.

NVK is entitled to receive warrants to purchase shares of Scienture

LLC’s common stock.

Scienture LLC entered into a Consent and Waiver on July 25, 2024 (the “NVK Consent and Waiver”),

regarding the NVK loan in connection with the business combination with the Company.

Under the NVK Consent and Waiver, the warrants previously

granted to NVK were converted into 5.25% warrants on a fully diluted basis, equalling 500,526 shares of outstanding common stock of Scienture

LLC and placed in escrow.

Any such conversion by NVK will result in dilution to holders Conversely, should NVK not exercise its conversion

right prior to maturity of the loan, Scienture LLC would need to obtain additional financing to fund its cash payment obligations thereunder.

we raise additional capital through the sale of equity or convertible debt securities or we issue any equity or convertible debt securities

in connection with a collaboration agreement or other contractual arrangement, our stockholders’ ownership interests also will

be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of stockholders.

financing, if available, may result in increased fixed payment obligations and involve agreements that include covenants limiting or

restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends

or acquiring, selling or licensing intellectual property rights or assets, which could adversely impact the ability to conduct our business.

we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third

parties, we may have to relinquish valuable rights to our intellectual property, technologies, future revenue streams or product candidates

or grant licenses on terms that may not be favorable to us.

We could also be required to seek funds through arrangements with collaborators

or others at an earlier stage than otherwise would be desirable.

Any of these occurrences may have a material adverse effect on our business,

operating results and prospects.

conditions and changes in financial regulations and policies can impact the viability of financial institutions.

In the event of failure

of any of the financial institutions where we maintain cash and cash equivalents, there can be no assurance that we would be able to

access uninsured funds in a timely manner or at all.

Any inability to access or delay in accessing these funds could adversely affect

our business and financial position.

In addition, changes in regulations governing financial institutions are beyond our control and

difficult to predict;

consequently, the impact of such changes on our business and results of operations is difficult to predict and

may have an adverse effect on us.

matters, when considered in the aggregate, raise substantial doubt about our ability to continue as a going concern for a reasonable

period of time, which is defined as within one year after the date that our condensed financial statements are issued.

The financial

herein do not contain any adjustments to reflect the possible future effects on the classification of assets or the amounts and classification

of liabilities that might result from the outcome of this uncertainty.

The doubt regarding our potential ability to continue as a going

concern may adversely affect our ability to obtain new financing on reasonable terms or at all.

Additionally, if we are unable to

continue as a going concern, our stockholders may lose some or all of their investment in the Company.

financing may not be available to us when needed or, if available, it may not be obtained on commercially reasonable terms.

not able to obtain the necessary additional financing on a timely or commercially reasonable basis, we will be forced to delay or scale

down some or all of our development activities (or perhaps even cease the operation of our business).

Our access to additional capital

may be negatively affected by future recessions, downturns in the economy or the markets as a whole, or inflation.

we do not obtain additional financing, our business, prospects, financial condition and results of operations will be adversely affected.

anticipates that we will require additional working capital in the future to pursue continued development of products, services, and

marketing operations.

We cannot accurately predict the timing and amount of such capital requirements.

Additional financing may not be

available to us when needed or, if available, it may not be obtained on commercially reasonable terms.

If we are not able to obtain the

necessary additional financing on a timely or commercially reasonable basis, we will be forced to delay or scale down some or all of

our development activities (or perhaps even cease the operation of our business).

Our access to additional capital may be negatively

affected by future recessions, downturns in the economy or the markets as a whole, or inflation.

have no commitments for any additional financing, and such commitments may not be obtained on favorable terms, if at all.

Any additional

equity financing will be dilutive to our stockholders, and debt financing, if available, may involve restrictive covenants with respect

to dividends, raising future capital, and other financial and operational matters.

If we are unable to obtain additional financing as

needed, we may be required to reduce the scope of our operations or our anticipated expansion, which could have a material adverse effect

have attempted to expand, and may further explore, the expansion of our business beyond our legacy healthcare and pharmacy focused business

model, and those efforts may not prove successful.

expect to attempt to broaden our current assets and operations through additional business combinations and acquisition transactions.

Certain of these transactions may involve companies involved in industries that are outside and different from our legacy operations,

which focused on the healthcare and pharmaceutical industries.

For example, during the year ended December 31, 2023 we acquired Superlatus a diversified food technology

These transactions, if successful, may result in a change of the Company’s focus, a change in the composition of its management,

and otherwise result in the Company entering new businesses in which it does not have substantial prior experience.

As a result, these

transactions may not prove successful or may result potential negative effects that prevent us from realizing the benefits of such transaction

and, in turn, have a material adverse impact on our stock price, financial condition, results of operations and liquidity.

is likely that any efforts we may make to acquire a business will result in substantial additional dilution to our stockholders.

existing resources will likely be insufficient to support business operations for a significant period of time.

Furthermore, with any

business combination or acquisition in which we engage, we will likely issue shares of our common stock rather than paying cash for the

Moreover, if we raise capital for any operations in the future or issue stock for a business combination or acquisition, such

action will require the issuance of equity or debt securities which will likely result in substantial dilution to our existing stockholders.

Although we will attempt to minimize the dilutive impact of any future business acquisition or capital-raising activities, we cannot

offer any assurance that we will be able to do so.

Additionally, if we are unable to continue

as a going concern, our stockholders may lose some or all of their investment in the Company.

and liabilities could limit the cash flow available for our operations, including under Scienture LLC’s outstanding secured convertible

debt, expose us to risks that could adversely affect our business, financial condition, and results of operations.

September 2023, Scienture LLC incurred $2 million of indebtedness under a Loan and Security Agreement dated September 8, 2023, by and

between NVK Finance LLC, a Nebraska Limited Liability Company (“NVK”) and Scienture LLC (the “NVK Loan Agreement”)

in connection with the business combination of NVK with Scienture LLC.

In the future, we may incur indebtedness to meet financing needs

or otherwise refinance existing indebtedness.

Indebtedness could have significant negative consequences for our security holders and

our business, results of operations, and financial condition by, among other things:

vulnerability to adverse economic and industry conditions;

our ability to obtain additional financing;

the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which would reduce the amount

of cash available for other purposes;

our flexibility to plan for, or react to, changes in our business;

us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.

LLC’s obligations under the NVK loan agreement are secured by a first priority security interest in all of Scienture LLC’s

assets, including its intellectual property rights.

Accordingly, Scienture LLC’s failure to perform its obligations under the NVK

loan agreement could result in NVK selling to foreclose on this collateral.

Our business may not generate sufficient funds, and we may

otherwise be unable to maintain sufficient cash reserves to pay amounts due under any indebtedness incurred.

to the significant resources required to develop our product pipeline, and depending on our ability to access capital, we must prioritize

the development of certain product candidates over others and we may fail to expend our limited resources on product candidates or indications

that may have been more profitable or for which there is a greater likelihood of success.

LLC’s lead product candidate, SCN-102, for the treatment of hypertension, was only recently approved by the FDA.

Its other product

candidates and programs are at various stages of development, and Scienture LLC has not yet initiated clinical trials for these other

candidates in our pipeline.

We seek to support Scienture LLC in rapidly advancing discovery and development of transformational medicines

for patients suffering from CNS and CVS diseases.

to the significant resources required for the development of our product candidates, we must decide which product candidates and indications

to pursue and advance and the amount of resources to allocate to each.

Our decisions concerning the allocation of research, development,

collaboration, management and financial resources toward particular product candidates, therapeutic areas or indications may not lead

to the development of viable commercial products and may divert resources away from better opportunities.

If we make incorrect determinations

regarding the viability or market potential of any of our product candidates or misread trends in the pharmaceutical industry, in particular

for CNS and CVS diseases, our business, financial condition and results of operations could be materially and adversely affected.

a result, we may fail to capitalize on viable commercial products or profitable market opportunities, be required to forego or delay

pursuit of opportunities with other product candidates or other diseases and disease pathways that may later prove to have greater commercial

potential than those we choose to pursue, or relinquish valuable rights to such product candidates through collaboration, licensing or

royalty arrangements in cases in which it would have been advantageous for us to invest additional resources to retain sole development

and commercialization rights.

acquisitions and investments in new businesses and new products, services, and technologies is inherently risky, and could disrupt our

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venture agreement.

The asset impairment is reflected in the statement of operations for the year ended December 31, 2022 as impairment of intangible

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;

recorded a loss of $875,250 in connection with CSP Test Kits purchased for our Community Specialty Pharmacy that were later deemed

inappropriate for distribution by the FDA.

The inventory was written down and was recorded as loss on inventory investment in the

statement of operations during the year ended December 31, 2022;

During the year ended December 31,

2023 we acquired Superlatus through a merger transaction, however, due to various complications with the post-closing integration

we elected to divest Superlatus in March 2024.

The asset impairment is reflected in the statement of operations for the year ended December 31, 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;

recorded a loss of $875,250 in connection with CSP Test Kits purchased for our Community

Specialty Pharmacy that were later deemed inappropriate for distribution by the FDA.

inventory was written down and was recorded as loss on inventory investment in the statement

of operations during the year ended December 31, 2022;

the year ended December 31, 2023 we acquired Superlatus through a merger transaction, however, due to various complications with

the post-closing integration we elected to divest Superlatus in March 2024 for $1.

As a result of this divestiture, the Company recognized

a goodwill impairment loss of $5.1 million for the year ended December 31, 2023.

use of resources for new businesses and new products, services, and technologies, to the extent such new businesses and new products,

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flows, liquidity and revenues, any or all of which may cause the value of the Company’s securities to decline in value or become

to adequately manage our planned aggressive growth strategy may harm our business or increase our risk of failure.

the foreseeable future, we intend to pursue an aggressive growth strategy for the expansion of our operations through increased product

development and marketing (or acquisitions of business operations and assets outside of our legacy operations).

Our ability to rapidly

expand our operations will depend upon many factors, including our ability to work in a regulated environment, market value-added products

effectively to independent pharmacies, establish and maintain strategic relationships with suppliers, and obtain adequate capital resources

on acceptable terms.

Any restrictions on our ability to expand may have a materially adverse effect on our business, results of operations,

and financial condition.

Accordingly, we may be unable to achieve our targets for sales growth, and our operations may not be successful

or achieve anticipated operating results.

Additionally,

our growth may place a significant strain on our managerial, administrative, operational, and financial resources and our infrastructure.

Our future success will depend, in part, upon the ability of our senior management to manage growth effectively.

This will require us

to, among other things:

additional management information systems;

develop our operating, administrative, legal, financial, and accounting systems and controls;

additional personnel;

additional levels of management within our company;

additional office space;

close coordination among our engineering, operations, legal, finance, sales and marketing, and client service and support organizations;

our expanding international operations.

a result, we may lack the resources to deploy our services on a timely and cost-effective basis.

Failure to accomplish any of these requirements

could impair our ability to deliver services in a timely fashion or attract and retain new customers.

business combinations and acquisition transactions, if any, as well as recently closed business combinations and acquisition transactions,

may not succeed in generating the intended benefits and may adversely affect our business.

of our growth strategy is to evaluate strategic acquisitions or relationships from time to time.

The inability of our management to successfully

integrate acquired businesses, assets or technologies, and any related diversion of management’s attention, could have a material

adverse effect on our business, operating results and financial condition.

Business combinations and other acquisition transactions may

have a direct adverse effect on our financial condition, results of operations, liquidity or stock price.

To complete acquisitions or

other business combinations, we may have to use cash, issue new equity securities with dilutive effects on existing stockholders, take

on new debt, assume contingent liabilities or amortize assets or expenses in a manner that might have a material adverse effect on our

balance sheet, results of operations or liquidity.

These and other potential negative effects of an acquisition transaction could prevent

us from realizing the benefits of such transaction and have a material adverse impact on our stock price, financial condition, results

of operations and liquidity.

we do not successfully implement any acquisition strategies, our operating results and prospects could be harmed.

face competition within our industry for acquisitions of businesses, technologies and assets, and, in the future, such competition may

become more intense.

As such, even if we are able to identify an acquisition that we would like to consummate, we may not be able to

complete the acquisition on commercially reasonable terms or at all because of such competition.

Furthermore, if we enter into negotiations

that are not ultimately consummated, those negotiations could result in diversion of management time and significant out-of-pocket costs.

Even if we are able to complete such acquisitions, we may additionally expend significant amounts of cash or incur substantial debt to

finance them, which indebtedness could result in restrictions on our business and use of available cash.

In addition, we may finance

or otherwise complete acquisitions by issuing equity or convertible debt securities, which could result in dilution of our existing stockholders.

If we fail to evaluate and execute acquisitions successfully, we may not be able to realize their benefits.

If we are unable to successfully

address any of these risks, our business, financial condition or operating results could be harmed.

we make any acquisitions, they may disrupt or have a negative impact on our business.

we make acquisitions in the future, funding permitting, which may not be available on favorable terms, if at all, we could have difficulty

integrating the acquired company’s assets, personnel and operations with our own.

We do not anticipate that any acquisitions or

mergers we may enter into in the future would result in a change of control of the Company.

In addition, the key personnel of the acquired

business may not be willing to work for us.

We cannot predict the effect expansion may have on our core business.

Regardless of whether

we are successful in acquiring, the negotiations could disrupt our ongoing business, distract our management and employees and increase

our expenses.

In addition to the risks described above, acquisitions are accompanied by a number of inherent risks, including, without

limitation, the following:

difficulty of integrating acquired products, services or operations;

potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies;

in maintaining uniform standards, controls, procedures and policies;

potential impairment of relationships with employees and customers as a result of any integration of new management personnel;

potential inability or failure to achieve additional sales and enhance our customer base through cross-marketing of the products

to new and existing customers;

effect of any government regulations which relate to the business acquired;

unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition

or modify the marketing and sales of acquired products or operations, or the defense of any litigation, whether or not successful,

resulting from actions of the acquired company prior to our acquisition;

expenses under the labor, environmental and other laws of various jurisdictions.

business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems

encountered in connection with an acquisition, many of which cannot be presently identified.

These risks and problems could disrupt our

ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations.

we do not maintain a current and effective prospectus relating to the common stock issuable upon exercise of the Private Placement Warrants,

holders may exercise such Private Placement Warrants on a “cashless basis.”

October 4, 2022 the Company entered into a securities purchase agreement (the “ Purchase Agreement ”) with a certain

institutional investor.

The Purchase Agreement provided for the sale and issuance by the Company of an aggregate of:

(i) 61,334 shares

of the Company’s common stock, (ii) pre-funded warrants (the “ Pre-Funded Warrants ”) to purchase up to 40,116

shares of common stock and (iii) warrants (the “ Private Placement Warrants ”“) to purchase up to 177,537 shares

of common stock.

we do not maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise of the Private Placement

Warrants at the time that holders wish to exercise such warrants, they will be able to exercise them on a “cashless basis”.

As a result, the number of shares of common stock that holders will receive upon exercise of the Private Placement Warrants will be fewer

than it would have been had such holders exercised their Private Placement Warrants for cash.

Pursuant to the terms of the Purchase Agreement,

we filed a registration statement to register the shares of common stock issuable upon the exercise of the Private Placement Warrants

(the “Private Placement Warrant Shares”).

We have agreed to keep such registration statement effective at all times until

the investor holds no Private Placement Warrants or Private Placement Warrant Shares issuable upon exercise thereof.

However, we cannot

assure you that we will be able to do so.

If the Private Placement Warrants are exercised on a “cashless” basis, we will

not receive any consideration from such exercises.

of the Private Placement Warrants and our outstanding Series C Preferred Stock could discourage an acquisition of us by a third party.

provisions of the Private Placement Warrants and our outstanding Series C Preferred Stock could make it more difficult or expensive for

a third party to acquire us.

The securities prohibit us from engaging in certain transactions constituting “fundamental transactions”

unless, among other things, the surviving entity assumes our obligations under the Private Placement Warrants and the Series C Preferred

Further, the Private Placement Warrants provide that, in the event of certain transactions constituting “fundamental transactions,”

with some exception, holders of such warrants will have the right, at their option, to require us to repurchase such warrants at a price

described in such warrants.

These and other provisions of the Private Placement Warrants could prevent or deter a third party from acquiring

us even where the acquisition could be beneficial to you.

Private Placement Warrants have certain anti-dilutive rights.

Private Placement Warrants include full ratchet anti-dilutive rights in the event any shares of common stock or other equity or

equity equivalent securities payable in common stock are granted, issued or sold (or the Company enters into any agreement to grant,

issue or sell), or in accordance with the terms of the warrant agreement evidencing the Private Placement Warrants, are deemed to

have granted, issued or sold, in each case, at a price less than the exercise price, which automatically decreases the exercise

price of the Warrants upon the occurrence of such event, as described in greater detail in the warrant agreement, subject to a

defined minimum exercise price.

Such anti-dilution rights, if triggered, could result in a significant decrease

in the exercise price of the Private Placement Warrants, which could result in significant dilution to existing

shareholders.

Private Placement Warrants are accounted for as liabilities and the changes in value of such Private Placement Warrants may have a material

effect on our financial results.

Placement Warrants, with certain terms as included in the Purchase Agreement should be accounted for as liability instruments.

the Company recorded warrant liability on the balance sheet as of December 31, 2022.

Under the liability accounting treatment, the Company

is required to measure the fair value of these instruments at the end of each reporting period and recognize changes in the fair value

from the prior period in the Company’s operating results for the current period.

As a result of the recurring fair value measurement,

our financial statements and results of operations may fluctuate quarterly based on factors which are outside our control.

the Private Placement Warrants are required to be accounted for under liability accounting treatment, we will recognize noncash gains

or losses due to the quarterly fair valuation of these warrants which could be material.

The impact of changes in fair value on our earnings

may have an adverse effect on the market price of our common stock and/or our stockholders’ equity, which may make it harder for

us to, or prevent us from, meeting the continued listing standards of The Nasdaq Capital Market.

issuance and sale of common stock upon exercise of the Private Placement Warrants may cause substantial dilution to existing stockholders

and may also depress the market price of our common stock .

Private Placement Warrants are exercisable for up to 177,537 shares of common stock, provided that the Private Placement Warrants contain

a provision limiting each holder’s ability to exercise the warrants if such exercise would cause the holder’s (or any affiliate

of any such holder) holdings in the Company to exceed 4.99% of the Company’s issued and outstanding shares of common stock (which

may be increased or decreased with 61 days prior written notice from the holder, to up to 9.99% of the Company’s issued and outstanding

shares of common stock).

The ownership limitation does not prevent such holder from exercising some of the warrants, selling those shares,

and then exercising the rest of the warrants, while still staying below the 4.99% limit.

In this way, the holder of the warrants could

sell more than this limit while never actually holding more shares than this limit allows.

If the holder of the warrants chooses to do

this, it will cause substantial dilution to the then holders of our common stock.

exercises of the warrants and sales of such shares issuable upon exercise thereof take place, the price of our common stock may decline.

In addition, the common stock issuable upon exercise of the warrants may represent overhang that may also adversely affect the market

price of our common stock.

Overhang occurs when there is a greater supply of a company’s stock in the market than there is demand

for that stock.

When this happens the price of the company’s stock will decrease, and any additional shares which shareholders

attempt to sell in the market will only further decrease the share price.

If the share volume of our common stock cannot absorb shares

sold by the warrant holders, then the value of our common stock will likely decrease.

business is subject to rigorous regulatory and licensing requirements.

described in greater detail in “ Item 1.

Business ”, above, our business is highly regulated in the United States, at

both the federal and state level, and in foreign countries.

If we fail to comply with regulatory requirements, or if allegations are

made that we fail to comply, our results of operations and financial condition could be adversely affected.

lawfully operate our businesses, we are required to obtain, and hold permits, product registrations, licenses and other regulatory approvals

from, and to comply with operating and security standards of, numerous governmental bodies..

Failure to maintain or renew necessary permits,

product registrations, licenses or approvals, or to comply with required standards, could have an adverse effect on our results of operations

and financial condition.

We are also required to comply with various state pricing gouging laws.

Products that we source and distribute

must also comply with regulatory requirements.

Noncompliance

or concerns over noncompliance may result in suspension of our ability to distribute or import products, product bans, recalls or seizures,

or criminal or civil sanctions, which, in turn, could result in product liability claims and lawsuits, including class actions.

of our competitors are better established and have resources significantly greater than we have, which may make it difficult to fend

off competition.

expect to compete with large ADR distributors (such as McKesson, Cardinal Health and AmerisourceBergen), in addition to other pharmaceutical

distributors, buying groups, software products, and various start-up drug companies.

Many of these companies have substantially greater

financial and manufacturer-backed resources, longer operating histories, greater name recognition and more established relationships

in the industry than us.

In addition, a number of these competitors may combine or form strategic partnerships.

As a result, our competitors

may establish a more favorable footing in the pharmaceutical industry with respect to pricing or other factors.

Our failure to compete

successfully with any of these companies would have a material adverse effect on our business and the trading price of our common stock.

three distributors listed above have a strong control over our industry, as they have contracts with approximately 24,000 independent,

retail pharmacies that limit the participants’ ability to purchase pharmaceuticals outside of those primary distributors.

restrictive elements exist within the pharmaceutical channels of distribution.

For example, a number of the inventory management systems,

either developed by the distributors or third-party vendors, have been developed to require compliance to these restrictive purchasing

Management anticipates that other existing and prospective competitors will adopt technologies or business plans similar

to ours or seek other means to develop operations competitive with ours, particularly if our development of large-scale production progresses

as scheduled.

will need to expand our member base or our profit margins to attain profitability.

we are aware of the competitiveness of the group of suppliers that participate within our industry and intend to price products accordingly.

However, price is not the only factor that influences where retail pharmacies will obtain their product.

Quality fulfillment services

are also important, and retail pharmacies have historically received quality fulfillment services from the three major ADR distributors.

In order to be more competitive, we must improve our customer service and fulfillment efforts, because the independent retail pharmacy

has for years considered this element of the fulfillment process as important as price.

Other factors influencing the pharmacies purchasing

behavior in the future will be changes brought upon by the ACA, which regulates some aspects of pharmaceutical spending and pricing.

Management believes that we should benefit substantially from our pricing and product knowledge that is offered by our platform.

Profitability

may be further increased as a result of lower cost of goods, should the Company build stronger relationships with manufacturers and other

larger buying groups that serve wholesalers and distributors.

On a larger scale, those margins are expected to drop depending upon the

breadth of products provided in the market and the sale turn rates required.

We are currently undertaking a significant effort to increase

our membership base through attendance at annual conferences and other strategies.

We intend to expand our e-mail marketing strategy

based on our competitive price advantages and unique distribution services.

are inherent risks associated with our operations within the Pharmaceutical Distribution Market.

are inherent risks involved with doing business within the pharmaceutical distribution market, including:

manufactured products may prove dangerous to the end consumer.

may become adulterated by improper warehousing methods or modes of shipment.

products or products with fake pedigree papers.

or unlawful participants in the distribution channel.

with default and the assumption of credit loss.

related to the loss of supply, or the loss of a number of suppliers, or in the delay of obtaining the supply of drugs.

all of our end-user agreements require our customers to indemnify us and for any and all liabilities resulting from our participation

in the pharmaceutical distribution industry, we cannot assure you that the parties required to provide such indemnification will have

the financial resources to do so.

Additionally, although we have evaluated appropriate state statutes and federal laws pertaining to

pharmaceutical distribution in an effort to diminish our risks, the Board of Pharmacy for each state is responsible for interpreting

their state laws, and their interpretations may not comport with our analysis.

It is also possible that any third-party logistics arrangements

may disrupt service, create a loss of income, or other unforeseen disruptions should the service provider experience any legal, financial

or other difficulties of their own.

do not have a traditional credit facility with a financial institution, which may adversely impact our operations.

do not have a traditional credit facility with a financial institution, such as a working line of credit.

The absence of such a facility

could adversely impact our operations, as it may constrain our ability to have available the working capital for equipment purchases

or other operational requirements.

If adequate funds are not otherwise available, we may be required to delay, scale back or eliminate

portions of our business development efforts.

Without credit facilities, we could be forced to cease operations and investors in our

securities could lose their entire investment.

offer limited credit to the pharmacies which limits the amount of the orders that they place and may result in us losing business and

a reduction in our revenues.

currently offer a limited amount of credit to our members.

Such limited credit reduces the risk that such members do not pay for products;

however, it also limits the amount of revenue we generate per member.

We believe that if we were to increase the amount of credit we

provide to members we would generate more revenues, but bear more risk of non-payment.

We are currently exploring increasing the amount

of credit we provide to members, which may in turn result in an increase in receivables and write-offs.

business is highly dependent on the success of certain product candidates.

If we are unable to successfully complete clinical development,

obtain regulatory approval for or commercialize one or more of our product candidates, or if we experience delays in doing so, our business

will be materially harmed.

LLC has not completed the development of any product candidates.

Although Scienture LLC has initiated development for product candidates,

all of these candidates, other than SCN-102, remain in early-stage clinical or preclinical development.

Our future success and ability

to generate revenue from Scienture LLC’s product candidates is dependent on our ability to successfully develop, obtain regulatory

approval for and commercialize one or more of our product candidates.

Even though approved by the FDA, SCN-102 will require substantial additional

investment for commercialization, clinical development, regulatory review, and approval in one or more jurisdictions.

If any of Scienture

LLC’s product candidates encounters safety or efficacy problems, development delays, regulatory issues or other problems, our development

plans and business would be materially harmed.

may not have the financial resources to continue development of Scienture LLC’s product candidates, particularly if Scienture LLC

experience any issues that delay or prevent regulatory approval of, or its ability to commercialize, product candidates, including:

LLC’s inability to demonstrate to the satisfaction of the FDA or other comparable regulatory authorities that our product candidates

are safe and effective;

insufficiency

of our financial and other resources to complete the necessary clinical trials and preclinical studies;

or inconclusive results from Scienture LLC’s clinical trials, preclinical studies or

the clinical trials of others for product candidates similar to Scienture LLC, leading to

a decision or requirement to conduct additional clinical trials or preclinical studies or

abandon a program;

product-related

adverse events experienced by subjects in Scienture LLC’s clinical trials, including unexpected toxicity results, or by individuals

using drugs or therapeutic biologics similar to Scienture LLC’s product candidates;

in submitting an Investigational New Drug (“IND”) application or other regulatory submission to the FDA or other comparable

regulatory authorities, or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial or

a suspension or termination, or hold, of a clinical trial once commenced;

imposed by the FDA or other comparable regulatory authorities regarding the scope or design of Scienture LLC’s clinical trials;

effectiveness of our product candidates during clinical trials;

than expected performance of control arms, such as placebo groups, which could lead to negative or inconclusive results from Scienture

LLC’s clinical trials;

in enrolling subjects in Scienture LLC’s clinical trials;

drop-out rates of subjects from Scienture LLC’s clinical trials;

supply or quality of product candidates or other materials necessary for the conduct of Scienture LLC’s clinical trials;

than anticipated clinical trial or manufacturing costs;

FDA or comparable regulatory authority inspection and review of Scienture LLC’s clinical trial sites;

of our third-party contractors or investigators to comply with regulatory requirements or the clinical trial protocol or otherwise

meet their contractual obligations in a timely manner, or at all;

and changes in regulatory requirements, policies and guidelines, including the imposition of additional regulatory oversight around

clinical testing generally or with respect to Scienture LLC’s therapies in particular;

interpretations of data by the FDA or other comparable regulatory authorities.

a material effect on 15

addition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval

in one country does not guarantee regulatory approval in any other country.

Scienture LLC may in the future conduct one or more of its

clinical trials with one or more trial sites that are located outside the United States.

Although the FDA may accept data from clinical

trials conducted outside the United States, acceptance of this data is subject to conditions imposed by the FDA, and there can be no

assurance that the FDA will accept data from trials conducted outside of the United States.

If the FDA does not accept the data from

any trial that we conduct outside the United States, it would likely result in the need for additional trials, which would be costly

and time-consuming and could delay or permanently halt our development of the applicable product candidates.

are dependent upon our current management, who may have conflicts of interest.

are dependent upon the efforts of our current management.

All of our officers and directors have duties and affiliations with other companies.

Even though these companies are not competitors or involved in pharmaceutical distribution, involvement of our officers and directors

in other businesses may still present a conflict of interest regarding decisions they make for Trxade or with respect to the amount of

time available for Trxade.

The loss of any of our officers or directors and, in particular, Mr.

Prashant Patel, our President or Mr.

Suren Ajjarapu, our Chief Executive Officer and Chairman of the Company, could have a materially adverse effect upon our business and

future prospects.

Our ability to develop product candidates and our future

growth depends on attracting, hiring and retaining key personnel and recruiting additional qualified personnel.

success depends upon the continued contributions of our key management and scientific personnel, many of whom have substantial experience

with developing therapies, identifying potential product candidates and building the technologies related to the clinical development

of our product candidates.

However, some of officers and directors have duties and affiliations with other companies.

Involvement of

our officers and directors in other businesses may present a conflict of interest regarding decisions they make for the Company or with

respect to the amount of time available for the Company.

the specialized nature of CNV and CVS diseases and our approach, there is an inherent scarcity of experienced personnel in these fields.

As we continue developing product candidates, we will require personnel with medical, scientific, or technical qualifications specific

to each program.

The loss of any of our officers or directors, in particular our current management team consisting of Shankar Hariharan,

Narasimhan Mani, Rahul Surana, Suren Ajjarapu, or Prashant Patel, could have a materially adverse effect upon our business and future

Company holds, on behalf of and for the benefit of Mr.

Suren Ajjarapu, a personal disability insurance policy providing for a $1,500,000

lump sum benefit, payable to Mr.

Ajjarapu, a personal disability insurance policy providing for a $1,500,000 lump

sum benefit, payable to Mr.

Ajjarapu, in the event of Mr.

Ajjarapu’s disability.

The premiums on such policy will be paid

by the Company for so long as Mr.

The premiums on such policy will be paid by the

Company for so long as Mr.

Ajjarapu is employed by the Company.

Company also holds a $4,000,000 key-man life insurance policy on the life of Mr.

Suren Ajjarapu, and a $1,500,000 lump sum disability

insurance policy on Mr.

Ajjarapu, providing for the Company as beneficiary of such policies.

our management team has considerable information technology and entrepreneurial experience, none of our management was involved in pharmaceutical

distribution prior to joining the Company and, as such, did not have any technical experience in pharmaceutical distribution prior to

In the event of the loss of Mr.

Ajjarapu’s services, we will seek to hire and retain a qualified professional.

event of the loss of his services in connection with his death, upon obtaining funding from the key-man life insurance, management intends

to hire qualified and experienced personnel.

We may be unable to find a suitable or qualified replacement for Mr.

Ajjarapu and as such

our operations and/or prospects may suffer.

rely on third party contracts.

depend on others to provide products and services to us.

We do not manufacture pharmaceuticals and we do not sell pharmaceuticals to

the end consumer.

We do not control these wholesalers, suppliers and purchasers, and although our arrangements with them will be terminable

or of limited length, a change may be difficult to implement.

At this time, we have a working relationship with over 10 manufacturers

and other suppliers.

Although we believe that those entities are satisfied with their business relationship with Trxade, if our buying

group pharmacies and several of our vendors decided no longer to do business with us, that vendor void would materially and adversely

affect our competitiveness in the marketplace.

depend on suppliers to make their drugs and other medical products available to us for resale and are subject to risks associated with

the availability of these drugs and other medical products.

do not directly manufacture any of the products we sell and instead we rely on third parties to manufacture and/or procure such drugs

and other medical products for us to resell.

Supply chain constraints have, and may in the future have, a negative impact on the availability

of drugs and medical products that we sell.

Our supplier relationships could be interrupted, become less favorable to us or be terminated

and the supply of these drugs or products could be interrupted or become insufficient.

Supply interruptions or other disruptions in manufacturing

processes could be caused by events beyond our control, including natural disasters, supplier facility shut-downs, defective raw materials,

the impact of epidemics or pandemics, such as COVID-19, and actions by U.S.

or international governments, including export restrictions

A sustained supply reduction or interruption, and an inability to develop alternative and additional sources for such supply,

could result in lost sales, increased cost, damage to our reputation, and may have an adverse effect on our business.

may have difficulties in sourcing or selling products due to a variety of causes.

might experience difficulties and delays in sourcing and selling products due to a variety of causes, such as:

difficulties in complying

with the legal requirements for export or import of pharmaceuticals or supplies;

suppliers’ failure to satisfy production demand;

manufacturing or supply problems such as inadequate resources;

and real or perceived quality issues.

Difficulties in product manufacturing

or access to raw materials could result in supplier production shutdowns, product shortages and other supply disruptions.

risks might have a materially adverse impact on our business operations and our financial position or results of operations.

technological change in our industry presents us with significant risks and challenges .

industry is characterized by rapid technological change, changing consumer requirements, short product lifecycles and evolving industry

Our success will depend on our ability to develop or to acquire and market new services.

There is no guarantee that we will

possess the resources, either financial or personnel, for the research, design and development of new applications or services, or that

we will be able to utilize these resources successfully and avoid technological or market obsolescence.

Further, there can be no assurance

that technological advances by one or more of our competitors or future competitors will not result in our present or future applications

and services becoming uncompetitive or obsolete.

are currently facing and may in the future face difficulties in sourcing products and inventory due to a variety of causes.

times, we have to date experienced issues with the availability of certain products, resulting in product allocation and delivery delays,

which has not to date, had a material adverse effect on our results of operations.

We might also experience difficulties and delays in

sourcing products and inventory due to a variety of causes in the future, such as:

difficulties in complying with the legal requirements

for export or import of pharmaceuticals or components;

suppliers’ failures to satisfy production demand;

manufacturing or supply

problems such as inadequate resources;

real or perceived quality issues;

and advanced deposits which are at risk of return if product

is not delivered.

Difficulties in product manufacturing or access to raw materials could result in supplier production shutdowns, product

shortages and other supply disruptions.

Any of these risks might have a materially adverse impact on our business operations and our

financial position or results of operations.

have in the past, and may in the future, not be able to sell our inventory, at or above the price we acquired such inventory for, and

have in the past, and may in the future, be forced to write-down inventory and certain of our other assets which may have a material

adverse effect on our balance sheet.

to the supply and demand nature of our pharmaceutical business especially in connection with the rapidly changing regulations, and

varying demand of certain medications the inventory of products we have acquired, or may acquire in the future, has been/may be,

acquired at a cost higher than the price at which we may be able to resell such products.

As a result, in the past we have, and in

the future we may not be able to, make a profit on such sales and have in the past and may in the future, have to write down a

significant portion of our inventory.

During the years ended December 31, 2023 and 2022, write down to market value was $4,265,399

and $0 respectively.

A significant write down of assets may have a material adverse effect on our balance sheet and results of

may not receive products or receive refunds for deposited amounts and may experience losses in connection with such deposits.

might not receive products or the return of funds on deposits that have been provided.

In the event we do not receive the return of our

deposits (through litigation or otherwise), this will cause us financial harm and as a result the Company has taken a significant charge

on our financial statements by taking a loss in the amount of such deposit amount.

Additionally, in the future we may provide additional

deposits for products which may be material, which deposits may not be refunded timely, if at all, and which products may not be delivered,

or may be defective or unusable.

Any significant losses of deposited funds could have a material adverse effect on our financial condition,

results of operations and the value of our securities.

In the past we (or our subsidiaries) have been involved in litigation with suppliers

and disputes regarding deposits made with third parties, including litigation involving Studebaker Defense Group, LLC and Sandwave Group

These disputes previously resulted in the Company recording a loss on inventory investments.

quarterly results have in the past, and may in the future, fluctuate significantly due to certain non-recurring sales of products.

quarterly revenues have in the past and may in the future fluctuate significantly due to certain non-recurring sales of personal protective

equipment (PPE) and other products and associated costs of revenues therewith, which may be compounded in our year over year financial

As such, we believe that quarter-to-quarter comparisons of our revenues, operating results and cash flows may not be meaningful

and should not be relied upon as an indication of future performance.

Relating to Our Information Systems;

Technology and Intellectual Property

may be subject to claims that we violated intellectual property rights of others, which are extremely costly to defend and could require

us to pay significant damages and limit our ability to operate.

primarily conducting their business on the internet, in the technology sector, and other patent and trademark holders seeking to profit

from royalties in connection with grants of licenses, own large numbers of patents, copyrights, trademarks and trade secrets and frequently

enter into litigation based on allegations of infringement or other violations of intellectual property rights.

There may be intellectual

property rights held by others, including issued or pending patents and trademarks, that cover significant aspects of our technologies,

content, branding or business methods.

Any intellectual property claims against us, regardless of merit, could be time-consuming and

expensive to settle or litigate and could divert our management’s attention and other resources.

These claims also could subject

us to significant liability for damages and could result in our having to stop using technology, content, branding or business methods

found to be in violation of another party’s rights.

We might be required or may opt to seek a license for rights to intellectual

property held by others, which may not be available on commercially reasonable terms, or at all.

If we cannot license or develop technology,

content, branding or business methods for any allegedly infringing aspect of our business, we may be unable to compete effectively.

if a license is available, we could be required to pay significant royalties, which could increase our operating expenses.

be required to develop alternative non-infringing technology, content, branding or business methods, which could require significant

effort and expense and be inferior.

Any of these results could harm our operating results.

business and operations depend on the proper functioning of information systems, critical facilities and distribution networks.

rely on our manufacturer, vendors and other third-party service providers’ information systems for a wide variety of critical operations,

including to obtain, rapidly process, analyze and manage data to:

the purchase and distribution of inventory items

process and ship orders on a timely basis;

accurate billing and collections for thousands of customers;

payments to suppliers;

financial information.

business also depends on the proper functioning of our critical facilities and our distribution networks.

Our results of operations could

be adversely affected if our or a service provider’s information systems, critical facilities or distribution networks are disrupted

(including disruption of access), are damaged or fail, whether due to physical disruptions, such as fire, natural disaster, pandemic

or power outage, or due to cyber-security incidents, ransomware or other actions of third parties, including labor strikes, political

unrest and terrorist attacks.

Manufacturing disruptions also can occur due to regulatory action, production quality deviations, safety

issues or raw material shortages or defects, or because a key product or component is manufactured at a single manufacturing facility

with limited alternate facilities.

rely on network and information systems and other technologies and a disruption, cyber-attack, failure or destruction of such networks,

systems, or technologies may disrupt our business or result in liability.

and information systems and other technologies, including those related to our computer, data back-up and processing systems, network

management, customer service operations and programming delivery, are critical to our business activities.

Network and information systems-related

events, such as computer hackings, cyber-attacks, computer viruses, worms or other destructive or disruptive software, process breakdowns,

denial of service attacks, malicious social engineering or other malicious activities, or any combination of the foregoing, or power

outages, natural disasters, terrorist attacks or other similar events, could result in a degradation or disruption of our services or

damage to our properties, equipment and data.

These events also could result in large expenditures to repair or replace the damaged properties,

networks or information systems or to protect them from similar events in the future.

risk of these systems-related events and security breaches occurring has intensified, in part because we maintain certain information

necessary to conduct our businesses in digital form stored on cloud servers.

While we develop and maintain systems seeking to prevent

systems-related events and security breaches from occurring, the development and maintenance of these systems are costly and requires

ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.

Despite these

efforts, there can be no assurance that these events and security breaches will not occur in the future.

Moreover, we may provide certain

confidential, proprietary and personal information to third parties in connection with our businesses, and while we obtain assurances

that these third parties will protect this information, there is a risk that this information could be compromised.

any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or

replace them, and may experience loss or corruption of critical data and interruptions or delays in our ability to perform critical functions,

which could adversely affect our business and results of operations.

In addition, we are currently making, and expect to continue to

make, substantial investments in our information technology systems and infrastructure, some of which are significant.

Upgrades involve

replacing existing systems with successor systems, making changes to existing systems, or cost-effectively acquiring new systems with

new functionality.

Implementing new systems carries significant potential risks, including failure to operate as designed, potential

loss or corruption of data or information, cost overruns, implementation delays, disruption of operations, and the potential inability

to meet business and reporting requirements.

While we are aware of inherent risks associated with replacing these systems and believe

we are taking reasonable action to mitigate known risks, these technology initiatives may not be deployed as planned or may not be timely

implemented without disruption to our operations.

the past, we had an incident with an email account being compromised and an attempt was made to get us to wire outgoing money.

not fall victim to the attempt, conducted a thorough investigation, performed cleanup procedures, and instituted additional security

measures to mitigate the risk of this incident from occurring in the future.

Risk mitigation includes the board of directors inquiring

with the information technology department on the status of cyber risks management, on a quarterly basis.

may be losses or unauthorized access to or releases of confidential information, including personally identifiable information, that

could subject the Company to significant reputational, financial, legal and operational consequences.

Company’s business requires it to use, transmit and store confidential information including, among other things, personally identifiable

information (“ PII ”) with respect to the Company’s customers and employees.

The Company devotes significant resources

to network and data security, including through the use of encryption and other security measures intended to protect its systems and

But these measures cannot provide absolute security, and losses or unauthorized access to or releases of confidential information

occur and could materially adversely affect the Company’s reputation, financial condition and operating results.

The Company’s

business also requires it to share confidential information with third parties.

Although the Company takes steps to secure confidential

information that is provided to third parties, such measures are not always effective and losses or unauthorized access to or releases

of confidential information occur and could materially adversely affect the Company’s reputation, financial condition and operating

example, the Company may experience a security breach impacting the Company’s information technology systems that compromises the

confidentiality, integrity or availability of confidential information.

Such an incident could, among other things, impair the Company’s

ability to attract and retain customers for its products and services, impact the Company’s stock price, materially damage supplier

relationships, and expose the Company to litigation or government investigations, which could result in penalties, fines or judgments

against the Company.

Company has implemented systems and processes intended to secure its information technology systems and prevent unauthorized access to

or loss of sensitive data.

As with all companies, these security measures may not be sufficient for all eventualities and may be vulnerable

to hacking, employee error, malfeasance, system error, faulty password management or other irregularities.

In addition to the risks relating

to general confidential information described above, the Company is also subject to specific obligations relating to health data and

payment card data.

Health data is subject to additional privacy, security and breach notification requirements, and the Company can be

subject to audit by governmental authorities regarding the Company’s compliance with these obligations.

If the Company fails to

adequately comply with these rules and requirements, or if health data is handled in a manner not permitted by law or under the Company’s

agreements with healthcare institutions, the Company could be subject to litigation or government investigations, may be liable for associated

investigatory expenses, and could also incur significant fees or fines.

payment card rules and obligations, if cardholder information is potentially compromised, the Company could be liable for associated

investigatory expenses and could also incur significant fees or fines if the Company fails to follow payment card industry data security

The Company could also experience a significant increase in payment card transaction costs or lose the ability to process

payment cards if it fails to follow payment card industry data security standards, which would materially adversely affect the Company’s

reputation, financial condition and operating results.

errors or failures of our platform or services to conform to specifications could cause unforeseen liabilities or injury, harm our reputation

and have a material adverse impact on our results of operations.

software and technology services that we operate are complex.

As with complex systems offered by others, our software and technology

services may contain errors, especially when first introduced.

Failure of a customer’s system to perform in accordance with our

documentation could constitute a breach of warranty and could require us to incur additional expenses in order to make the system comply

with the documentation.

If such failure is not remedied in a timely manner, it could constitute a material breach under a contract, allowing

the client to cancel the contract, obtain refunds of amounts previously paid, or assert claims for significant damages.

we fail to develop widespread brand awareness cost-effectively, our business may suffer.

believe that developing and maintaining widespread awareness of our brand in a cost-effective manner is critical to achieving widespread

adoption of our products and attracting new clients.

Our brand promotion activities may not generate client awareness or increase revenue,

and even if they do, any increase in revenue may not offset the expenses we incur in building our brand.

If we fail to successfully promote

and maintain our brand, or incur substantial expenses in doing so, we may fail to attract or retain clients necessary to realize a sufficient

return on our brand-building efforts or to achieve the widespread brand awareness that is critical for broad client adoption of our solution.

Associated with Our Governing Documents and Delaware Law

certificate of incorporation provides for indemnification of officers and directors at our expense and limits their liability, which

may result in a major cost to us and hurt the interests of our stockholders because corporate resources may be expended for the benefit

of officers or directors.

certificate of incorporation provides for indemnification as follows:

“To the fullest extent permitted by applicable law, the Corporation

is authorized to provide indemnification of, and advancement of expenses to, such agents of the Corporation (and any other persons to

which Delaware law permits the Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other

persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted

by Section 145 of the Delaware General Corporation Law (the “ DGCL ”), subject only to limits created by applicable

Delaware law (statutory or non-statutory), with respect to actions for breach of duty to the Corporation, its stockholders and others.”

Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors

for breach of their fiduciary duty.

These provisions also may have the effect of reducing the likelihood of derivative litigation against

our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders.

a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our

officers and directors pursuant to these indemnification provisions.

have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public

policy as expressed in the Securities Act and is, therefore, unenforceable.

In the event that a claim for indemnification for liabilities

arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling

person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection

with our activities, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a

court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities

Act and will be governed by the final adjudication of such issue.

The legal process relating to this matter if it were to occur is likely

to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market

and price for our shares.

certificate of incorporation contains a specific provision that limits the liability of our directors for monetary damages to the Company

and the Company’s stockholders and requires us, under certain circumstances, to indemnify officers, directors and employees.

limitation of monetary liability against our directors, officers and employees under Delaware law and the existence of indemnification

rights to them may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees.

certificate of incorporation contains a specific provision that limits the liability of our directors for monetary damages to the Company

and the Company’s stockholders, including as a result of a breach of their fiduciary duties, except to the extent such exception

from liability is not permitted under the DGCL.

We also have contractual indemnification obligations under our employment and engagement

agreements with our executive officers and directors, as well as pursuant to indemnification agreements.

The foregoing indemnification

obligations could result in us incurring substantial expenditures to cover the cost of settlement or damage awards against our directors

and officers, which the Company may be unable to recoup.

These provisions and resultant costs may also discourage us from bringing a

lawsuit against our directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative

litigation by our stockholders against our directors and officers, even though such actions, if successful, might otherwise benefit us

and our stockholders.

directors have the right to authorize the issuance of shares of preferred stock and additional shares of our common stock.

directors, within the limitations and restrictions contained in our certificate of incorporation and without further action by our stockholders,

have the authority to issue shares of preferred stock from time to time in one or more series and to fix the number of shares and the

relative rights, conversion rights, voting rights, and terms of redemption, liquidation preferences and any other preferences, special

rights and qualifications of any such series.

Any issuance of shares of preferred stock could adversely affect the rights of holders

of our common stock.

Should we issue additional shares of our common stock at a later time, each investor’s ownership interest

in our stock would be proportionally reduced.

Anti-takeover

provisions may impede the acquisition of the Company.

provisions of the DGCL have anti-takeover effects and may inhibit a non-negotiated merger or other business combination, notwithstanding

the fact that our certificate of incorporation provides that we are not subject to Section 203 of the DGCL, which relates to certain

restrictions on business combinations with interested stockholders.

These provisions are intended to encourage any person interested

in acquiring the Company to negotiate with, and to obtain the approval of, our directors, in connection with such a transaction.

result, certain of these provisions may discourage a future acquisition of the Company, including an acquisition in which the stockholders

might otherwise receive a premium for their shares.

In addition, we can also authorize “ blank check ” preferred stock,

which could be issued by our Board of Directors without stockholder approval and may contain voting, liquidation, dividend and other

rights superior to our common stock.

Reporting and Listing Risks

incur significant costs to ensure compliance with U.S.

and NASDAQ Capital Market reporting and corporate governance requirements.

incur significant costs associated with our public company reporting requirements and with applicable U.S.

and NASDAQ Capital Market

corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the SEC

and The NASDAQ Capital Market.

The rules of The NASDAQ Capital Market include requiring us to maintain independent directors, comply

with other corporate governance requirements and pay annual listing and stock issuance fees.

All of such SEC and NASDAQ obligations require

a commitment of additional resources including, but not limited to, additional expenses, and may result in the diversion of our senior

management’s time and attention from our day-to-day operations.

We expect all of these applicable rules and regulations to significantly

increase our legal and financial compliance costs and to make some activities more time-consuming and costly.

We also expect that these

applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance

and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar

As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors

or as executive officers.

may not be able to comply with NASDAQ’s continued listing standards.

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

Notwithstanding

such listing, there can be no assurance any broker will be interested in trading our stock.

Therefore, it may be difficult to sell your

shares of common stock if you desire or need to sell them.

Our former underwriters are not obligated to make a market in our securities,

and even if they do make a market, they can discontinue market-making at any time without notice.

We cannot provide any assurance that

an active and liquid trading market in our securities will develop or, if developed, that such a market will continue.

is also no guarantee that we will be able to maintain our listing on The NASDAQ Capital Market for any period of time by perpetually

satisfying NASDAQ’s continued listing requirements.

Our failure to continue to meet these requirements may result in our securities

being delisted from NASDAQ.

At times, including during our 2023 fiscal year we have received deficiency notices from Nasdaq regarding

our inability, at times, to comply with various of the on-going listing rules of NASDAQ’S (including stockholders’ equity

requirements, publicly held share requirements, and timely filing requirements).

In the past we have taken steps to attempt to regain

compliance with these listing rules, however, in the future we may be unable to remain in compliance with NASDAQ’s continued listing

requirements or remedy any deficiencies.

If our common stock were to be delisted from NASDAQ it would likely reduce the liquidity of

our common stock, and, among other things, may decrease the attractiveness of our common stock to the investment community, and make

it more difficult for us to issue equity securities for capital raising purposes or for acquisitions.

are currently prohibited from filing any new registration statements on Form S-3 and effective upon the date that our Annual Report on

Form 10-K for the year ended December 31, 2022 is filed with the Commission, we will be prohibited from using our Shelf Form S-3 until

at least December 2024.

to our failure to timely file a Quarterly Report on Form 10-Q, we are currently prohibited from using Form S-3 to register securities

with the Commission.

Separately, our ability to use our previously effective shelf Form S-3, is suspended until at least December 2024.

As a result, we will be required to use Form S-1, a longer-form registration statement for future offerings, and are prohibited, until

at least December 2024, from undertaking at-the-market offerings.

Furthermore, in the event that the Pre-Funded Warrants have not been

exercised in full by such date, the shares of common stock issuable upon exercise of the Pre-Funded Warrants will need to be registered

on Form S-1 in order to continue to be registered under the Securities Act.

changes that affect our distribution channels could harm our business.

the federal level, track and trace legislation requiring the use of pharmaceutical pedigree may restrict and disrupt the movement of

pharmaceuticals along the supply chain should the cost of complying with this legislation be too burdensome for smaller suppliers.

in the United States healthcare industry and regulatory environment could have a material adverse impact on our results of operations.

of our products and services are intended to function within the structure of the healthcare financing and reimbursement system currently

being used in the United States.

In recent years, the healthcare industry in the United States has changed significantly in an effort

to enhance efficiencies, reduce costs and improve patient outcomes.

These changes have included cuts in Medicare and Medicaid reimbursement

levels, changes in the basis for payments, shifting away from fee-for-service and towards value-based payments and risk-sharing models,

increases in the use of managed care, and consolidation in the healthcare industry generally.

We expect that the healthcare industry

in the United States shall continue to change and evolve in the near future.

Changes in the healthcare industry’s (or our pharmaceutical

suppliers’) pricing, selling, inventory, distribution or supply policies or practices could significantly reduce our revenues and

Additionally, if we experience disruptions in our supply of generic drugs, our margins could be adversely affected.

distribute generic pharmaceuticals, which can be subject to both price deflation and price inflation.

Continued volatility in the availability,

pricing trends or reimbursement of these generic drugs, or significant fluctuations in the nature, frequency and magnitude of generic

pharmaceutical launches, could have a material adverse impact on our results of operations.

Additionally, any future changes in branded

and generic drug pricing could be significantly different than our projections.

Generic drug manufacturers are increasingly challenging

the validity or enforceability of patents on branded pharmaceutical products.

During the pendency of these legal challenges, a generic

drugs manufacturer may begin manufacturing and selling a generic version of the branded product prior to the final resolution of its

legal challenge over the branded product’s patent.

To the extent we source, contract manufacture, and distribute such generic products,

the brand-name company could assert infringement claims against us.

While we generally obtain indemnification against such claims from

generic manufacturers as a condition of distributing their products, these rights may not be adequate or sufficient to protect us.

are also required to comply with various state pricing gouging laws.

healthcare industry is highly regulated, and further regulation of our distribution businesses and technology products and services could

impose increased costs, negatively impact our profit margins and the profit margins of our customers, delay the introduction or implementation

of our new products, or otherwise negatively impact our business and expose us to litigation and regulatory investigations.

fraud laws are often vague and uncertain, exposing us to potential liability.

are subject to extensive, and frequently changing, local, state and federal laws and regulations relating to healthcare fraud, waste

Local, state and federal governments continue to strengthen their position and scrutiny over practices involving fraud, waste

and abuse affecting Medicare, Medicaid and other government healthcare programs.

The Company also holds a $4,000,000 key-man life insurance policy on

the life of Mr.

Ajjarapu, and a $1,500,000 lump sum disability insurance policy on Mr.

Ajjarapu, providing for the Company as beneficiary

of such policies.

The Company does not hold key-man life insurance policies for any other employees.

our efforts to retain valuable employees, members of our team may terminate employment on short notice.

The competition for qualified

personnel in the biotechnology and biopharmaceutical industries is intense, and our future success depends upon our ability to attract,

retain, and motivate highly skilled scientific, technical and managerial employees.

We face competition for personnel from other companies,

universities, public and private research institutions, and other organizations.

If our recruitment and retention efforts are unsuccessful

in the future, it may be difficult for us to implement our business strategy, which would have a material adverse effect on our business.

addition, our clinical operations and research and development programs depend on our ability to attract and retain highly skilled scientists,

data scientists, and engineers, particularly in New York, New Jersey, Massachusetts and Pennsylvania.

There is powerful competition for

skilled personnel in these geographical markets, and we may experience, difficulty in hiring and retaining employees with appropriate

qualifications on acceptable terms, or at all.

Many of the companies with which we compete for experienced personnel have greater resources

If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees

have breached legal obligations, resulting in a diversion of our time and resources and, potentially, damages.

In addition, job candidates

and existing employees often consider the value of the stock awards they receive in connection with their employment.

If the perceived

benefits of stock awards decline, it may harm our ability to recruit and retain highly skilled employees.

If we fail to attract new personnel

or fail to retain and motivate our current personnel, our business and future growth prospects would be harmed.

may seek to collaborate with third parties and may not be able to implement these collaborations on commercially acceptable terms, if

The success of certain of our product candidates may depend in significant part on the success of such collaborations.

plan to opportunistically pursue strategic partnerships if we believe that these partnerships can accelerate the development or maximize

the market potential of our product candidates.

Likely collaborators may include large and mid-size pharmaceutical companies, regional

and national pharmaceutical companies and biotechnology companies.

In addition, if we are able to obtain regulatory approval for product

candidates from foreign regulatory authorities, we may enter into partnerships or collaborations with international biotechnology or

pharmaceutical companies for the commercialization of such product candidates.

face significant competition in seeking appropriate collaborators.

Whether we reach a definitive agreement for a partnership or collaboration

will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of

the proposed partnerships or collaboration and the proposed collaborator’s evaluation of a number of factors.

Those factors may

include the potential differentiation of our product candidates from competing product candidates, design or results of clinical trials,

the likelihood of approval by the FDA or other comparable regulatory authorities and the regulatory pathway for any such approval, the

potential market for the product candidate, the costs and complexities of manufacturing and delivering the product to patients and the

potential of competing products.

The collaborator may also consider alternative product candidates or technologies for similar indications

that may be available for partnership or collaboration and whether such a partnership or collaboration could be more attractive than

the one with the Company for our product candidate.

If we elect to increase expenditures to fund development or commercialization activities

on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all.

If we do not have

sufficient funds, we may not be able to further develop product candidates or bring them to market and generate product revenue.

and collaborations are each complex and time-consuming to negotiate and document.

Further, business combinations among large pharmaceutical

companies could result in a reduced number of potential future collaborators.

Any partnership or collaboration agreement that we enter

into in the future may contain restrictions on our ability to enter into potential partnerships or collaborations or to otherwise develop

specified product candidates.

We may not be able to negotiate partnerships or collaborations on a timely basis, on acceptable terms,

If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate,

reduce or delay development programs, delay potential commercialization or reduce the scope of any sales or marketing activities, or

increase expenditures and undertake development or commercialization activities at our own expense.

may have limited control over the amount and timing of resources that our collaborators will dedicate to the development or commercialization

of our product candidates.

Our ability to generate revenues from these arrangements will depend on any future collaborators’ abilities

to successfully perform the functions assigned to them in these arrangements.

In addition, any future collaborators may have the right

to abandon research or development projects and terminate applicable agreements, including funding obligations, prior to or upon the

expiration of the agreed upon terms.

Collaborations

involving our product candidates pose a number of risks, including the following:

collaborators

have significant discretion in determining the efforts and resources that they will apply to these collaborations;

collaborators

may not perform their obligations as expected;

collaborators

may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization

programs, based on clinical trial results, changes in the collaborators’ strategic focus or available funding or external factors,

such as an acquisition, which divert resources or create competing priorities;

collaborators

may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product

candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

collaborators

could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates;

collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing

and distribution of such product or products;

disagreements

with collaborators, including disagreements over proprietary rights, including trade secrets and intellectual property rights, contract

interpretation, or the preferred course of development might cause delays or termination of the research, development or commercialization

of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation

or arbitration, any of which would be time-consuming and expensive;

collaborators

may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite

litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;

collaborators

may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;

collaborations

may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization

of the applicable product candidates.

Collaboration

agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all.

If any future

collaborator is involved in a business combination, we could decide to delay, diminish or terminate the development or commercialization

of any licensed product candidate.

have relied upon and plan to continue to rely on third parties, such as Contract Research Organizations (“CROs”), clinical

data management organizations, medical institutions and clinical investigators, to conduct our clinical trials and expect to rely on

these third parties to conduct clinical trials of any other product candidate that we develop.

Our ability to complete clinical trials

in a timely fashion depends on a number of key factors.

These factors include protocol design, regulatory and Institutional Review Board

approval, patient enrollment rates and compliance with GCPs.

Generally, we rely on our third-party partners to accurately report their

Our reliance on third parties for clinical development activities may impact or limit our control over the timing, conduct,

expense and quality of our clinical trials.

Moreover, the FDA requires that we to comply with GCPs for conducting, recording and reporting

the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and

confidentiality of trial participants are protected.

The FDA enforces these GCPs through periodic inspections of clinical trial sponsors,

principal investigators, clinical trial sites and Institutional Review Boards.

For certain commercial prescription drug products, manufacturers

and other parties involved in the supply chain must also meet chain of distribution requirements and build electronic, interoperable

systems for product tracking and tracing and for notifying the FDA of counterfeit, diverted, stolen and intentionally adulterated products

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

remain responsible for ensuring that each of our trials is conducted in accordance with the applicable protocol, legal and regulatory

requirements and scientific standards.

Our failure or the failure of third parties to comply with the applicable protocol, legal and

regulatory requirements and scientific standards can result in rejection of our clinical trial data or other sanctions.

third-party clinical trial providers or third-party CROs do not successfully carry out these clinical activities, our clinical trials

or the potential regulatory approval of a product candidate may be delayed or be unsuccessful.

Additionally, if we or our third-party

contractors fail to comply with applicable GCPs for any reason, the clinical data generated in our clinical trials may be deemed unreliable

and the FDA may require us to perform additional clinical trials before approving our product candidates, which would delay the regulatory

approval process.

We cannot be certain that, upon inspection, the FDA will determine that any of our clinical trials comply with GCPs.

We are also required to register certain clinical trials and post the results of completed clinical trials on a government-sponsored

database, ClinicalTrials.gov, within certain timeframes.

Failure to do so can result in fines, adverse publicity and civil and criminal

the third parties conducting clinical trials on our behalf are not our employees, and except for remedies available to us under our agreements

with such contractors, we cannot control whether or not they devote sufficient time, skill and resources to our ongoing development programs.

These contractors may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting

clinical trials or other drug development activities, which could impede their ability to devote appropriate time to our clinical programs.

If these third parties, including clinical investigators, do not successfully carry out their contractual duties, meet expected deadlines

or conduct its clinical trials in accordance with regulatory requirements or its stated protocols, we may not be able to obtain, or may

be delayed in obtaining, regulatory approvals for our product candidates.

If that occurs, we will not be able to, or may be delayed in

our efforts to, successfully commercialize our product candidates.

In such an event, our financial results and the commercial prospects

for any product candidates that we seek to develop could be harmed, our costs could increase and our ability to generate revenues could

be delayed, impaired or foreclosed.

also rely on other third parties to store and distribute drug supplies for our clinical trials.

Any performance failure on the part of

our distributors could delay clinical development or regulatory approval of our product candidates or commercialization of any resulting

products, producing additional losses and depriving us of potential product revenue.

addition, we rely on wholesalers and attempt to structure our agreements with such wholesalers to ensure that we are appropriately and

predictably compensated for the services we provide.

We cannot control the frequency or magnitude of pharmaceutical price changes.

might be unable to renew agreements with wholesalers in a timely and favorable manner.

These risks might have a materially adverse impact

on our business operations and our financial positions or results of operations.

of the third-party organizations we utilize may terminate our engagements with us under certain circumstances.

The replacement of an

existing CRO or other third party may result in the delay of the affected trials or otherwise adversely affect our efforts to obtain

regulatory approvals and commercialize our product candidates.

We may not be able to enter into alternative arrangements or do so on

commercially reasonable terms.

In addition, even if there are suitable replacements for one or more of these service providers, there

is a natural transition period when a new service provider begins work.

As a result, delays may occur, which could negatively impact

our ability to meet our expected clinical development timelines and harm our business, financial condition and prospects.

third-party manufacturing partners may be unable to increase the scale of production or product yield of our product candidates, resulting

in increased manufacturing costs and delays in commercialization of our products.

Furthermore, changes in methods of manufacturing our

product candidates could result in additional costs or delays.

order to produce sufficient quantities to meet the demand for clinical trials and, if approved, subsequent commercialization of our product

candidates, our third-party manufacturers will be required to increase production and optimize manufacturing processes while maintaining

the quality of our product candidates.

The transition to larger scale production could prove difficult.

In addition, if our third-party

manufacturers are not able to optimize their manufacturing processes to increase the product yield for our product candidates, or if

such third party manufacturers are unable to produce increased amounts of our product candidates while maintaining the same quality,

then we may not be able to meet the demands of clinical trials or market demands.

This could decrease our ability to generate profits

and have a material adverse impact on our business and results of operations.

growth depends in part on the success of our strategic relationships with third parties.

Some of these third parties may be located outside

of the United States.

order to grow our business, we anticipate that we will need to continue to depend on our relationships with third parties, including

our technology providers.

Identifying partners, and negotiating and documenting relationships with them, requires significant time and

Our competitors may be effective in providing incentives to third parties to favor their products or services, or utilization

of, our products and services.

In addition, acquisitions of our partners by our competitors could result in a decrease in the number

of our current and potential customers.

If we are unsuccessful in establishing or maintaining our relationships with third parties, our

ability to compete in the marketplace or to grow our revenue could be impaired and our results of operations may suffer.

Even if we are

successful, we cannot assure you that these relationships will result in increased customer use of our products or increased revenue.

do not own or operate manufacturing facilities for the production of clinical or commercial quantities of our product candidates, and

we lack the resources and the capabilities to do so.

Our current strategy is to outsource all manufacturing of its product candidates

to third parties, including in jurisdictions outside of the United States such as China.

As such, we currently rely on third-party manufacturers

to provide all of the API and the final drug product formulation of all of our product candidates that are being used in our clinical

trials and preclinical studies.

If we were to need an alternate manufacturer, we would incur added costs and delays in identifying and

qualifying any such replacement.

In addition, we typically order raw materials, API and drug product and services on a purchase order

basis and do not enter into long-term dedicated capacity or minimum supply arrangements with any commercial manufacturer.

be able to timely secure needed supply arrangements on satisfactory terms, or at all.

Our failure to secure these arrangements as needed

could have a material adverse effect on our ability to complete the development of our product candidates or, to commercialize them,

We may be unable to conclude agreements for commercial supply with third-party manufacturers or may be unable to do so on

acceptable terms.

There may be difficulties in scaling up to commercial quantities and formulation of our product candidates, and the

costs of manufacturing could be prohibitive.

of the third-party manufacturers we rely on have only recently begun working with us and have limited or no experience manufacturing

our API and final drug products.

If our manufacturers have difficulty or suffer delays in successfully manufacturing material that meets

our specifications, it may limit supply of our product candidates and could delay our clinical trials.

if we are able to establish and maintain arrangements with third-party manufacturers, reliance on third-party manufacturers entails additional

risks, including:

failure of the third-party manufacturer to comply with applicable regulatory requirements and reliance on third parties for manufacturing

process development, regulatory compliance and quality assurance;

manufacturing

delays if our third-party manufacturers give greater priority to the supply of other products over our product candidates or otherwise

do not satisfactorily perform according to the terms of the agreement between parties;

on supply availability resulting from capacity and scheduling constraints of third parties;

failure of the third-party manufacturer to produce materials with acceptable quality on a larger scale;

possible breach of manufacturing agreements by third parties because of factors beyond our control;

possible termination or non-renewal of the manufacturing agreements by the third party, at a time that is costly or inconvenient

possible misappropriation of our proprietary information, including our trade secrets and know-how.

we do not maintain its key manufacturing relationships, we may fail to find replacement manufacturers or develop our own manufacturing

capabilities, which could delay or impair our ability to obtain regulatory approval for our product candidates.

If we do find replacement

manufacturers, we may not be able to enter into agreements with them on terms and conditions favorable to us and there could be a substantial

delay before new facilities could be qualified and registered with the FDA and other comparable regulatory authorities.

Additionally,

if any third-party manufacturer with whom we contract fail to perform its obligations, we may be forced to manufacture the materials

ourself, for which we may not have the capabilities or resources, or enter into an agreement with a different manufacturer.

scenario, our clinical trials supply could be delayed significantly as we establish alternative supply sources.

In some cases, the technical

skills required to manufacture our product candidates may be unique or proprietary to the original manufacturer and we may have difficulty,

or there may be contractual restrictions prohibiting us from, transferring such skills to a back-up or alternate supplier, or we may

be unable to transfer such skills at all.

In addition, if we are required to change third-party manufacturers for any reason, we will

be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable

We will also need to verify, such as through a manufacturing comparability study, that any new manufacturing process will

produce its product candidate according to the specifications previously submitted to the FDA or other comparable regulatory authorities.

We may be unsuccessful in demonstrating the comparability of clinical supplies, which could require the conduct of additional clinical

The delays associated with the verification of a new third-party manufacturer could negatively affect our ability to develop

product candidates or commercialize our products in a timely manner or within budget.

Furthermore, a third-party manufacturer may possess

technology related to the manufacture of our product candidates that such third party owns independently.

This would increase our reliance

on such third-party manufacturer or require us to obtain a license from such third-party manufacturer in order to have another third

party manufacture our product candidates.

any of our product candidates are approved by any regulatory agency, we intend to utilize arrangements with third-party contract manufacturers

for the commercial production of those products.

This process is difficult and time consuming and we may face competition for access

to manufacturing facilities as there are a limited number of contract manufacturers operating under cGMPs that are capable of manufacturing

our product candidates.

Consequently, we may not be able to reach agreement with third-party manufacturers on satisfactory terms, which

could delay commercialization.

of our manufacturers are located outside of the United States, including in China.

There is currently significant uncertainty about the

future relationship between the United States and various other countries, including China, with respect to trade policies, treaties,

government regulations and tariffs.

Increased tariffs or pending legislation that would impose federal contracting or federal funding

limitations on parties directly using or connected to those using the services or equipment of certain foreign entities with known or

alleged associations with foreign adversaries could potentially disrupt our existing supply chains and impose additional costs on our

In particular, certain Chinese biotechnology companies and commercial manufacturing organizations may become subject to trade

restrictions, sanctions, and other regulatory requirements by the U.S.

government, which could restrict or even prohibit our ability

to work with such entities, thereby potentially disrupting our supplies and manufacturing.

Additionally, it is possible further tariffs

may be imposed that could affect imports of any Active Pharmaceutical Ingredients (“APIs”) used in our product candidates

in the future, or our business may be adversely impacted by retaliatory trade measures taken by China or other countries, including restricted

access to such raw materials used in its product candidates.

Given the unpredictable regulatory environment in China and the United States

and uncertainty regarding how the U.S.

or foreign governments will act with respect to tariffs, international trade agreements and policies,

further governmental action related to tariffs, additional taxes, contracting matters, regulatory changes or other retaliatory trade

measures in the future could occur with a corresponding detrimental impact on our business and financial condition.

failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed

on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, seizures or voluntary

recalls of product candidates, operating restrictions and criminal prosecutions, any of which could significantly affect supplies of

our product candidates.

The facilities used by our contract manufacturers to manufacture our product candidates must be evaluated by

We do not control the manufacturing process of, and is completely dependent on, its contract manufacturing partners for compliance

If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict

regulatory requirements of the FDA or other comparable regulatory authorities, we may not be able to secure and/or maintain regulatory

approval for our product candidates manufactured at these facilities.

In addition, we have no control over the ability of our contract

manufacturers to maintain adequate quality control, quality assurance and qualified personnel.

If the FDA finds deficiencies or a comparable

foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such

approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop,

obtain regulatory approval for or market our approved product candidates.

Contract manufacturers may face manufacturing or quality control

problems causing drug substance production and shipment delays or a situation where the contractor may not be able to maintain compliance

with the applicable cGMP requirements.

Any failure to comply with cGMP requirements or other FDA and comparable foreign regulatory requirements

could adversely affect our clinical research activities and our ability to our its product candidates and market our products, if approved.

FDA or other comparable regulatory authorities require manufacturers to register manufacturing facilities, and also inspect these facilities

to confirm compliance with cGMPs.

manufacturers may face manufacturing or quality control problems causing drug substance production and shipment delays or a situation

where the contractor may not be able to maintain compliance with the applicable cGMP requirements.

Any failure to comply with cGMP requirements

or other FDA and other comparable regulatory requirements could adversely affect our clinical research activities and our ability to

develop our product candidates and market our products following approval, if obtained.

should we decide to use any APIs in any of our product candidates that are proprietary to one or more third parties, we would need to

maintain licenses to those APIs from those third parties.

If we are unable to gain or continue to access rights to such APIs prior to

conducting preclinical toxicology studies intended to support clinical trials, we may need to develop alternate product candidates from

these programs by either accessing or developing alternate APIs, resulting in increased development costs and delays in commercialization

of these product candidates.

If we are unable to gain or maintain continued access rights to the desired APIs on commercially reasonable

terms or develop suitable alternate APIs, we may not be able to commercialize product candidates from these programs.

in methods of product candidate manufacturing or formulation may result in additional costs or delay.

product candidates proceed through preclinical studies to late-stage clinical trials towards potential approval and commercialization,

it is common that various aspects of the development program, such as the vendors used to manufacture drug product or manufacturing methods

and formulation, are altered along the way in an effort to optimize processes and results.

Such changes carry the risk that they will

not achieve these intended objectives.

Any of these changes could cause our product candidates to perform differently and affect the

results of planned clinical trials or other future clinical trials conducted with the materials manufactured using altered processes.

Such changes may also require additional testing, FDA notification or FDA approval.

This could delay or prevent completion of clinical

trials, require conducting bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs,

delay or prevent approval of our product candidates and jeopardize our ability to commence sales and generate revenue.

may be subject to lawsuits.

time to time, we may be subject to legal proceedings and claims in the ordinary course of business.

Such claims, even if lacking merit,

could result in the expenditure of significant financial and managerial resources.

August 2022 and April 2023, Scienture LLC entered into exclusive license and commercial agreements with Kesin Pharma Corporation (“Kesin”),

a related party, pursuant to which Scienture LLC granted the exclusive license rights to commercialize two of its potential products,

SCN-102 and SCN-104, to Kesin for use in the United States.

In March 2024, Scienture LLC and Kesin agreement to terminate those agreements

and agreed that Scienture LLC would pay Kesin a total gross amount of $1.3 million upon commercialization of either SCN-102 or SCN-104

via a royalty arrangement.

This agreement also requires that if the full $1.3 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.

In August 2024, Kesin demanded immediate payment of the full amount under this agreement, alleging

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

We have disputed that

the amount is now payable, and we have been in discussions to resolve the issue.

However, on 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.

We intend to vigorously defend ourself in this matter.

can be no assurance that an amicable resolution will be obtained and the litigation arising from this matter could be costly and may

divert management’s attention from the day-to-day operations of our business.

We would have to obtain financing to fund any amounts

payable under this agreement.

successful development of Scienture LLC’s pharmaceutical products involves a lengthy and expensive process and is highly uncertain.

development of Scienture LLC’s pharmaceutical products involves a lengthy and expensive process, is highly uncertain, and is dependent

on numerous factors, many of which are beyond our control.

Product candidates that appear promising in the early phases of development

may fail to reach the market for several reasons, including:

trial results may show the product candidates to be less effective than expected;

to receive the necessary regulatory approvals or a delay in receiving such approvals, which, among other things, may be caused by

patients who fail the trial screening process, slow enrollment in clinical trials, patients dropping out of trials, patients lost

to follow-up, length of time to achieve trial endpoints, additional time requirements for data analysis or New Drug Application (“NDA”)

or similar foreign application preparation, discussions with the FDA or other comparable regulatory authority, FDA or other comparable

regulatory request for additional preclinical or clinical data (such as long-term toxicology studies) or unexpected safety or manufacturing

study results may show the product candidate to be less effective than desired or to have harmful side effects;

to receive the necessary post-marketing approval requirements;

proprietary rights of others and their competing products and technologies may prevent our product candidates from being commercialized.

the length of time necessary to complete clinical trials and submit an application for marketing approval for a final decision by a regulatory

authority varies significantly from one product candidate to the next and from one country or jurisdiction to the next and may be difficult

if a product is approved, the FDA may limit the indications for which the product may be marketed, require extensive warnings on the

product labeling or require expensive and time-consuming clinical trials and/or reporting as conditions of approval.

Regulators of other

countries and jurisdictions have their own procedures for the approval of product candidates with which we must comply prior to marketing

in those countries or jurisdictions.

if we are successful in obtaining marketing approval, commercial success of any approved products will also depend in large part on the

availability of coverage and adequate reimbursement from third-party payors, including government payors such as the Medicare and Medicaid

programs and managed care organizations in the United States or country-specific governmental organizations in foreign countries, which

may be affected by existing and future healthcare reform measures designed to reduce the cost of healthcare.

Third-party payors could

require us to conduct additional studies, including post-marketing studies related to the cost effectiveness of a product, to qualify

for reimbursement, which could be costly and divert our resources.

If government and other healthcare payors were not to provide coverage

and adequate reimbursement for our products once approved, market acceptance and commercial success would be reduced.

Even if we are

able to obtain coverage and adequate reimbursement for approved products, there may be features or characteristics of our products, such

as dose preparation requirements, that prevent our products from achieving market acceptance by the healthcare or patient communities.

addition, if any of our product candidates receive marketing approval, we will be subject to significant regulatory obligations regarding

the submission of safety and other post-marketing information and reports and registration, and will need to continue to comply (or ensure

that our third-party providers comply) with current Good Manufacturing Practices (“cGMPs”) and Good Clinical Practices (“GCPs”)

for any clinical trials that we conduct post-approval.

In addition, there is always the risk that we, a regulatory authority or a third

party might identify previously unknown problems with a product post-approval, such as adverse events of unanticipated severity or frequency.

Compliance with these requirements is costly, and any failure to comply or other issues with our product candidates post-approval could

adversely affect our business, financial condition and results of operations.

Related to Our Legal and Regulatory Requirements

are subject, directly or indirectly, to federal and state healthcare, fraud, abuse false claims, and other laws and regulations as well

as health data privacy and security laws and regulations, contractual obligations and self-regulatory schemes.

If we are unable to comply,

or have not fully complied, with such laws, we could face investigations and substantial penalties.

Furthermore, it may be difficult

and costly for us to comply with the extensive government regulations to which our business is subject.

operations are subject to extensive regulation by the U.S.

federal and state governments.

Healthcare providers and third-party payors

in the United States and elsewhere play a primary role in the recommendation and prescription of any product candidates for which we

obtain marketing approval.

Our operations and our current and future arrangements with healthcare professionals, principal investigators,

consultants, customers and third-party payors may subject us to various federal and state fraud and abuse laws and other healthcare laws,

including, without limitation, the federal Anti-Kickback Statute, the federal civil and criminal false claims laws and the law commonly

referred to as the Physician Payments Sunshine Act and regulations.

These laws will impact, among other things, our clinical research,

as well as our proposed sales and marketing programs.

may be subject to health information privacy and security laws by the federal government, the states and other jurisdictions in which

we may conduct our business.

In particular, we may be subject to regulations promulgated pursuant to the Health Insurance Portability

and Accountability Act of 1996 (“HIPAA”), which establishes privacy and security standards that limit the use and disclosure

of individually identifiable health information, known as “protected health information,” and requires the implementation

of administrative, physical and technological safeguards to protect the privacy of protected health information and ensure the confidentiality,

integrity and availability of electronic protected health information.

We are directly subject to certain provisions of the regulations

as a “Business Associate” through our relationships with customers.

We are also directly subject to the HIPAA privacy and

security regulations as a “Covered Entity” with respect to our operations as a healthcare clearinghouse, specialty pharmacy

and medical surgical supply business.

If we are unable to properly protect the privacy and security of protected health information entrusted

to us, we could be found to have breached our contracts with our customers.

Further, if we fail to comply with applicable HIPAA privacy

and security standards, we could face civil and criminal penalties.

Although we have implemented and continue to maintain policies and

processes to assist us in complying with these regulations and our contractual obligations, we cannot provide assurances regarding how

these regulations will be interpreted, enforced or applied by the government and regulators to our operations.

In addition to the risks

associated with enforcement activities and potential contractual liabilities, our ongoing efforts to comply with evolving laws and regulations

at the federal and state level might also require us to make costly system purchases /or modifications from time to time.

For more information,

see “ Scienture’s Business–Government Regulation–Other Healthcare Laws.

also may be subject to extensive, and frequently changing, local, state and federal laws and regulations relating to healthcare fraud,

waste and abuse.

Local, state and federal governments continue to strengthen their position and scrutiny over practices involving fraud,

waste and abuse affecting Medicare, Medicaid and other government healthcare programs.

Many of the regulations applicable to us, including

4 unchanged sentences

including the loss of licenses or our ability to participate in Medicare, Medicaid and other federal and state healthcare programs.

reducing reimbursements for pharmaceuticals could negatively affect our industry.

our profit margins and the profit margins of our customers may be adversely affected by laws and regulations reducing reimbursement rates

for pharmaceuticals, medical treatments and related services, or changing the methodology by which reimbursement levels are determined.

The federal government may adopt measures that could reduce Medicare or Medicaid spending, or impose additional requirements on healthcare

We cannot predict what alternative or additional deficit reduction initiatives or Medicare payment reductions, if any, will

ultimately be enacted into law, or the timing or effect any such initiatives or reductions would have on us.

Any of the changes discussed

above may have a material adverse impact on our results of operations, cash flows, prospects and/or the value of our securities.

security and licensure standards of federal agencies challenge our ability to comply with applicable laws and regulations.

are subject to the operating and security standards of the Drug Enforcement Administration (the DEA), the U.S.

Food and Drug Administration

(the FDA), various state boards of pharmacy, state health departments, the U.S.

Department of Health and Human Services (HHS), the Centers

for Medicare & Medicaid Services (CMS), and other comparable agencies.

We are also subject to certain state laws relating to price

Although we have enhanced our procedures to ensure compliance, a regulatory agency or tribunal may conclude that our operations

are not compliant with applicable laws and regulations.

In addition, we may be unable to maintain or renew existing permits, licenses

or any other regulatory approvals or obtain without significant delay, future permits, licenses or other approvals needed for the operation

of our businesses.

Any noncompliance by us with applicable laws and regulations or the failure to maintain, renew or obtain necessary

permits and licenses could lead to litigation and have a material adverse impact on our results of operations.

tracking laws and regulations could increase our regulatory burdens.

and state and federal agencies, including state boards of pharmacy and departments of health and the FDA, have made increased efforts

in the past year to regulate the pharmaceutical distribution system in order to prevent the introduction of counterfeit, adulterated

or mislabeled drugs into the pharmaceutical distribution system (otherwise known as “ pedigree tracking ”).

2013, Congress passed (and President Barack Obama signed into law) the Drug Quality and Security Act (the “ DQSA ”).

The DQSA establishes federal standards requiring supply-chain stakeholders to participate in an electronic, interoperable, lot-level

prescription drug track-and-trace system.

The law also preempts state drug pedigree requirements and establishes new requirements for

drug wholesale distributors and third-party logistics providers, including licensing requirements in states that had not previously licensed

such entities.

addition, the Food and Drug Administration Amendments Act of 2007 requires the FDA to establish standards and identify and validate effective

technologies for the purpose of securing the pharmaceutical supply chain against counterfeit drugs.

These standards may include track-and-trace

or authentication technologies, such as radio frequency identification devices, 2D data matrix barcodes, and other similar technologies.

On March 26, 2010, the FDA released the Serialized Numerical Identifier (the “ SNI ”) guidance for manufacturers who

serialize pharmaceutical packaging.

To date we have been able to accommodate these SNI regulations in our distribution operations.

DQSA and other pedigree tracking laws and regulations have increased the overall regulatory burden and costs associated with our pharmaceutical

distribution business and have had a material adverse impact on our results of operations.

are uncertain how new privacy laws shall be interpreted.

are numerous federal and state laws and regulations related to the privacy and security of personal information.

In particular, regulations

promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 (HIPAA) establish privacy and security standards

that limit the use and disclosure of individually identifiable health information (known as “ protected health information ”)

and require the implementation of administrative, physical and technological safeguards to protect the privacy of protected health information

and ensure the confidentiality, integrity and availability of electronic protected health information.

We are directly subject to certain

provisions of the regulations as a “ Business Associate ” through our relationships with customers.

We are also directly

subject to the HIPAA privacy and security regulations as a “ Covered Entity ” with respect to our operations as a healthcare

clearinghouse, specialty pharmacy and medical surgical supply business.

If we are unable to properly protect the privacy and security

of protected health information entrusted to us, we could be found to have breached our contracts with our customers.

Further, if we

fail to comply with applicable HIPAA privacy and security standards, we could face civil and criminal penalties.

Although we have implemented

and continue to maintain policies and processes to assist us in complying with these regulations and our contractual obligations, we

cannot provide assurances regarding how these regulations will be interpreted, enforced or applied by the government and regulators to

our operations.

In addition to the risks associated with enforcement activities and potential contractual liabilities, our ongoing efforts

to comply with evolving laws and regulations at the federal and state level might also require us to make costly system purchases /or

modifications from time to time.

might be adversely impacted by healthcare reform such as changes in pricing and reimbursement models.

of our products and services are designed and intended to function within the structure of current healthcare financing and reimbursement

The healthcare industry and related government programs are changing.

Some of these changes increase our risks and create uncertainties

for our business.

example, some changes in reimbursement methodologies (including government rates) for pharmaceuticals, medical treatments and related

service reduces profit margins for us and our customers and impose new legal requirements on healthcare providers.

Those changes have

included cuts in Medicare and Medicaid reimbursement levels, changes in the basis for payments, shifting away from fee-for-service and

toward value-based payment and risk-sharing models, and increases in the use of managed care.

the U.S., the Patient Protection and Affordable Care Act (“ACA”) significantly expanded health insurance coverage to uninsured

Americans and changed the way healthcare is financed by both governmental and private payers.

There are continued efforts to challenge

addition, we may be subject to the operating and security standards of the Drug Enforcement Administration, the FDA, various state boards

of pharmacy, state health departments, the HHS, the CMS, and other comparable agencies.

We are also subject to certain state laws relating

to price gouging.

Although we have enhanced our procedures to ensure compliance, a regulatory agency or tribunal may conclude that our

operations are not compliant with applicable laws and regulations.

In addition, we may be unable to maintain or renew existing permits,

licenses or any other regulatory approvals or obtain without significant delay, future permits, licenses or other approvals needed for

the operation of our businesses.

Any noncompliance by us with applicable laws and regulations or the failure to maintain, renew or obtain

necessary permits and licenses could lead to litigation and have a material adverse impact on our results of operations.

of the breadth of these laws and the limited statutory exceptions and regulatory safe harbors available, it is possible that some of

our business activities could be subject to challenge under one or more of such laws.

Efforts to ensure that our business arrangements

with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.

Any action against us

for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert

our management’s attention from the operation of our business.

The shifting compliance environment and the need to build and maintain

robust and expandable systems to comply with multiple jurisdictions with different compliance and/or reporting requirements increases

the possibility that a healthcare company may run afoul of one or more of the requirements.

our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be

subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation

in government funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become

subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws and the curtailment

or restructuring of our operations.

may be unable to obtain regulatory approval for our product candidates under applicable regulatory requirements.

The denial or delay

of any such approval would delay commercialization of our product candidates and adversely impact our business and results of operations.

We have not prepared or submitted an NDA or submitted similar filings to comparable foreign regulatory authorities

for product candidates other than SCN-102.

An NDA or other similar

regulatory filing requesting approval to market a product candidate must include extensive preclinical and clinical data and supporting

information to establish that the product candidate is safe, effective, pure and potent for each desired indication.

The NDA or other

similar regulatory filing must also include significant information regarding the chemistry, manufacturing and controls for the product .

research, testing, manufacturing, labeling, approval, sale, marketing and distribution of pharmaceutical products are subject to extensive

regulation by the FDA and other regulatory authorities in the United States and other countries, and such regulations differ from country

We are not permitted to market any product candidate in the United States or in any foreign countries until we receive the

requisite approval from the applicable regulatory authorities of such jurisdictions.

FDA or any foreign regulatory bodies can delay, limit or deny approval of a product candidate for many reasons, including:

inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory body that the product candidate is safe

and effective for the requested indication;

FDA’s or the applicable foreign regulatory agency’s disagreement with our trial protocol or the interpretation of data

from preclinical studies or clinical trials;

inability to demonstrate that the clinical and other benefits of a product candidate outweigh any safety or other perceived risks;

FDA’s or the applicable foreign regulatory agency’s requirement for additional preclinical studies or clinical trials;

FDA’s or the applicable foreign regulatory agency’s non-approval of the formulation, labeling or specifications of a

product candidate;

FDA’s or the applicable foreign regulatory agency’s failure to approve our manufacturing processes and facilities or

the facilities of third-party manufacturers upon which we rely;

potential for approval policies or regulations of the FDA or the applicable foreign regulatory agencies to significantly change in

a manner rendering our clinical data insufficient for approval.

the large number of pharmaceutical products in development, only a small percentage successfully complete the FDA or other regulatory

bodies’ approval processes and are commercialized.

if we eventually complete clinical testing and receive approval from the FDA or applicable foreign agencies for our product candidates,

the FDA or the applicable foreign regulatory agency may grant approval contingent on the performance of costly additional clinical trials

which may be required after approval.

The FDA or the applicable foreign regulatory agency also may approve a product candidate for a

more limited indication or a narrower patient population than we originally requested, and the FDA, or applicable foreign regulatory

agency, may not approve it with the labeling that we believe is necessary or desirable for the successful commercialization.

delay in obtaining, or inability to obtain, applicable regulatory approval would delay or prevent commercialization of our product candidates

and would materially adversely impact our business and prospects.

if we obtain regulatory approval for any of our product candidates, we will be subject to ongoing regulatory requirements, which may

result in significant additional expenses.

Additionally, our product candidates, if approved, could be subject to labeling and other

restrictions, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems

with our product candidates.

any of our product candidates are approved by the FDA or a comparable foreign regulatory authority, they will be subject to extensive

and ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping,

conduct of post-marketing studies, and submission of safety, efficacy, and other post-market information, including both federal and

state requirements in the United States and requirements of comparable foreign regulatory authorities.

These requirements include submissions

of safety and other post-marketing information and reports, establishment registration and listing, as well as continued compliance with

cGMPs and GMPs for any clinical trials that we conduct post-approval.

Any regulatory approvals that we receive for our product candidates

may also be subject to limitations on the approved indicated uses, including the duration of use, for which the product may be marketed

or to the conditions of approval, or contain requirements for potentially costly post-marketing studies, including Phase 4 clinical trials,

and surveillance to monitor the safety and efficacy of the product.

The FDA may also require a Risk Evaluation and Mitigation Strategy

in order to approve our product candidates, which could entail requirements for a medication guide, physician communication plans or

additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

Manufacturers

and manufacturers’ facilities are required to comply with extensive FDA and comparable foreign regulatory authority requirements,

including ensuring that quality control and manufacturing procedures conform to cGMP regulations and implementing tracking and tracing

requirements for certain prescription pharmaceutical products.

As such, we and our contract manufacturers will be subject to continual

review and inspections to assess compliance with cGMPs and adherence to commitments made in any approved marketing application.

we and others with whom we work must continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing,

production, and quality control.

will have to comply with requirements concerning advertising and promotion for our product candidates.

Promotional communications with

respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information

in the product’s approved label.

As such, we may not promote any of our products for indications or uses for which they do not

have approval.

However, companies may share truthful and not misleading information that is otherwise consistent with a product’s

FDA approved labeling.

We also must submit new or supplemental applications and obtain approval for certain changes to the product labeling

or manufacturing processes for our products, if approved.

we discover previously unknown problems with any of our product candidates, such as adverse events of unanticipated severity or frequency,

or problems with the facility where they manufactured, or if the FDA disagrees with the promotion, marketing or labeling of our products,

the FDA may impose restrictions on us, including requiring withdrawal from the market.

If we fail to comply with applicable regulatory

requirements, the FDA and other regulatory authorities may, among other things:

warning letters or other regulatory enforcement action;

injunctions, fines or civil or criminal penalties;

or withdraw regulatory approval;

any ongoing clinical studies;

to approve pending applications or supplements to approved applications;

revisions to the labeling, including limitations on approved uses or the addition of additional warnings, contraindications or other

safety information, including boxed warnings;

a Risk Evaluation and Mitigation Strategy, which may include distribution or use restrictions;

the conduct of an additional post-market clinical trial or trials to assess the safety of the product;

restrictions on our operations, including closing our contract manufacturers’ facilities where regulatory inspections identify

observations of noncompliance requiring remediation;

the marketing of the product, require a product recall, seizure or detention, or refuse to permit the import or export of the product.

government action or investigation of alleged violations of law could require us to expend significant time and resources in response,

and could generate negative publicity.

Any failure to comply with ongoing regulatory requirements may significantly and adversely affect

our ability to commercialize and generate revenue from our product candidates.

If regulatory sanctions are applied or if regulatory approval

is withdrawn, our operating results will be adversely affected.

the policies of the FDA and of other regulatory authorities may change and additional government regulations may be enacted that could

prevent, limit or delay regulatory approval of our product candidates.

We cannot predict the likelihood, nature or extent of government

regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad.

if we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not

able to maintain regulatory compliance, we may be subject to enforcement action and we may not achieve or sustain profitability.

intend to use certain regulatory pathways to seek regulatory approval of several of our product candidates.

If the FDA concludes that

our marketing applications no longer qualify for these regulatory pathways, then our applications may not be accepted by the FDA for

review and approval of our products may be delayed.

intend to seek FDA approval for certain product candidates through the Section 505(b)(2) regulatory pathway.

Section 505(b)(2) of the

Federal Food, Drug, and Cosmetic Act (the “FDCA”) was enacted as part of the Drug Price Competition and Patent Term Restoration

Act of 1984, (the “Hatch-Waxman Amendments”), and permits the submission of an NDA where at least some of the information

required for approval comes from preclinical studies or clinical trials not conducted by or for the applicant and for which the applicant

has not obtained a right of reference.

The FDA interprets Section 505(b)(2) of the FDCA to permit the applicant to rely upon the FDA’s

previous findings of safety and efficacy for an approved product.

The FDA requires submission of information needed to support any changes

to a previously approved drug, such as published data or new studies conducted by the applicant or clinical trials demonstrating safety

and efficacy.

The FDA could require additional information to sufficiently demonstrate safety and efficacy to support approval.

FDA later determines our applications for any of our product candidates do not meet the requirements of Section 505(b)(2), or that additional

information is needed to support a marketing application for such candidates we are planning to develop under the Section 505(b)(2) pathway,

we could experience delays in submitting a marketing application or in obtaining marketing approval.

Moreover, even if we obtain approval

for our product candidates under the Section 505(b)(2) regulatory pathway, the approval may be subject to limitations on the indicated

uses for which they may be marketed or to other conditions of approval, or may contain requirements for costly post-marketing testing

and surveillance to monitor the safety or efficacy of the products.

may seek priority review designation for our product candidates.

We might not receive such designation, and even if we do, such designation

may not lead to faster regulatory review or approval.

the FDA determines that a product candidate offers a treatment for a serious condition and, if approved, the product would provide a

significant improvement in safety or effectiveness, the FDA may designate the product candidate for priority review.

A priority review

designation means that the goal for the FDA to review an application is six months, rather than the standard review period of ten months.

We may request priority review for one or more of our product candidates.

The FDA has broad discretion with respect to whether or not

to grant priority review status, so even if we believe a product candidate for such designation or status, the FDA may decide not to

Moreover, a priority review designation does not necessarily result in an expedited regulatory review or approval process or

necessarily confer any advantage with respect to approval compared to conventional FDA procedures.

Receiving priority review from the

FDA does not guarantee approval within the six-month review cycle or at all.

may seek orphan drug designation from the FDA for our product candidates.

We may be unable to obtain such designation or, if obtained,

to maintain the benefits associated with orphan drug status, including the potential for non-patent market exclusivity.

may seek orphan drug designation for certain of our product candidates, but we may not be able to obtain such designation or maintain

the benefits associated with orphan drug designation (if obtained), including the potential for non-patent market exclusivity.

the Orphan Drug Act, the FDA may designate a drug or biologic as an orphan drug if it is a product intended to treat a rare disease or

condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United States, or a patient

population of 200,000 or more in the United States where there is no reasonable expectation that the cost of developing the product will

be recovered from sales in the United States.

In the United States, orphan drug designation entitles a party to financial incentives

such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers.

if a product with an orphan drug designation subsequently receives the first regulatory approval for the indication for which it has

such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA from approving another marketing

application for the same product and indication for that time period, except in limited circumstances.

Any competitor developing the

same product in the same indication with orphan drug designation may block our ability to obtain orphan drug exclusivity in the future

if the competitor receives marketing approval before we do.

The applicable exclusivity period is seven years in the United States.

if we obtain orphan drug exclusivity, that exclusivity may not effectively protect our product from competition because different products

can be approved for the same condition.

Even after an orphan drug is approved, the FDA can subsequently approve the same product for

the same condition if the FDA concludes that the later product is clinically superior in that it is shown to be safer, more effective

or makes a major contribution to patient care.

In addition, a 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 designation.

Moreover, 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 quantity of the product to meet the needs of patients with the rare disease or condition

or if another product with the same active moiety is determined to be safer, more effective, or represents a major contribution to patient

Orphan drug designation neither shortens the development time or regulatory review time of a product nor gives the product any

advantage in the regulatory review or approval process.

regulatory authorities approve generic versions of our products, or do not grant our products a sufficient period of market exclusivity

before approving a generic version, our ability to generate revenue may be adversely affected.

an NDA is approved, including under the 505(b)(2) pathway, the product covered thereby becomes a “reference listed drug”

in the FDA’s publication, “Approved Drug Products with Therapeutic Equivalence Evaluations,” commonly known as the

Manufacturers may seek approval of generic versions of reference listed drugs through submission of Abbreviated New Drug

Applications and may obtain therapeutical equivalence evaluations for 505(b)(2) pathway drugs under the Food and Drug Omnibus Reform

Act’s expanded authorities, in the United States.

In support of an Abbreviated New Drug Application, a generic manufacturer need

not conduct clinical trials to assess safety and efficacy.

Rather, the applicant generally must show that its product has the same active

ingredient(s), dosage form, strength, route of administration and conditions of use or labelling as the reference listed drug and that

the generic version is bioequivalent to the reference listed drug, meaning it is absorbed in the body at the same rate and to the same

Generic products may be significantly less costly to bring to market than the reference listed drug and companies that produce

generic products are generally able to offer them at lower prices.

Thus, following the introduction of a generic drug, a significant

percentage of the sales of any branded product or reference listed drug is typically lost to the generic product.

drug manufacturers may seek to launch generic products following the expiration of any applicable exclusivity period we obtain if any

of our products is approved, even if we still have patent protection.

In particular, competition that our lead candidate, SCN-102, could

face from generic versions could materially and adversely affect our future revenue, profitability, and cash flows and substantially

limit our ability to obtain a return on the investments we have made in SCN-102.

if we obtain FDA approval for a product candidate in the United States, we may never obtain approval for or successfully commercialize

that candidate outside of the United States, which would limit our ability to realize a product’s full market potential.

order to market a candidate outside of the United States, we must obtain marketing authorizations and comply with numerous and varying

regulatory requirements of other countries regarding quality, safety and efficacy.

Clinical trials conducted in one country may not be

accepted by foreign regulatory authorities, and regulatory approval in one country does not mean that regulatory approval will be obtained

in any other country.

Approval processes vary among countries and can involve additional product testing and validation and additional

administrative review periods.

Seeking foreign regulatory approval could result in difficulties and costs for us and require additional

non-clinical studies or clinical trials, which could be costly and time consuming.

Regulatory requirements can vary widely from country

to country and could delay or prevent the introduction of our product candidates in those countries.

We do not have experience in obtaining

regulatory approval in international markets.

If we fail to comply with regulatory requirements in international markets or to obtain

and maintain required approvals, or if regulatory approval in international markets is delayed, our target market for our product candidates

will be reduced and we would not be able to realize the full market potential of our product candidates.

if we are able to commercialize any of our product candidates, the third-party payor coverage and reimbursement status of newly-approved

products are uncertain.

Failure to obtain or maintain adequate coverage and reimbursement for our product candidates could limit our

ability to market those products and decrease our ability to generate revenue.

availability and adequacy of coverage and reimbursement by governmental healthcare programs such as Medicare and Medicaid, private health

insurers and other third-party payors in the United States are essential for most patients to be able to afford treatments such as our

products or product candidates, if approved.

Our ability to achieve acceptable levels of coverage and reimbursement for drug treatments

by governmental authorities, private health insurers and other organizations will have an effect on our ability to successfully commercialize

our products, and potentially attract additional collaboration partners to invest in the development of our product candidates.

be sure that adequate coverage and reimbursement in the United States, the EU or elsewhere will be available for our products or any

products that we may develop, and any reimbursement that may become available may be decreased or eliminated in the future.

information, see “ Scienture’s Business–Government Regulation– Pharmaceutical Coverage, Pricing, and Reimbursement .”

is significant uncertainty related to the insurance coverage and reimbursement of newly approved products.

In the United States, third-party

payors, including private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining

the extent to which new drugs, biologics and medical devices will be covered.

The Medicare and Medicaid programs increasingly are used

as models for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs, biologics

and medical devices.

It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement

for our products or product candidates.

increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause

such organizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover

or provide adequate payment for our products or product candidates.

We expect to experience pricing pressures in connection with the

sale of our products and product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance

organizations, and additional legislative changes.

The downward pressure on healthcare costs in general, particularly prescription drugs,

medical devices and surgical procedures and other treatments, has become very intense.

As a result, increasingly high barriers are being

erected to the entry of new products.

are developing a drug-device combination product, which may result in additional regulatory risks.

SCN-104 injection pen will be regulated as a drug-device combination product.

We currently plan to develop this product as a combination

of a small molecule drug product administered using a disposable, multiple fixed dose injection pen.

There may be additional regulatory

risks for drug-device combination products.

We may experience delays in obtaining regulatory approval of SN-104 given the increased complexity

of the review process when approval of the product and a delivery device is sought under a single marketing application.

In the United

States, each component of a combination product is subject to the requirements established by the FDA for that type of component, whether

a drug, biologic or device.

The delivery device will be subject to FDA design control device requirements which comprise among other

things, design verification, design validation (including human factors testing), and testing to assess performance, cleaning, and robustness.

Delays in or failure of the studies conducted by us, or failure of us, our collaborators, if any, or our third-party providers or suppliers

to maintain compliance with regulatory requirements could result in increased development costs, delays in or failure to obtain regulatory

approval, and associated delays in SCN-104 reaching the market.

third party collaborators and service providers are, or may become, subject to a variety of stringent and evolving privacy and data security

laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to privacy and data

Any actual or perceived failure to comply with such obligations could expose us to significant fines or other penalties and

otherwise harm our business and operations.

the ordinary course of our business, we and the third parties upon which we rely (such as our third party CROs and other contractors

and consultants) collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit,

and share personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual

property, sensitive third-party data, business plans, transactions, financial information and data we collect about trial participants

in connection with clinical trials.

Our data processing activities subject us to numerous evolving privacy and data security obligations,

such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements,

and other obligations relating to privacy and data security.

legislative and regulatory framework for the processing of personal data worldwide is rapidly evolving and is likely to remain uncertain

for the foreseeable future.

In the United States, numerous federal, state and local laws and regulations, including federal health information

privacy laws, state information security and data breach notification laws, federal and state consumer protection laws (e.g., Section

5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws) govern the processing of health-related and other

personal data.

the state level, numerous U.S.

states—including California, Virginia, Colorado, Connecticut and Utah—have enacted comprehensive

privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording

individuals certain rights concerning their personal data.

Similar laws are being considered in several other states, as well as at the

federal and local levels, and we expect more states to pass similar laws in the future.

While these states exempt some data processed

in the context of clinical trials, these developments may further complicate compliance efforts, and increase legal risk and compliance

costs for us and the third parties upon whom we rely.

Additionally,

we may be subject to new laws governing the privacy of consumer health data.

For example, Washington’s My Health My Data Act broadly

defines consumer health data, creates a private right of action to allow individuals to sue for violations of the law, imposes stringent

consent requirements and grants consumers certain rights with respect to their health data, including to request deletion of their information.

Connecticut and Nevada have also passed similar laws regulating consumer health data.

These various privacy and data security laws may

impact our business activities, including our identification of research subjects, relationships with business partners and ultimately

the marketing and distribution of our products.

the United States, an increasing number of laws, regulations, and industry standards may govern privacy and data security.

the European Union’s General Data Protection Regulation and the United Kingdom’s GDPR (collectively, “GDPR”)

impose strict requirements for processing personal data.

establishes stringent requirements regarding the processing of personal data, including (i) strict requirements relating to processing

of sensitive data (such as health data), ensuring there is a legal basis or condition to justify the processing of personal data, where

required, (ii) strict requirements relating to obtaining consent of individuals, (iii) expanded disclosures about how personal data is

to be used, (iv) limitations on retention of information, (v) implementing safeguards to protect the security and confidentiality of

personal data, where required, (vi) providing notification of data breaches, (v) maintaining records of processing activities, and (vii)

documenting data protection impact assessments where there is high risk processing and taking certain measures when engaging third-party

GDPR, companies may face temporary or definitive bans on data processing and other corrective activities, fines, and private litigation

related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to

represent their interests.

Non-compliance could also result in a material adverse effect on our business, financial position and results

of operations.

addition, we may be unable to transfer personal data from Europe and other jurisdictions to the United States or other countries due

to data localization requirements or limitations on cross-border data flows.

Europe and other jurisdictions have enacted laws requiring

data to be localized or limiting the transfer of personal data to other countries.

In particular, the European Economic Area (“EEA”)

and the United Kingdom (“UK”) have significantly restricted the transfer of personal data to the United States and other

countries whose privacy laws it generally believes are inadequate.

Other jurisdictions may adopt similarly stringent interpretations

of their data localization and cross-border data transfer laws.

Although there are currently various mechanisms that may be used to transfer

personal data from the EEA and UK to the United States in compliance with law, such as the EEA’s standard contractual clauses,

the UK’s International Data Transfer Agreement/Addendum, and the EU-U.S.

Data Privacy Framework and the UK extension thereto (which

allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the framework), these mechanisms

are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal

data to the United States.

If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions

to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences,

including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities

to other jurisdictions (such as Europe) at significant expense, increased exposure to regulatory actions, substantial fines and penalties,

the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring

of personal data necessary to operate our business.

Additionally, companies that transfer personal data out of the EEA and UK to other

jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activities

activist groups.

Some European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal

data out of Europe for allegedly violating the GDPR’s cross-border data transfer limitations.

addition to privacy and data security laws, we are contractually subject to industry standards adopted by industry groups and may become

subject to such obligations in the future.

We are also bound by other contractual obligations related to privacy and data security, and

our efforts to comply with such obligations may not be successful.

may publish privacy policies, marketing materials, and other statements, such as compliance with certain certifications or self-regulatory

principles, regarding privacy and data security.

If these policies, materials or statements are found to be deficient, lacking in transparency,

deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other

adverse consequences.

related to privacy and data security (and consumers’ data privacy expectations) are quickly changing, becoming increasingly stringent,

and creating uncertainty.

Additionally, these obligations may be subject to differing applications and interpretations, which may be

inconsistent or conflict among jurisdictions.

Preparing for and complying with these obligations requires us to devote significant resources

and may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that

process personal data on our behalf.

may at times fail (or be perceived to have failed) in our efforts to comply with our privacy and data security obligations.

despite our efforts, our personnel or third parties on whom we rely may fail to comply with such obligations, which could negatively

impact our business operations.

If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply

with applicable privacy and data security obligations, we could face significant consequences, including but not limited to:

enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar);

litigation (including class-action claims)

and mass arbitration demands;

additional reporting requirements and/or oversight;

bans on processing personal data;

and orders to destroy

or not use personal data.

In particular, plaintiffs have become increasingly more active in bringing privacy-related claims against companies,

including class claims and mass arbitration demands.

Some of these claims allow for the recovery of statutory damages on a per violation

basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations.

Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited

loss of customers;

interruptions or stoppages in our business operations (including, as relevant, clinical trials);

process personal data or to operate in certain jurisdictions;

limited ability to develop or commercialize our products;

expenditure of

time and resources to defend any claim or inquiry;

adverse publicity;

or substantial changes to our business model or operations.

FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.

we obtain approval of any of our product candidates and we are found to have improperly promoted off-label uses of such products, we

may become subject to significant liability.

The FDA and other regulatory agencies strictly regulate the promotional claims that may

be made about prescription products, if approved.

In particular, while the FDA permits the dissemination of truthful and non-misleading

information about an approved product, a manufacturer may not promote a product for uses that are not approved by the FDA or such other

regulatory agencies as reflected in the product’s approved labeling.

If we are found to have promoted such off-label uses, we may

become subject to significant liability.

The federal government has levied large civil and criminal fines against companies for alleged

improper promotion of off-label use and has enjoined several companies from engaging in off-label promotion.

The government has also

imposed consent decrees, corporate integrity agreements or permanent injunctions under which specified promotional conduct must be changed

or curtailed.

If we cannot successfully manage the promotion of our product candidates, if approved, we could become subject to significant

liability, which would materially adversely affect our business and financial condition.

legislative reform measures may have a negative impact on our business and results of operations.

the United States and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and

proposed changes regarding the healthcare system that could prevent or delay marketing approval of product candidates, restrict or regulate

post-approval activities, and affect our ability to profitably sell any product candidates for which we obtain marketing approval.

more information, see “ Scienture’s Business– Other Regulatory Requirements–Healthcare Reform .”

policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems

with the stated goals of containing healthcare costs, improving quality and/or expanding access.

In the United States, the pharmaceutical

industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.

the ACA was passed, which substantially changed the way healthcare is financed by both the government and private insurers, and significantly

impacts the U.S.

pharmaceutical industry.

are continued efforts to challenge the ACA.

There are also efforts to broaden healthcare coverage.

lawmakers also have explored proposals to reduce drug prices, including

requiring price transparency and drug importation measures.

These proposals might result in significant changes in the pharmaceutical

value chain as manufacturers, PBM, managed care organizations and other industry stakeholders look to implement new transactional flows

and adapt their business models.

lawmakers also have explored

proposals to reduce drug prices, including requiring price transparency and drug importation measures.

These proposals might result in

significant changes in the pharmaceutical value chain as manufacturers, pharmacy benefits managers (“PBMs”, managed care

organizations and other industry stakeholders look to implement new transactional flows and adapt their business models.

PBMs are third-party

administrator of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans (prescription

drug plans), the Federal Employees Health Benefits Program, and state government employee plans

governments in Canada that provide partial funding for the purchase of pharmaceuticals and independently regulate the sale and reimbursement

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and may cause our customers to purchase fewer of our products and services or influence us to reduce prices.

billing and coding laws may subject us to fines and investigations.

billing, coding and collection activities are governed by numerous federal and state civil and criminal laws.

In connection with these

laws, we may be subjected to federal, or state government investigations and possible penalties may be imposed upon us, false claims

actions may have to be defended, private payers may file claims against us, and we may be excluded from Medicare, Medicaid or other government-funded

healthcare programs.

Any such proceeding or investigation could have a material adverse impact on our results of operations.

may be difficult and costly for us to comply with the extensive government regulations to which our business is subject.

operations are subject to extensive regulation by the U.S.

federal and state governments.

In addition, as we expand our operations, we

may also become subject to the regulations of foreign jurisdictions, as well as additional regulations relating to environmental matters,

transportation of pharmaceutical products, shipping restrictions, and import and export restrictions.

We are also required to comply

with various state pricing gouging laws.

the enactment of new rules and regulations could adversely affect our business.

Depending on future enforcement or additional rules and

regulations created around it, pharmaceutical pricing controls could be established, resulting in substantially reduced margins and limited

reimbursement for pharmacies and all other healthcare provider bases.

In turn, this may adversely affect our cash flow, profitability,

Relating to Our Industry in General

significant number of counties, municipalities and other plaintiffs, including a number of state attorney generals, have filed lawsuits

against pharmaceutical manufacturers, pharmaceutical wholesale distributors, retail chains and others relating to the manufacturing,

marketing or distribution of certain prescription medications.

The defense and resolution of future lawsuits and events relating to these

lawsuits could have a material adverse effect on our results of operations, financial condition, cash flows or liquidity or have adverse

reputational or operational effects on our business.

Other legislative, regulatory or industry measures related to the public health

crisis involving the abuse of prescription opioid pain medication and the distribution of these medications could affect our business

in ways that we may not be able to predict.

healthcare environment may not be favorable to us.

a number of years, the U.S.

healthcare industry has undergone significant changes designed to increase access to medical care, improve

safety and patient outcomes, contain costs and increase efficiencies.

These changes include adoption of the Patient Protection and Affordable

Care Act (ACA), a general decline in Medicare and Medicaid reimbursement levels, efforts by healthcare insurance companies to limit or

reduce payments to pharmacies and providers, the basis for payments beginning to transition from a fee-for-service model to value-based

payments and risk-sharing models, and the industry shifting away from traditional healthcare venues like hospitals and into clinics,

physician offices and patients’ homes.

expect the U.S.

healthcare industry to continue to change significantly in the future.

Possible changes include repeal and replacement

of major parts of the Patient Protection and Affordable Care Act, further reduction or limitations on governmental funding at the state

or federal level, efforts by healthcare insurance companies to further limit payments for products and services or changes in legislation

or regulations governing prescription pharmaceutical pricing, healthcare services or mandated benefits.

These possible changes, and the

uncertainty surrounding these possible changes, may cause healthcare industry participants to reduce the number of products and services

they purchase from us or the price they are willing to pay for our products and services, which could adversely affect us.

Consolidation

healthcare industry may negatively impact our results of operations.

recent years, U.S.

healthcare industry participants, including distributors, manufacturers, suppliers, healthcare providers, insurers

and pharmacy chains, have consolidated or formed strategic alliances.

Consolidations create larger enterprises with greater negotiating

power, and also could result in the possible loss of a customer where the combined enterprise selects one distributor from two incumbents.

If this consolidation trend continues, it could adversely affect our results of operations.

have identified material weaknesses in our internal control over financial reporting and controls and procedures which could, if not

remediated, adversely affect our ability to report our financial condition, cash flows and results of operations in a timely and accurate

manner and/or increase the risk of future misstatements, which could have a material adverse effect on our business, financial condition,

cash flows and results of operations and could cause the market value of our shares of common stock and/or debt securities to decline.

effective internal control over financial reporting and effective disclosure controls and procedures are necessary for us to produce

reliable financial statements.

As reported under “ Item 9A.

Controls and Procedures ”, as of December 31, 2023, our

CEO and CFO have determined that our disclosure controls and procedures were not effective.

Additionally, our management is responsible

for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange

As disclosed below under “ Item 9A.

Controls and Procedures ”, based on reviews conducted by management, we have

concluded that a material weakness exists and has existed since approximately 2014 in the Company’s internal controls over financial

A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting such

that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented

or detected on a timely basis.

material weaknesses identified in our controls and procedures as of December 31, 2023, included the fact that (1) The Company did not

maintain a fully integrated financial consolidation and reporting system throughout the period and as a result, extensive manual analysis,

reconciliation and adjustments were required in order to produce financial statements for external reporting purposes.

and (2) the Company

continuing efforts of the government, insurance companies, managed care organizations and other payers of healthcare services to contain

or reduce costs of healthcare may adversely affect:

demand for any of our product candidates, if approved;

ability to set a price that we believe is fair for any of our product candidates, if approved;

ability to generate revenues and achieve or maintain profitability;

level of taxes that we are required to pay;

availability of capital.

and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical

and biologic products.

In addition, there has been increasing legislative and enforcement interest in the United States with respect

to specialty drug pricing practices.

Specifically, there have been several recent 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, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement

methodologies for drugs.

cannot be sure whether additional legislative changes will be enacted, or whether FDA regulations, guidance or interpretations will be

changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be.

In addition, increased

scrutiny by Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us

to more stringent product labeling and post-marketing testing and other requirements.

cannot predict what healthcare reform initiatives may be adopted in the future.

We expect that these and other healthcare reform measures

that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the price that we

receive for any approved drug.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction

in payments from private payors.

The implementation of cost containment measures or other healthcare reforms may prevent us from being

able to generate revenue, attain profitability, or commercialize our drugs.

funding for the FDA and other government agencies, including from government shutdowns, or other disruptions to these agencies’

operations, could hinder such agencies’ ability to hire and retain key leadership and other personnel, prevent new products and

services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business

functions on which the operation of our business may rely.

ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding

levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes.

review times at the agency have fluctuated in recent years as a result.

Disruptions at the FDA and other agencies may also slow the time

necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect our

In addition, government funding of the SEC and other government agencies on which our operations may rely, including those

that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary

government agencies, which would adversely affect our business.

For example, over the last several years the United States government

has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and

other government employees and stop critical activities.

If a prolonged government shutdown occurs, it could significantly impact the

ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly

capitalize and continue our operations.

Related to Our Technology and Intellectual Property

may not be able to protect our intellectual property and trade secret rights throughout the world.

If our efforts to protect our intellectual

property rights are inadequate, we may not be able to compete effectively in our market.

may not be able to pursue patent coverage of our product candidates in certain countries outside of the United States.

Filing, prosecuting

and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual

property rights in some countries outside the United States may be less extensive than those in the United States.

In addition, the laws

of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States.

The breadth and strength of our or our licensors’ patents issued in foreign jurisdictions or regions may not be the same as the

corresponding patents issued in the United States.

Consequently, we may not be able to prevent third parties from practicing our or our

licensors’ inventions in all countries outside the United States, or from selling or importing products made using our or our licensors’

inventions in and into the United States or other jurisdictions.

Competitors may use our technologies in jurisdictions where we have

not obtained patent protection to develop their own products and further, may export otherwise infringing products to certain territories

where we have patent protection, but enforcement is not as strong as that in the United States.

These products may compete with our product

candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

addition to seeking patents for some of our product candidates, we also rely on trade secrets, including unpatented know-how, technology,

and other proprietary information, to maintain our competitive position.

We seek to protect these trade secrets, in part, by entering

into non-disclosure and confidentiality agreements with parties who have access to them, such as employees, corporate collaborators,

outside scientific collaborators, contract manufacturers, consultants, advisors, and other third parties.

We also enter into confidentiality

and invention or patent assignment agreements with our employees and consultants.

Despite these efforts, any of these parties may breach

the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies

for such breaches.

Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and

time consuming, and the outcome is unpredictable.

If we are unable to prevent unauthorized material disclosure of our intellectual property

to third parties, we may not be able to establish or maintain a competitive advantage in the market, which could materially adversely

affect our business, operating results and financial condition.

If we choose to go to court to stop a third party from using any of our

trade secrets, we may incur substantial costs.

These lawsuits may consume our time and other resources even if successful.

some courts inside and outside the United States are less willing or unwilling to protect trade secrets.

As a result, we may encounter

significant problems in protecting and defending our intellectual property both in the United States and abroad.

If any of our trade

secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them from using that

technology or information to compete with us.

If any of our trade secrets were to be disclosed to or independently developed by a competitor,

our competitive position would be harmed.

companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.

legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets

and other intellectual property protections, particularly those relating to biotechnology and biopharmaceutical products.

This difficulty

with enforcing patents could make it difficult for us to stop the infringement of our or our licensors’ patents or marketing of

competing products otherwise generally in violation of our proprietary rights.

Proceedings to enforce our patent rights in foreign jurisdictions

could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our or our licensors’

patents at risk of being invalidated or interpreted narrowly, put our or our licensors’ patent applications at risk of not issuing

and could provoke third parties to assert claims against us.

We may not prevail in any lawsuits that we initiate and the damages or other

remedies awarded, if any, may not be commercially meaningful.

Accordingly, our efforts to enforce our intellectual property rights around

the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

depend on in-licensed intellectual property.

If we fail to comply with our obligations under intellectual property licenses with third

parties, we could lose license rights that are important to our business.

LLC is a party to a Feasibility Study and Animal Trial Material Manufacturing Agreement with Innocore Technologies, B.V.

(“Innocore”),

as amended on December 2, 2022 (the “Innocore License”), an exclusive and royalty-bearing intellectual property license agreement.

In connection with our efforts to expand our pipeline of product candidates, we expect to enter into additional license agreements in

We expect that any future license agreements we may enter into may impose various diligence, milestone payment, royalty,

insurance, and other obligations on us.

If we fail to comply with these obligations, our licensors may have the right to terminate the

relevant agreement, in which event we would not be able to develop or market the products covered by such licensed intellectual property,

or to pursue other remedies.

may not be able to obtain licenses at a reasonable cost or on reasonable terms, or at all.

Furthermore, if we lose intellectual property

rights licensed under existing agreements or fail to obtain future licenses, we may be required to expend considerable time and resources

to develop or license replacement technology.

If we are unable to do so, we may be unable to develop or commercialize the affected proprietary

technologies and product candidates, which could harm our business significantly.

we or our licensors are unable to obtain and maintain patent protection for our product candidates, or if the scope of the patent protection

obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to our product candidates,

and our ability to successfully commercialize our product candidates may be adversely affected.

Furthermore, we do not intend to seek

patent protection for one of our products, SCN-106.

success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect

to our product candidates, their respective components, formulations, combination therapies, methods used to manufacture them and methods

of treatment that are important to our business.

If we or our licensors does not adequately protect our or our licensors’ intellectual

property rights, competitors may be able to erode or negate any competitive advantage we may have, which could harm our business and

ability to achieve profitability.

We and our licensors seek to protect our proprietary position by filing patent applications in the

United States and abroad related to our product candidates that are important to our business.

We may in the future also license or purchase

patent applications filed by others.

If we or our licensors are unable to secure or maintain patent protection with respect to our product

candidates and any proprietary product candidates and technology we develop, our business, financial condition, results of operations,

and prospects could be materially harmed.

the scope of the patent protection we or our licensors obtain is not sufficiently broad, we may not be able to prevent others from developing

and commercializing products and technology similar or identical to our product candidates or otherwise maintain a competitive advantage.

The degree of patent protection we require to successfully compete in the marketplace may be unavailable or severely limited in some

cases and may not adequately protect our rights or permit us to gain or keep any competitive advantage.

We cannot provide any assurances

that any of our or our licensors’ patents have, or that any of our or our licensors’ pending patent applications that mature

into issued patents will include, claims with a scope sufficient to protect our product candidates or otherwise provide any competitive

In addition, to the extent that we license intellectual property, we cannot make assurances that those licenses will remain

if our owned and licensed patent applications issue as patents, they may not issue in a form that will provide us with any meaningful

protection, prevent competitors from competing with us, or otherwise provide us with any competitive advantage.

The scope of the invention

claimed in a patent application can be significantly reduced before the patent is issued, and this scope can be reinterpreted after issuance.

Any patents that eventually issue may be challenged, narrowed or invalidated by third parties.

Consequently, we do not know whether any

of our product candidates will be protectable or remain protected by valid and enforceable patent rights.

Our competitors or other third

parties may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing

patent prosecution process is expensive and time consuming, and we may not be able to file and prosecute all necessary or desirable patent

applications at a reasonable cost or in a timely manner.

In addition, we may not pursue or obtain patent protection in all relevant markets.

It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to

obtain patent protection.

Moreover, in some circumstances, we do not have the right to control the preparation, filing and prosecution

of patent applications, or to maintain the patents, covering product candidates that we license from third parties and are reliant on

our licensors.

Therefore, we cannot be certain that these patents and applications will be prosecuted and enforced in a manner consistent

with the best interests of our business.

If such licensors fail to maintain such patents, or lose rights to those patents, the rights

we have licensed may be reduced or eliminated.

patents have a limited lifespan.

In the United States, the natural expiration of a patent is generally 20 years after it is filed.

extensions may be available;

however, the life of a patent, and the protection it affords, is limited.

Publications of discoveries in

the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions

are typically not published until 18 months after filing, or in some cases, at all.

Therefore, we cannot be certain that we or our licensors

were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we or our licensors

were the first to file for patent protection of such inventions.

patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions,

and has in recent years been the subject of much litigation.

As a result, the issuance, scope, validity, enforceability, and commercial

value of our and our licensors’ patent rights are highly uncertain.

Our and our licensors’ pending and future patent applications

may not result in patents being issued which protect our product candidates or which effectively prevent others from commercializing

competitive products.

issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and our owned and licensed patents

may be challenged in the courts or patent offices in the United States and abroad.

There may be prior art of which we are not aware that

may affect the validity or enforceability of a patent claim.

There also may be prior art of which we are aware, but which we do not believe

affects the validity or enforceability of a claim, which may, nonetheless, ultimately be found to affect the validity or enforceability

We or our licensors may in the future, become subject to a third-party pre-issuance submission of prior art, opposition,

derivation, revocation, re-examination, post-grant and inter partes review, or interference proceeding and other similar proceedings

challenging our patent rights or the patent rights of others in the USPTO or other foreign patent office.

Such challenges may result

in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated, or held unenforceable, which could limit

our ability to stop others from using or commercializing similar or identical products, or limit the duration of the patent protection

of our product candidates.

given the amount of time required for the development, testing, and regulatory review of new product candidates, patents protecting such

candidates might expire before or shortly after such candidates are commercialized.

As a result, our owned and licensed patent portfolio

may not provide us with sufficient rights to exclude others from commercializing products similar or identical to our product candidates.

addition, we rely on certain of our licensors to prosecute patent applications and maintain patents and otherwise protect the intellectual

property we license from them and may continue to do so in the future.

We have limited control over these activities or any other intellectual

property that may be related to our in-licensed intellectual property.

For example, we cannot be certain that such activities by these

licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents

and other intellectual property rights.

We have limited control over the manner in which our licensors initiate an infringement proceeding

against a third-party infringer of the intellectual property rights or defend certain of the intellectual property that is licensed to

It is possible that any licensors’ infringement proceeding or defense activities may be less vigorous than had we conducted

some of our owned and in-licensed patents and patent applications may in the future be co-owned with third parties.

If we are unable

to obtain an exclusive license to any such third-party co-owners’ interest in such patents or patent applications, such co-owners

may be able to license their rights to other third parties, including our competitors, and our competitors could market competing products

and technology.

In addition, we or our licensors may need the cooperation of any such co-owners of our owned and in-licensed patents

in order to enforce such patents against third parties, and such cooperation may not be provided to us or our licensors.

Any of the foregoing

could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects.

Notwithstanding

the importance of obtaining and maintaining patent protection for our products, we are not pursuing, and do not intend in the future

to pursue, patent protection for one of our products, SCN-106.

SCN-106 is a potential biosimilar product.

Developing and commercializing

a biosimilar product is time consuming, costly, and subject to numerous factors that may delay or prevent such development and commercialization.

The biosimilar markets in which we compete are undergoing and are expected to continue to undergo, rapid and significant change.

competition to intensify as technology advances and consolidation continues.

New developments by other manufacturers and distributors

could render our products uncompetitive or obsolete.

Company did not maintain a fully integrated financial consolidation and reporting system throughout the period and as a result, extensive

manual analysis, reconciliation and adjustments were required in order to produce financial statements for external reporting purposes.

does not currently have a sufficient complement of technical accounting and external reporting personnel commensurate to support standalone

6 unchanged sentences

of a full complement of accounting staff.

effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce

reliable financial statements and the Company is committed to remediating its material weaknesses in such controls as promptly as possible.

Fiscal 2014 when the material weakness became effective, the Company has identified certain remediation actions and has implemented many

efforts are not complete and remain in process.

If we do not complete our remediation in a timely manner or if our remedial measures

are insufficient to address the material weaknesses, or if additional material weaknesses in our internal controls and/or controls and

procedures are discovered or occur in the future, it may materially adversely affect our ability to report our financial condition and

results of operations in a timely and accurate manner and there will continue to be an increased risk of future misstatements.

we regularly review and evaluate internal controls systems to allow management to report on the effectiveness of our internal controls

over financial reporting and controls and procedures, we may discover additional weaknesses in our internal controls over financial reporting

or disclosure controls and procedures.

The next time we evaluate our internal controls over financial reporting and disclosure controls

and procedures, if we identify one or more new material weaknesses or have been unable to timely remediate our existing material weaknesses,

we would be unable to conclude that our internal controls over financial reporting or disclosure controls and procedures are effective.

If we are unable in the future to conclude that our internal controls over financial reporting or our disclosure controls and procedures

are effective, we may not be able to report our financial condition and results of operations in a timely and accurate manner, which

could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market

value of our shares of common stock to decline.

In addition, any potential future restatements could subject us to additional adverse

consequences, including sanctions by the SEC, stockholder litigation and other adverse actions.

Moreover, we may be the subject of further

negative publicity focusing on such financial statement adjustments and resulting restatement and negative reactions from our stockholders,

creditors or others with whom we do business.

The occurrence of any of the foregoing could have a material adverse effect on our business,

financial condition, cash flows and results of operations and could cause the market value of our shares of common stock to decline.

significant amount of our revenues has historically been due to only a small number of customers and we depend on a small number of major

wholesalers, and if we were to lose any of those customers or suppliers, our results of operations would be adversely affected .

the years ended December 31, 2023 and 2022, no sales to any specific customer represented greater than 10% of revenue.

In the event our customers

do not pay us amounts owed, sales to such customers cease or we are unable to find new customers moving forward, it could have a

materially adverse effect on our results of operations.

We have a working relationship with over 25 wholesalers and the

nation’s largest buying group.

Although we believe those entities are satisfied with their business relationship with Trxade,

if supply chain vendors decide to no longer to do business with Trxade, and we are unable to find additional entities to step into

their shoes, the resulting supplier void would materially and adversely affect our competitiveness in the marketplace, and could

cause a material adverse effect on our results of operations.

might be harmed by changes in our relationships or contracts with suppliers .

attempt to structure our agreements with wholesalers to ensure that we are appropriately and predictably compensated for the services

We cannot control the frequency or magnitude of pharmaceutical price changes.

We might be unable to renew agreements with

wholesalers in a timely and favorable manner.

Any of these risks might have a materially adverse impact on our business operations and

our financial positions or results of operations.

Related to Our Common Stock and Organizational Documents

common stock has in the past been a “ penny stock ” under SEC rules, and may be subject to the “ penny stock ”

rules in the future.

if we are able to obtain regulatory approvals for SCN-106, the commercial success of SCN-106 is dependent upon market acceptance.

of market acceptance for our product could be affected by several factors, including:

control over financial reporting a.

the availability of alternative products from our competitors;

the prices of our products relative to those of our competitors;

the timing of our market entry;

the ability to market our products effectively at the institutional level;

the perception of patients and the healthcare community, including third-party payers, regarding the safety, efficacy and benefits of

our drug products compared to those of competing products;

the acceptance of our products by government and private formularies.

of these factors will not be in our control, and SCN-106 may not achieve expected levels of market acceptance.

Many of our competitors

in the biosimilar space have longer operating histories and greater financial, research and development, marketing, and other resources

Consequently, some of our competitors may be able to develop biosimilar products and/or processes competitive with, or superior

to, our products and/or processes and can enter the market prior to or after we launch the product.

Furthermore, we may not be able to

offer customers payment and other commercial terms as favorable as those offered by our competitors.

Such actions have the potential

to significantly reduce the potential market share and profitability of SCN-106.

and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements

imposed by governmental patent agencies.

Our patent protection could be reduced or eliminated for non-compliance with these requirements.

cannot be certain that an allowed patent application will become an issued patent because there may be events that cause withdrawal of

the allowance of a patent application.

For example, after a patent application has been allowed, but prior to being issued, material

that could be relevant to patentability may be identified.

In such circumstances, the applicant may pull the application from allowance

in order for the USPTO to review the application in view of the new material.

We cannot be certain that the USPTO will issue the application

in view of the new material.

Periodic maintenance fees on any issued patent are due to be paid to the USPTO and foreign countries may

require the payment of maintenance fees or patent annuities during the lifetime of a patent application and/or any subsequent patent

that issues from the application.

The USPTO and various foreign governmental patent agencies require compliance with a number of procedural,

documentary, fee payment and other similar provisions during the patent application process and following the issuance of a patent.

an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there

are situations in which noncompliance can result in abandonment or lapse of the patent or patent application.

Such noncompliance can

result in partial or complete loss of patent rights in the relevant jurisdiction.

Noncompliance events that could result in abandonment

or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed

time limits, non-payment of fees and failure to properly legalize and submit formal documents.

Such an event could have a material adverse

effect on our business.

patents covering our product candidates could be found invalid or unenforceable if challenged in court or the USPTO.

we or one of our licensing partners initiates legal proceedings against a third party to enforce a patent covering our product candidates,

the defendant could counterclaim that the patent covering our product candidates, as applicable, is invalid and/or unenforceable.

patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace, and there

are various grounds upon which a third party can assert invalidity or unenforceability of a patent.

Third parties may also raise similar

claims before administrative bodies in the United States or abroad, even outside the context of litigation.

Such mechanisms include re-examination,

inter partes review, post grant review and equivalent proceedings in foreign jurisdictions (such as opposition proceedings).

proceedings could result in revocation or amendment to our or our licensors’ patents in such a way that they no longer cover our

product candidates.

The outcome following legal assertions of invalidity and unenforceability is unpredictable.

With respect to the validity

question, for example, we cannot be certain that there is no invalidating prior art, of which we, our patent counsel, our licensors and

the patent examiner were unaware during prosecution.

If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability,

or if we are otherwise unable to adequately protect our or our licensors’ rights, we would lose at least part, and perhaps all,

of the patent protection on our product candidates.

Such a loss of patent protection could have a material adverse impact on our business

and our ability to commercialize or license our technology and product candidates.

to patent law in the United States and in foreign jurisdictions could diminish the value of our patents in general, thereby impairing

our ability to protect our product candidates.

is the case with other biotechnology and biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly

Obtaining and enforcing patents in the biotechnology and biopharmaceutical industry involves both technological and legal complexity,

and is therefore costly, time-consuming and inherently uncertain.

Patent reform legislation in the U.S.

and other countries could increase

those uncertainties and costs.

Passed in 2011, the Leahy-Smith America Invents Act (the “Leahy-Smith Act”) made a number

of significant changes to U.S.

patent law, including provisions affecting the way patent applications are prosecuted, redefining prior

art and providing more efficient and cost-effective avenues for competitors to challenge the validity of patents.

In addition, the Leahy-Smith

Act transformed the U.S.

patent system into a “first-to-file” system, effective on March 16, 2013 and has impacted our business

by making it more difficult to obtain patent protection for our inventions and increasing the uncertainties and costs surrounding the

prosecution of our patent applications and the enforcement or defense of our issued patents.

Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights

of patent owners in certain situations.

In addition to increasing uncertainty with regard to our or our licensors’ ability to obtain

patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.

on decisions by the U.S.

Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable

ways that would weaken our or our licensors’ ability to obtain new patents or to enforce our or our licensors’ existing patents

and patents that we or our licensors might obtain in the future.

We cannot predict how future decisions by the courts, Congress or the

USPTO may impact the value of our or our licensors’ patents.

Similarly, any adverse changes in the patent laws of other jurisdictions

could have a material adverse effect on our business and financial condition.

Changes in the laws and regulations governing patents in

other jurisdictions could similarly have an adverse effect on our ability to obtain and effectively enforce our patent rights.

we do not obtain patent term extension for our current product candidates, our business may be materially harmed.

upon the timing, duration and specifics of any FDA marketing approval of our current product candidates, one or more of our or our licensors’

patents may be eligible for limited patent term extension under the Hatch-Waxman Amendments.

The Hatch-Waxman Amendments permit

a patent extension term of up to five years as compensation for patent term lost during the FDA regulatory review process.

A patent term

extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent

may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended.

However, we may not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory

review process, failing to apply for a patent extension within applicable deadlines, failing to apply prior to expiration of relevant

patents, or otherwise failing to satisfy applicable requirements.

Moreover, the applicable time period or the scope of patent protection

afforded could be less than we request.

If we are unable to obtain patent term extension or the term of any such extension is less than

we believe we are entitled to, our competitors may obtain approval of competing products sooner than we would expect, and our business,

financial condition, results of operations, and prospects could be materially harmed.

may become involved in lawsuits to protect or enforce our intellectual property rights, which could be distracting, expensive, time consuming,

and unsuccessful.

may infringe our patents or the patents of our licensors.

To counter infringement or unauthorized use, we may be required to file infringement

claims, which can be expensive and time consuming.

In addition, in an infringement proceeding, a court may decide that our patents or

our licensors’ patents are invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on

the grounds that the patents do not cover the technology in question.

An adverse result in any litigation proceeding could put one or

more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.

Defense against these assertions, non-infringement, invalidity or unenforceability regardless of their merit, would involve substantial

litigation expense and would be a substantial diversion of employee resources from our business.

In the event of a successful claim of

infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement,

obtain one or more licenses from third parties, pay royalties or redesign our infringing products, which may be impossible or require

substantial time and monetary expenditure.

proceedings provoked by third parties or brought by the USPTO may be brought to determine the validity or priority of inventions with

respect to our patents or patent applications or those of our licensors.

An unfavorable outcome could result in a loss of our current

patent rights and could require us to cease using the related technology or require us to obtain license rights from the prevailing party.

Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms.

Litigation or post-grant

proceedings may result in a decision adverse to our interests and, even if successful, may result in substantial costs and distract our

management, employees, and contractors.

We may not be able to prevent, alone or with our licensors, misappropriation of our trade secrets

or confidential information, particularly in countries where the laws may not protect those rights as fully as those within the United

because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some

of our confidential information could be compromised by disclosure during this type of litigation.

In addition, our licensors may have

rights to file and prosecute such claims, and we are reliant on them.

may be subject to claims challenging the inventorship or ownership of our intellectual property or asserting that we violated intellectual

property rights of others, the outcome of which would be uncertain.

These claims could be extremely costly to defend, could require us

to pay significant damages and limit our ability to operate, and could distract our personnel from normal responsibilities.

commercial success depends upon our ability and the ability of our collaborators to commercialize, develop, manufacture, market, and

sell our product candidates without infringing the proprietary rights of third parties.

We have yet to conduct comprehensive freedom

to operate searches to determine whether we would infringe patents issued to third parties.

We may become party to, or threatened with,

future adversarial proceedings or litigation regarding intellectual property rights with respect to our product candidates, including

interference proceedings before the USPTO.

Third parties may assert infringement claims against us based on existing patents or patents

that may be granted in the future.

If we are found to infringe a third party’s intellectual property rights, we could be required

to obtain a license from such third party to continue developing and marketing its product candidates.

However, we may not be able to

obtain any required license on commercially reasonable terms or at all.

Even if we were able to obtain a license, it could be non-exclusive,

thereby giving our competitors access to the same technologies licensed to us.

We could be forced, including by court order, to cease

commercializing the infringing product.

In addition, we could be found liable for monetary damages.

A finding of infringement could prevent

us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our

Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative

impact on our business.

a third party alleges that we infringe its intellectual property rights, we may face a number of issues, including, but not limited to:

and other intellectual property misappropriation which, regardless of merit, may be expensive and time-consuming to litigate and

may divert management’s attention from our core business;

damages for infringement or misappropriation, which we may have to pay if a court decides that the product or technology at issue

infringes on or violates the third-party’s rights, and, if the court finds we have willfully infringed intellectual property

rights, we could be ordered to pay treble damages and the patent owner’s attorneys’ fees;

injunction prohibiting us from manufacturing, marketing or selling our product candidates, or from using our proprietary technologies,

unless the third party agrees to license its patent rights to us;

if a license is available from a third party, we may have to pay substantial royalties, upfront fees and other amounts, and/or grant

cross-licenses to intellectual property rights protecting our product candidates;

may be forced to try to redesign our product candidates or processes so they do not infringe third-party intellectual property rights,

an undertaking which may not be possible or which may require substantial monetary expenditures and time.

of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially

greater resources.

In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material

adverse effect on our ability to raise the funds necessary to continue our operations or could otherwise have a material adverse effect

on our business, results of operations, financial condition and prospects.

parties may assert that we are employing their proprietary technology without authorization.

Patents issued in the United States by law

enjoy a presumption of validity that can be rebutted only with evidence that is “clear and convincing,” a heightened standard

There may be issued third-party patents of which we are currently unaware with claims to compositions, formulations, methods

of manufacture or methods for treatment related to the use or manufacture of our product candidates.

Patent applications can take many

years to issue.

There may be currently pending patent applications which may later result in issued patents that may be infringed by

our product candidates.

Moreover, we may fail to identify relevant patents or incorrectly conclude that a patent is invalid, not enforceable,

exhausted, or not infringed by its activities.

If any third-party patents, held now or obtained in the future by a third party, were

found by a court of competent jurisdiction to cover the manufacturing process of our product candidates, constructs or molecules used

in or formed during the manufacturing process, or any final product or methods use of the product, the holders of any such patents may

be able to block our ability to commercialize the product unless we obtained a license under the applicable patents, or until such patents

expire or they are finally determined to be held invalid or unenforceable.

Similarly, if any third-party patent were held by a court

of competent jurisdiction to cover any aspect of our formulations, any combination therapies or patient selection methods, the holders

of any such patent may be able to block our ability to develop and commercialize the product unless we have obtained a license or until

such patent expires or is finally determined to be held invalid or unenforceable.

In either case, such a license may not be available

on commercially reasonable terms or at all.

If we are unable to obtain a necessary license to a third-party patent on commercially reasonable

terms, or at all, our ability to commercialize our product candidates may be impaired or delayed, which could in turn significantly harm

our business.

Even if we obtain a license, such license may be non-exclusive, thereby giving our competitors access to the same technologies

licensed to us.

In addition, if the breadth or strength of protection provided by our patents and patent applications are threatened,

it could dissuade companies from collaborating with us to license, develop or commercialize our product candidates.

making claims against us may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further

develop and commercialize our product candidates.

Defense of these claims, regardless of their merit, could involve substantial litigation

expense and would be a substantial diversion of employee resources from our business.

In the event of a successful claim of infringement

against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain

one or more licenses from third parties, pay royalties or redesign its infringing product candidates, which may be impossible or require

substantial time and monetary expenditure.

We cannot predict whether any such license would be available at all or whether it would be

available on commercially reasonable terms.

Furthermore, even in the absence of litigation, we may need or may choose to obtain licenses

from third parties to advance its research or allow commercialization of its product candidates.

We may fail to obtain any of these licenses

at a reasonable cost or on reasonable terms, if at all.

In that event, we would be unable to further develop and commercialize its product

candidates, which could harm our business significantly.

generally enter into confidentiality and intellectual property assignment agreements with our employees, consultants, and contractors.

These agreements generally provide that inventions conceived by the party in the course of rendering services to us will be our exclusive

However, these agreements may not be honored and may not effectively assign intellectual property rights to us.

Moreover, there

may be some circumstances where we are unable to negotiate for such ownership rights.

Disputes regarding ownership or inventorship of

intellectual property can also arise in other contexts, such as collaborations and sponsored research.

If we are subject to a dispute

challenging our rights in or to patents or other intellectual property, such a dispute could be expensive and time-consuming.

unsuccessful, we could lose valuable rights in intellectual property that we regard as our own.

is especially relevant as some of our employees and contractors may have been previously employed at, or may have previously provided

or may be currently providing consulting services to, universities or other biotechnology or pharmaceutical companies, including our

competitors or potential competitors.

We could in the future be subject to claims that we or our employees and contractors have inadvertently

or otherwise used or disclosed alleged trade secrets or other confidential information of former employers or competitors.

try to ensure that our employees and contractors do not use the proprietary information or know how of others in their work for us, we

may be subject to claims that we caused an employee or contractor to breach the terms of his or her non-competition or non-solicitation

agreement, or that we or our employees or contractors have, inadvertently or otherwise, used or disclosed intellectual property, including

trade secrets or other proprietary information, of a former employer or competitor.

Litigation may be necessary to defend against these

If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights

or personnel.

Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction

to management.

patents and patent applications could be challenged in the recently created Unified Patent Court for the European Union.

or our licensors’ European patents and patent applications could be challenged in the recently created Unified Patent Court (“UPC”)

for the European Union.

We may decide to opt out our European patents and patent applications from the UPC.

However, if certain formalities

and requirements are not met, our European patents and patent applications could be challenged for non-compliance and brought under the

jurisdiction of the UPC.

We cannot be certain that our or our licensors’ European patents and patent applications will avoid falling

under the jurisdiction of the UPC, if we decide to opt out of the UPC.

Under the UPC, a granted European patent would be valid and enforceable

in numerous European countries.

A successful invalidity challenge to a European patent under the UPC would result in loss of patent protection

in those European countries.

Accordingly, a single proceeding under the UPC could result in the partial or complete loss of patent protection

in numerous European countries, rather than in each validated European country separately as such patents always have been adjudicated.

Such a loss of patent protection could have a material adverse impact on our business and our ability to commercialize our technology

and product candidates and, resultantly, on our business, financial condition, prospects and results of operations.

use, or the use by our third party collaborators and service providers, of new and evolving technologies, such as artificial intelligence

(“AI”) and machine learning (“ML”), may result in spending additional resources and present new risks and challenges

that can impact our business, including by posing security and other risks to our sensitive data.

As a result, we may be exposed to reputational

harm, other adverse consequences, and liability.

use of new and evolving technologies, such as AI/ML, in our operations, and the operations of third parties upon which we rely presents

new risks and challenges that could negatively impact our business.

The use of certain AI/ML technologies can give rise to intellectual

property risks, including compromises to proprietary intellectual property and intellectual property infringement.

Additionally, several

jurisdictions around the globe, including Europe and certain U.S.

states, have proposed, enacted, or are considering, laws governing

the development and use of AI/ML, such as the European Union’s AI Act.

We expect other jurisdictions will adopt similar laws.

Additionally,

certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision making,

which may be incompatible with our use of AI/ML.

These obligations may make it harder for us to conduct our business using AI/ML, lead

to regulatory fines or penalties, require us to change our business practices, retrain our AI/ML, or prevent or limit our use of AI/ML.

For example, the Federal Trade Commission has required other companies to turn over (or disgorge) valuable insights or trainings generated

through the use of AI/ML where they allege the company has violated privacy and consumer protection laws.

If we cannot use AI/ML or our

use is restricted, our business may be less efficient, or we may be at a competitive disadvantage.

rapid evolution of AI/ML will require the application of significant resources to design, develop, test and maintain our products and

services to help ensure that AI/ML is implemented in accordance with applicable law and regulation and in a socially responsible manner

and to minimize any real or perceived unintended harmful impacts.

Our vendors may in turn incorporate AI/ML tools into their own offerings,

and the providers of these AI/ML tools may not meet existing or rapidly evolving regulatory or industry standards, including with respect

to privacy and data security.

Further, bad actors around the world use increasingly sophisticated methods, including the use of AI/ML,

to engage in illegal activities involving the theft and misuse of sensitive data.

Any of these effects could damage our reputation, result

in the loss of valuable property and information, cause us to breach applicable laws and regulations, and adversely impact our business.

our trademarks and trade names are not adequately protected then we may not be able to build name recognition in our markets of interest

and our business may be adversely affected.

trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks.

We rely on both registration and common law protection for our trademarks.

We may not be able to protect our rights to these trademarks

and trade names or may be forced to stop using these names, which we need for name recognition by potential partners or customers in

our markets of interest.

During the trademark registration process, we may receive so called “Office Actions” from the USPTO

objecting to the registration of our trademark.

Although we would be given an opportunity to respond to those objections, we may be unable

to overcome such rejections.

In addition, in the USPTO and in comparable agencies in many foreign jurisdictions, third parties are given

an opportunity to oppose pending trademark applications and/or to seek the cancellation of registered trademarks.

Opposition or cancellation

proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings.

If we are unable to establish name

recognition based on our trademarks and trade names, we may not be able to compete effectively and our business may be adversely affected.

Related to Our Common Stock

may not be able to comply with Nasdaq’s continued listing standards.

is no guarantee that we will be able to maintain our listing on Nasdaq for any period of time by perpetually satisfying Nasdaq’s

continued listing requirements.

Our failure to continue to meet these requirements may result in our securities being delisted from Nasdaq.

At times, including during our 2023 and 2024 fiscal years, we have received deficiency notices from Nasdaq regarding our inability to

comply with various of the continued listing rules (including stockholders’ equity requirements, publicly held share requirements,

and timely filing requirements).

For example, the Company received a written notice from the Listing Qualifications department of Nasdaq

on January 3, 2025, indicating that the Company (i) was not in compliance with Nasdaq Listing Rule 5620(a), due to the Company not holding

an annual meeting of stockholders in 2024 within one year of the Company’s 2023 fiscal year end and (ii) had until February 18,

We have taken steps to attempt to regain compliance with Nasdaq Listing Rule 5620(a), including by scheduling a 2024 annual

meeting of stockholders for March 10, 2025, and filing a proxy statement for such meeting with the SEC on January 27, 2025, as amended

on February 18, 2025.We timely submitted a plan to Nasdaq proposing to regain compliance by holding the 2024 annual meeting of stockholders

on March 10, 2025.

On February 24, 2025, Nasdaq notified us that it has accepted our plan and determined to grant us an extension to

regain compliance with Nasdaq Listing Rule 5620(a) until March 10, 2025, the date that we will hold the 2024 annual meeting of stockholders.

the Company believes it will be able to timely regain compliance with Nasdaq’s continued listing requirements, there can be no

assurance that the Company will be able to regain compliance with Nasdaq Listing Rule 5620(a) or will otherwise be able to

maintain compliance with other Nasdaq listing criteria.

If our common stock were to be delisted from Nasdaq, it would likely reduce the

liquidity of our common stock, and, among other things, may decrease the attractiveness of our common stock to the investment community,

and make it more difficult for us to issue equity securities for capital raising purposes or for acquisitions.

common stock has in the past been a “penny stock” under SEC rules, and may be subject to the “penny stock” rules

in the future.

It may be more difficult to resell securities classified as “penny stock.”

the past (including immediately prior to our common stock being listed on The NASDAQ Capital Market in February 2020), our common stock

was a “ penny stock ” under applicable SEC rules (generally defined as non-exchange traded stock with a per-share price

below $5.00).

While our common stock is not now considered a “ penny stock ” because it is listed on The NASDAQ Capital

Market, if we are unable to maintain that listing, unless we maintain a per-share price above $5.00, our common stock will become “ penny

” These rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of

penny stocks to persons other than those who qualify as “ established customers ” or “ accredited investors.

For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks.

Broker-dealers

must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document

that provides information about penny stocks and the risks in the penny stock market.

The broker-dealer also must provide the customer

with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the

transaction, furnish monthly account statements showing the market value of each penny stock held in the customer’s account, provide

a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s written

agreement to the transaction.

the past (including immediately prior to our common stock being listed on Nasdaq in February 2020), our common stock was a “penny

stock” under applicable SEC rules (generally defined as non-exchange traded stock with a per-share price below $5.00).

common stock is not now considered a “penny stock” because it is listed on Nasdaq, if we are unable to maintain that listing,

unless we maintain a per-share price above $5.00, our common stock will become “penny stock.” These rules impose additional

sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify

as “established customers” or “accredited investors.” For example, broker-dealers must determine the appropriateness

for non-qualifying persons of investments in penny stocks.

Broker-dealers must also provide, prior to a transaction in a penny stock

not otherwise exempt from the rules, a standardized risk disclosure document that provides information about penny stocks and the risks

in the penny stock market.

The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock,

disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish monthly account statements showing the

market value of each penny stock held in the customer’s account, provide a special written determination that the penny stock is

a suitable investment for the purchaser, and receive the purchaser’s written agreement to the transaction.

remedies available to an investor in “penny stocks” may include the following:

a “ penny stock ” is sold to the investor in violation of the requirements listed above, or other federal or states

securities laws, the investor may be able to cancel the purchase and receive a refund of the investment.

a “ penny stock ” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and

firms that committed the fraud for damages.

a “penny stock” is sold to the investor in violation of the requirements listed above, or other federal or states securities

laws, the investor may be able to cancel the purchase and receive a refund of the investment.

a “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms

that committed the fraud for damages.

requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes

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We can give no assurance at what time, if

ever, our common stock will not be classified as a “ penny stock ” in the future.

stocks are generally considered to be high-risk investments.

There are several factors that contribute to the high-risk nature of penny

stocks, including:

Penny stocks are known for their extreme price fluctuations.

This volatility can be caused by a number of factors, including changes

in the overall stock market, news about the company or industry, and changes in investor sentiment.

of liquidity:

Penny stocks are often traded on over-the-counter markets, which can make them more difficult to buy and sell.

lack of liquidity can increase the risk of large price swings and can make it difficult to exit a position if needed.

of information:

Many penny stock companies are not required to file regular reports with the Securities and Exchange Commission (SEC),

which means there may be limited information available to investors.

This can make it difficult to evaluate the financial health

of the company and to make informed investment decisions.

Manipulation:

Because of their low trading volumes and lack of regulatory oversight, penny stocks can be vulnerable to market manipulation.

can include practices such as “pump and dump” schemes, where investors artificially inflate the price of a stock before

selling their shares for a profit.

it’s important to approach penny stocks with caution and to thoroughly research any investment before making a decision.

also a good idea to diversify your portfolio and to limit your exposure to any one stock or sector.

may not be sufficient liquidity in the market for our securities in order for investors to sell their shares.

The market price of our

common stock may continue to be volatile .

market price of our common stock will likely continue to be highly volatile.

Some of the factors that may materially affect the market

price of our common stock are beyond our control, such as conditions or trends in the industry in which we operate or sales of our common

This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown

to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume,

and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company

such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.

a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared

to a mature issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse

effect on share price.

It is possible that a broader or more active public trading market for our common stock will not develop or be

sustained, or that trading levels will not continue.

These factors may materially adversely affect the market price of our common stock,

regardless of our performance.

In addition, the public stock markets have experienced extreme price and trading volume volatility.

volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelated to the operating

performance of the specific companies.

These broad market fluctuations may adversely affect the market price of our common stock.

exercise of outstanding warrants, options and shares issued in connection with a joint venture and acquisition will be dilutive to our

existing stockholders.

As of the date of this Report, we had outstanding various warrants, stock

options and other securities that are exercisable into shares of our common stock:

the life of the options and warrants, the holders have the opportunity to profit from a rise in the market price of our common stock

without assuming the risk of ownership.

The issuance of shares upon the exercise of outstanding securities will also dilute the ownership

interests of our existing stockholders.

availability of these shares for public resale, as well as any actual resales of these shares, could adversely affect the trading price

of our common stock.

Certain of the shares of common stock underlying outstanding options will be available for resale immediately in

the public market without restriction.

ever, our common stock may be classified as a “penny stock” in the future.

exercise of outstanding warrants, options and other securities that are exercisable into shares of our common stock will be dilutive

to our existing stockholders.

of the date of this Registration Statement, we had outstanding various warrants, stock options and other securities that are exercisable

into shares of our common stock.

For the life of the options and warrants, the holders have the opportunity to profit from a rise in

the market price of our common stock without assuming the risk of ownership.

The issuance of shares upon the exercise of outstanding

securities will also dilute the ownership interests of our existing stockholders.

The availability of these shares for public resale,

as well as any actual resales of these shares, could adversely affect the trading price of our common stock.

cannot predict the size of future issuances of our common stock pursuant to the exercise of outstanding options or warrants, or the effect,

5 unchanged sentences

on a regular basis, if at all.

we declared and paid a special cash dividend in March 2024 that dividend was paid as the result of a sale various business assets and

not paid from cash generated in our operations, the Company has not historically paid or declared any dividends on our common stock or

preferred stock.

Any future dividends on common stock will be declared at the discretion of our Board of Directors and will depend, among

other things, on our earnings, our financial requirements for future operations and growth, and other facts as we may then deem appropriate.

As such, the return on your investment, if any, has historically been dependent solely on an increase, if any, in the market value of

our common stock.

we declared special cash dividends in the first and third quarters of 2024, those dividends were declared as the result of a sale various

business assets and not paid from cash generated in our operations.

The Company has not historically paid or declared any dividends on

our common stock or preferred stock.

Any future dividends on common stock will be declared at the discretion of our board of directors

and will depend, among other things, on our earnings, our financial requirements for future operations and growth, and other facts as

we may then deem appropriate.

As such, the return on your investment, if any, has historically been dependent solely on an increase,

if any, in the market value of our common stock.

common stock price is likely to be highly volatile because of several factors, including a limited public float.

22 unchanged sentences

of our actual operating performance.

Chief Executive Officer and President are two of our largest stockholders and, as a result, they can exert influence over us and have

actual or potential interests that may differ from yours.

Suren Ajjarapu, our CEO, and Mr.

Prashant Patel, our President, acting together, may be able to influence many matters requiring stockholder

approval, including the election of directors and approval of mergers and other significant corporate transactions.

This concentration

of ownership may have the effect of delaying, preventing or deterring a change in control, and could deprive our stockholders of an opportunity

to receive a premium for their shares of common stock as part of a sale of our company and may affect the market price of our stock.

Ajjarapu and Mr.

Patel may have interests that differ from those of other holders of our common stock.

As a result, Mr.

Patel may vote the shares they own or control or otherwise cause us to take actions that may conflict with your best interests

as a stockholder, which could adversely affect our results of operations and the trading price of our common stock.

this influence, Mr.

Ajjarapu and Mr.

Patel can influence our management, affairs and all matters requiring stockholder approval, including

the approval of significant corporate transactions, a sale of our company, decisions about our capital structure and the composition

of our Board of Directors.

common stock may continue to be followed by only a limited number of analysts and there may continue to be a limited number of institutions

acting as market makers for our common stock.

the foreseeable future, our common stock is unlikely to be followed by a significant number of market analysts, and there may be few

institutions acting as market makers for our common stock.

Either of these factors could adversely affect the liquidity and trading price

of our common stock.

Until our common stock is fully distributed, and an orderly market develops in our common stock, if ever, the price

at which it trades is likely to fluctuate significantly.

Prices for our common stock are determined in the marketplace and may be influenced

by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business,

including the impact of the factors referred to elsewhere in these Risk Factors, investor perception of us and general economic and market

No assurances can be given that an orderly or liquid market will ever develop for the shares of our common stock.

bylaws require, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers,

other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in

the State of Delaware, and if brought outside of Delaware, the stockholder bringing the suit will, subject to certain exceptions, be

deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits

against our directors, officers, other employees or stockholders.

bylaws require that unless the Company consents in writing to an alternative forum, the Court of Chancery of the State of Delaware shall,

to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf

of the Company;

(b) any action asserting a claim of breach of fiduciary duty owed by, or other wrongdoing by, any director, officer,

employee or agent of the Company to the Company or the Company’s stockholders;

to any provision of Delaware General Corporation Law or the certificate of incorporation or bylaws of the Company;

(d) any action to

interpret, apply, enforce or determine the validity of the certificate of incorporation or bylaws of the Company;

or (e) any action asserting

a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the

indispensable parties named as defendants therein (or such indispensable parties consenting to the personal jurisdiction of the Court

of Chancery within 10 days following any determination by the Court of Chancery that an indispensable party is not subject to such personal

jurisdiction);

provided that, if the Court of Chancery of the State of Delaware dismisses any action for lack of subject matter jurisdiction,

such action may be brought in another state or federal court sitting in the State of Delaware.

Any person or entity purchasing or otherwise

acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our

This choice of forum provision may limit or make more costly a stockholder’s ability to bring a claim in a judicial forum

that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage

lawsuits with respect to such claims.

Alternatively, if a court were to find the choice of forum provision contained in our bylaws to

be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions,

which could harm our business, operating results and financial condition.

described above, our bylaws provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable

law, subject to certain exceptions.

However, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought

to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.

As a result, the exclusive forum

provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the

federal courts have exclusive jurisdiction.

We also note that investors cannot waive compliance with the federal securities laws and

the rules and regulations thereunder.

Section 22 of the Securities Act, creates concurrent jurisdiction for state and federal courts

over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

stockholders have no right to call special meetings of stockholders.

bylaws provide that special meetings of our stockholders may be called only by the chairperson of the board of directors, the chief executive

officer or president (in the absence of a chief executive officer).

Because our stockholders do not have the right to call a special

meeting, a stockholder could not force stockholder consideration of a proposal over the opposition of our board of directors by calling

a special meeting of stockholders prior to such time as the chairperson of the board of directors, the chief executive officer or president

(in the absence of a chief executive officer) believed the matter should be considered or until the next annual meeting provided that

the requestor met the notice requirements.

The restriction on the ability of stockholders to call a special meeting means that a proposal

to replace our board of directors also could be delayed until the next annual meeting.

in our certificate of incorporation and bylaws may inhibit a takeover of us, which could limit the value of our securities and could

entrench management.

certificate of incorporation and bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider

to be in their best interests.

These provisions include the ability of the board of directors to designate the terms of and issue new

series of preferred shares and the requirement to receive the affirmative vote of holders of at least two-thirds of the outstanding capital

stock of the Company to amend any provision of the bylaws of the Company, without Board of Directors approval (which Board of Directors

approved amendments may be affected solely by the Board of Directors, without stockholder approval, subject to certain exceptions, without

stockholder approval), which may make the removal of management more difficult and may discourage transactions that otherwise could involve

payment of a premium over prevailing market prices for our securities.

These provisions may make the removal of management more difficult

and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

and global economic conditions could materially adversely affect the Company’s business, results of operations, financial condition

macroeconomic conditions, including inflation, slower growth or recession, new or increased tariffs, changes to fiscal and monetary policy,

tighter credit, higher interest rates, high unemployment and currency fluctuations could have a material adverse impact on demand for

the Company’s products and services.

In addition, consumer confidence and spending could be adversely affected in response to financial

market volatility, negative financial news, conditions in the real estate and mortgage markets, declines in income or asset values, changes

to fuel and other energy costs, labor and healthcare costs and other economic factors.

addition to an adverse impact on demand for the Company’s products, uncertainty about, or a decline in, U.S.

or global economic

conditions could have a significant impact on the Company’s suppliers, the pharmacy industry as a whole, the Company’s network

of independent pharmacies and other partners.

Potential effects include financial instability, inability to obtain credit to finance

operations and purchases of the Company’s products, payment defaults and insolvency.

downturn in the economic environment could also lead to increased credit and collectability risk on the Company’s receivables;

limitations on the Company’s ability to raise new funding through the sale of debt or equity;

reduced liquidity;

and declines in

the value of the Company’s securities.

These and other economic factors could materially adversely affect the Company’s business,

results of operations, financial condition and growth.

may apply working capital and future funding to uses that ultimately do not improve our operating results or increase the value of our

general, we have complete discretion over the use of our working capital and any new investment capital we may obtain in the future.

Because of the number and variety of factors that could determine our use of funds, our ultimate expenditure of funds (and their uses)

may vary substantially from our current intended operating plan for such funds.

intend to use existing working capital and future funding to support the development of our products and services, product purchases

in our wholesale distribution division, the expansion of our marketing, or the support of operations to educate our customers.

also use capital for market and network expansion, acquisitions, and general working capital purposes.

However, we do not have more specific

plans for the use and expenditure of our capital.

Our management has broad discretion to use any or all of our available capital reserves.

Our capital could be applied in ways that do not improve our operating results or otherwise increase the value of a stockholder’s

websites may encounter technical problems and service interruptions.

websites may, in the future, experience slower response times or interruptions as a result of increased traffic or other reasons.

delays and interruptions resulting from failure to maintain Internet service connections to our site could frustrate visitors and reduce

our future web site traffic, which could have a material adverse effect on our business.

may not be sufficient liquidity in the market for our securities in order for investors to sell their shares.

The market price of our

common stock may continue to be volatile .

market price of our common stock will likely continue to be highly volatile.

Some of the factors that may materially affect the market

price of our common stock are beyond our control, such as conditions or trends in the industry in which we operate or sales of our common

This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown

to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume,

and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company

such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.

a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared

to a mature issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse

effect on share price.

It is possible that a broader or more active public trading market for our common stock will not develop or be

sustained, or that trading levels will not continue.

These factors may materially adversely affect the market price of our common stock,

regardless of our performance.

In addition, the public stock markets have experienced extreme price and trading volume volatility.

volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelated to the operating

performance of the specific companies.

These broad market fluctuations may adversely affect the market price of our common stock.

may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional shares

15 unchanged sentences

existing management.

or types of insurance may not be adequate to cover claims.

we maintain current and active insurance policies, we cannot guarantee that all levels and types of insurance will be adequate to cover

claims brought against the Company.

growth depends in part on the success of our strategic relationships with third parties.

order to grow our business, we anticipate that we will need to continue to depend on our relationships with third parties, including

our technology providers.

Identifying partners, and negotiating and documenting relationships with them, requires significant time and

Our competitors may be effective in providing incentives to third parties to favor their products or services, or utilization

of, our products and services.

In addition, acquisitions of our partners by our competitors could result in a decrease in the number

of our current and potential customers.

If we are unsuccessful in establishing or maintaining our relationships with third parties, our

ability to compete in the marketplace or to grow our revenue could be impaired and our results of operations may suffer.

Even if we are

successful, we cannot assure you that these relationships will result in increased customer use of our products or increased revenue.

litigation, government investigations, and other proceedings may adversely affect our business and results of operations.

a company offering a wide range of products and services, we are regularly subject to actual and threatened claims, litigation, reviews,

investigations, and other proceedings, including proceedings relating to goods and services offered by us and by third parties, and other

Any of these types of proceedings, including currently pending proceedings as discussed herein, may have an adverse effect on

us because of legal costs, disruption of our operations, diversion of management resources, negative publicity, and other factors.

outcomes of these matters are inherently unpredictable and subject to significant uncertainties.

Determining legal reserves and possible

losses from such matters involves judgment and may not reflect the full range of uncertainties and unpredictable outcomes.

final resolution of such matters, we may be exposed to losses in excess of the amount recorded, and such amounts could be material.

any of our estimates and assumptions change or prove to have been incorrect, it could have a material effect on our business, consolidated

financial position, results of operations, or cash flows.

In addition, it is possible that a resolution of one or more such proceedings,

including as a result of a settlement, could require us to make substantial future payments, prevent us from offering certain products

or services, require us to change our business practices in a manner materially adverse to our business, requiring development of non-infringing

or otherwise altered products or technologies, damaging our reputation, or otherwise having a material effect on our operations.

all of the foregoing reasons and others set forth herein, an investment in our securities involves a high degree of risk.

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 1A. Risk Factors