What changed in this filing

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Item 1. Financial Statements

2025-05-12 compared with 2024-11-06 · 921 added, 1136 removed, 306 unchanged (87% of the section changed)

FINANCIAL STATEMENTS

Holdings, Inc.

formerly TRxADE HEALTH, INC.

Consolidated Balance Sheets

30, 2024 and December 31, 2023

September 30,

Scienture Holdings, Inc.

formerly TRxADE HEALTH,

Condensed Consolidated Balance Sheets

As of March 31, 2025 and December 31, 2024

Current assets:

Accounts receivable, net

Prepaid expenses and other current assets

Prepaid expenses

Notes receivable - related party

6 unchanged sentences

Operating lease right-of-use assets

Noncurrent assets of discontinued operations

Deferred tax asset

$ 106,358,530

$ 104,853,805

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

4 unchanged sentences

Loan payable, related party

Contingent funding liabilities

Lease liability - current portion

Convertible note, net of debt discount - current portion

Operating lease liability - current

Warrant liability

1 unchanged sentence

Total current liabilities

Convertible note, net of debt discount

Lease liability - net of current portion

Convertible notes, net of debt discount

Derivative liability

Operating lease liability - net of current portion

Development agreement liability

Noncurrent liabilities of discontinued operations

Deferred tax liability

Total liabilities

Commitments and contingencies

Commitments and contingencies (Note 12)

Stockholders’ equity (deficit):

Series A preferred stock, $ 0.00001 par value;

0 and 9,211,246 shares authorized;

none issued and outstanding as of September 30, 2024 and December 31, 2023, all respectively

Series A preferred stock, $ 0.00001 par

and 9,211,246

shares authorized;

shares issued and outstanding as of both March 31, 2025 and December 31, 2024

Series B preferred stock, $ 0.00001 par value;

787,754 shares authorized;

15,759 shares issued and outstanding as of both September 30, 2024 and December 31, 2023

Series C preferred stock, $ 0.00001 par value;

15,759 shares issued and outstanding as of both March 31, 2025 and December 31, 2024

Series C preferred stock, $ 0.00001

shares authorized;

0 and 290 shares issued and outstanding as of September

30, 2024 and December 31, 2023, respectively

Series X preferred stock, $ 0.00001 par value;

shares issued and outstanding as of both March 31, 2025 and December 31, 2024

Series X preferred stock, $ 0.00001

shares authorized;

0 and 0 shares issued and outstanding as of September

30, 2024 and December 31, 2023, respectively

shares issued and outstanding as of both March 31, 2025 and December 31, 2024

preferred stock, value

1 unchanged sentence

100,000,000 shares authorized;

8,605,366 and 905,008 shares issued and outstanding as of

September 30, 2024 and December 31, 2023, respectively

12,515,019 and 8,750,582 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

4 unchanged sentences

Total liabilities and stockholders’ equity

accompanying notes are an integral part of the unaudited consolidated financial statements.

Holdings, Inc.

formerly TRxADE HEALTH, INC.

Consolidated Statements Of Operations

the Three and Nine Months Ended September 30, 2024 and 2023

Three Months Ended

Nine Months Ended

September 30,

$ 106,358,530

$ 104,853,805

The accompanying notes are an integral part of the

unaudited consolidated financial statements.

Scienture Holdings, Inc.

formerly TRxADE HEALTH,

Condensed Consolidated Statements Of Operations

For the Three Months Ended March 31, 2025 and 2024

Cost of sales

6 unchanged sentences

Research and development

Total operating expenses

operating expenses

Operating loss

1 unchanged sentence

( 5,492,971 )

( 2,142,854 )

Non-operating income (loss):

Change in fair value of warrant liability

Other income (expense):

Change in fair value of

warrant liability

Change in fair value of

derivative liability

Loss on conversion of note

Interest income

Loss on disposal of asset

Interest expense

Total non-operating income (loss), net

Total other income (expense)

( 1,140,451 )

2 unchanged sentences

( 6,633,422 )

( 3,429,112 )

Net (loss) income from discontinued operations

Benefit / (provision)

for income taxes

Net loss from continuing operations, net of

( 3,063,997 )

( 6,633,422 )

Net income from

discontinued operations, net of tax

Net (loss) income

$ ( 3,063,997 )

$ ( 3,525,114 )

$ ( 6,177,945 )

Net loss per common share from continuing operations

Net (loss) income per common share from discontinued operations

Net income per common share from discontinued

Net (loss) income per common share

Weighted average common shares outstanding

accompanying notes are an integral part of the unaudited consolidated financial statements.

Holdings, Inc.

formerly TRxADE HEALTH, INC.

Consolidated Statements of Changes in Stockholders’ Equity

Non-controlling

The accompanying notes are an integral part of the

unaudited consolidated financial statements.

Scienture Holdings, Inc.

formerly TRxADE HEALTH,

Condensed Consolidated Statements of Changes in

Stockholders’ Equity

Preferred Stock

Stockholders’

1 unchanged sentence

$ ( 33,245,940 )

$ ( 420,269 )

Common stock issued for services

Disposition of assets, related party

Warrants exercised for cash

Options expense

Balances at March 31, 2023

( 19,905,459 )

Common stock issued for services

Options exercised for common shares

Warrants exercised for cash

Options expense

( 1,974,878 )

Balances at June 30, 2023

( 21,880,337 )

( 1,294,527 )

Options expense

Disposition of assets

Shares issued pursuant to merger agreement

( 3,525,114 )

Balances at September 30, 2023

$ ( 21,529,975 )

Balances at December 31, 2023

( 33,245,940 )

Cash dividends paid ($ 8 per share)

1 unchanged sentence

( 12,671,072 )

Common stock issued for services

Options exercised for cash

Warrants exercised for cash

Options expense

Balances at March 31, 2024

$ ( 24,670,979 )

Options expense

( 1,833,902 )

Balances at June 30, 2024

( 26,504,881 )

Balances at December 31, 2024

$ 118,111,007

Cash dividends paid ($ 1.50 per share)

$ ( 39,038,973 )

$ 118,111,007

Conversion of Series C preferred stock into common stock

Issuance of shares pursuant to Merger

Conversion of Series X preferred stock into common stock

$ ( 39,038,973 )

Warrants issued with convertible note

Warrants exercised for shares

Common stock issued for services

Common stock issued for cash pursuant to ELOC agreement, net of offering costs

Equity line of commitment shares issued

Conversion of note payable into common stock

Options expense

1 unchanged sentence

( 3,063,997 )

Net income (loss)

( 3,063,997 )

Balances at September 30, 2024

Balances at March 31, 2025

$ 123,265,605

2 unchanged sentences

$ ( 42,102,970 )

accompanying notes are an integral part of the unaudited consolidated financial statements

Holdings, Inc.

formerly TRxADE HEALTH, INC.

Consolidated Statements of Cash Flows

The Nine Months Ended September 30, 2024 and 2023

Nine Months Ended

September 30,

The accompanying notes are an integral part of the

unaudited consolidated financial statements

Scienture Holdings, Inc.

formerly TRxADE HEALTH,

Condensed Consolidated Statements of Cash Flows

For The Three Months Ended March 31, 2025 and 2024

Three Months Ended

Cash flows from operating activities:

2 unchanged sentences

$ ( 6,633,422 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash used in

operating activities:

Depreciation expense

Change in fair value of warrant liability

Change in fair value of derivative liability

Loss on conversion of note payable

Options expense

4 unchanged sentences

Accounts receivable, net

Prepaid expenses and other assets

Prepaid expenses and deposits

Other receivables

7 unchanged sentences

( 9,659,231 )

Net cash (used in) provided by operating activities from

discontinued operations

Net cash used in operating activities from discontinued operations

Net cash used in operating activities

2 unchanged sentences

Cash flows from investing activities:

Cash received in acquisition

Acquisition of property and equipment

Investment in securities

( 2,500,000 )

Net cash (used in) provided by investing activities from continuing operations

Net cash used in investing activities from continuing operations

( 2,500,000 )

4 unchanged sentences

( 1,246,346 )

( 1,755,688 )

Proceeds from issuance of debt

Proceeds from repayment of notes receivable

Proceeds from loan payable, related party

Gross proceeds from issuance of common stock

Cash dividends paid

( 12,671,072 )

Proceeds from sale of future revenue

Proceeds from convertible note

Proceeds from exercise of warrants

Proceeds from exercise of options

Net cash (used in) provided by financing activities from continuing operations

Net cash provided by (used in) financing activities from continuing operations

( 13,891,011 )

Net cash used in financing activities from discontinued operations

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

( 13,896,011 )

Net change in cash

( 1,060,860 )

Cash at beginning of period

4 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Issuance of shares pursuant to Merger

Assets acquired in connection with Merger

Liabilities assumed in connection with Merger

Conversion of note payable into common stock

Equity line of commitment shares issued as offering costs

Insurance premium financed

Deferred offering costs

Warrants issued with convertible note

Note issued as SOSRx contribution

Disposition of assets, related party

accompanying notes are an integral part of the unaudited consolidated financial statements.

1 – ORGANIZATION AND BASIS OF PRESENTATION

On September 20, 2024, the Company filed with the Secretary of State of

the State of Delaware an amendment to its Second Amended and Restated Certificate of Incorporation to change the legal name of the Company

from “TRxADE HEALTH, Inc.” to “Scienture Holdings, Inc.”

The Company owned, as of September 30, 2024,

Issuance of note receivable

The accompanying notes are an integral part of the

unaudited consolidated financial statements.

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

On September 20, 2024, the Company

filed with the Secretary of State of the State of Delaware an amendment to its Second Amended and Restated Certificate of Incorporation

to change the legal name of the Company from “TRxADE HEALTH, Inc.” to “Scienture Holdings, Inc.”

The Company owned, as of March

31, 2025, 100 % of Softell Inc.

(f/k/a Trxade Inc.), Integra Pharma Solutions, LLC, and Scienture, LLC (f/k/a Scienture, Inc.).

On October 4, 2024, the Company and Softell Inc.

(f/k/a Trxade Inc.) (“Softell”)

entered into an Assignment and Assumption of Membership Interests (the “IPS Assignment Agreement”), pursuant to which the

Company transferred, and Softell accepted, 100 % of the membership interests of Integra Pharma Solutions, LLC (“IPS”).

result, IPS is now a wholly-owned subsidiary of Softell.

During the year ended December 31, 2023 and a portion of the quarter ended March

31, 2024, Softell, operated a web-based market platform that enabled commerce among healthcare buyers and sellers of pharmaceuticals,

accessories and services.

Softell’s current primary operations are conducted through IPS.

IPS is a licensed pharmaceutical wholesaler and sells brand, generic and non-drug

products to customers.

IPS’ customers span various healthcare markets including government organizations, hospitals, clinics and independent

pharmacies nationwide.

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

(f/k/a Trxade Inc.), Integra Pharma Solutions, LLC, and Scienture, LLC (f/k/a Scienture, Inc.), which was

acquired in July 2024.

On October 4, 2024, the Company

and Softell Inc.

(f/k/a Trxade Inc.) (“Softell”) entered into an Assignment and Assumption of Membership Interests (the “IPS

Assignment Agreement”), pursuant to which the Company transferred, and Softell accepted, 100 % of the membership interests of Integra

Pharma Solutions, LLC (“IPS”).

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

During the year ended December

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

healthcare buyers and sellers of pharmaceuticals, accessories and services.

Softell’s current primary operations are conducted through

IPS is a licensed pharmaceutical

wholesaler and sells brand, generic and non-drug products to customers.

IPS’ customers include all healthcare markets including

government organizations, hospitals, clinics and independent pharmacies nationwide.

Bonum Health, LLC was formed to

hold certain telehealth assets acquired in October 2019.

The “Bonum Health Hub” was launched in February 2020;

however, the Company does not anticipate installations moving forward.

Company does not anticipate installations moving forward.

The Company anticipates dissolving Bonum Health, Inc.

and Bonum Health, LLC.

Scienture, LLC (f/k/a Scienture, Inc.) (“Scienture”) is a New

York based branded, specialty pharmaceutical research company which is engaged in the research and development of branded pharmaceutical

The intellectual property application process was initiated in November 2019 and the product development activities commenced

in January 2020.

Scienture also plans to foray into commercialization of innovative and branded pharmaceutical products in the US market.

Scienture’s assets in development are across therapeutics areas and indications and cater to different market segments.

mission is to identify, develop and bring to market innovative technology-based products to address unmet medical needs.

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

July 14, 2023, the Company entered into an Amended and Restated Agreement and Plan of Merger (the “Superlatus Merger

Agreement”) with Superlatus, Inc., a U.S.-based holding company of food products and distribution capabilities

(“Superlatus”) and Foods Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company

(“Merger Sub”).

July 31, 2023, the Company completed its acquisition of Superlatus in accordance with the terms and conditions of the Superlatus

Merger Agreement (the “Superlatus Merger”), pursuant to which the Company acquired Superlatus by way of a merger of the

Merger Sub with and into Superlatus, with Superlatus being a wholly owned subsidiary of the Company and the surviving entity in the

Superlatus Merger.

Under the terms of the Superlatus Merger Agreement, at the closing of the

Superlatus Merger, shareholders of Superlatus received an aggregate of 136,441 shares of the Company’s common stock and 306,855 shares of the Company’s Series B Preferred Stock, par value

$ 0.00001 per share (the “Series B Preferred Stock”).

Each share of Series

B Preferred Stock is convertible into 100 shares of the Company’s common stock.

At Closing, the value of the Company’s common

stock was $ 7.30 per share, resulting in a total value of $ 225,000,169 .

Upon consummation of the Superlatus Merger, the Company continued to trade

under its former ticker symbol “MEDS”.

Not all of the closing conditions of the Superlatus Merger Agreement were

As a result, the Company entered into Amendment No.

1 to the Amended and Restated Agreement and Plan of Merger (the “Superlatus

Amendment”) on January 8, 2024.

Under the terms of the Superlatus Amendment, the merger consideration to the shareholders of Superlatus

was adjusted to an aggregate of 136,441 shares of the Company’s common stock and 15,759 shares of the Company’s Series B Preferred Stock, resulting in a

total value of $ 12,500,089 .

Additionally, the shareholders

of Superlatus agreed to surrender back to the Company 291,096 shares of the Company’s Series B Preferred Stock.

As described below,

in March 2024, the Company divested of its interest in Superlatus.

July 25, 2024, the Company entered into and closed an Agreement and Plan of Merger (the “Scienture Merger Agreement”) with

MEDS Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub I”), MEDS Merger

Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Merger Sub II” and, together

with Merger Sub I, the “Merger Subs”), and Scienture.

Pursuant to the Scienture Merger Agreement, (i) Merger Sub I merged

with and into Scienture (the “First Merger”), with Scienture continuing as the surviving entity and a wholly owned subsidiary

of the Company, and (ii) Scienture merged with and into Merger Sub II (the “Second Merger” and, together with the First Merger

and all other related transactions, the “Scienture Merger”), with Merger Sub II continuing as the surviving entity.

In connection

with the transactions, the Company changed its name to “Scienture Holdings, Inc.” and Merger Sub II, as the surviving entity

of the Second Merger, changed its name to “Scienture, LLC”.

consideration for the Scienture Merger, at the effective time of the First Merger (the “Effective Time”), the shares of Scienture

common stock issued and outstanding immediately prior to the Effective Time were converted into the right to receive, in the aggregate,

(i) 291,536 shares of the Company’s common stock and (ii) 6,826,753 shares of the Company’s Series X Non-Voting Convertible

Preferred Stock (the “Series X Preferred Stock”), each share of which is convertible into one share of common stock.

On February 16, 2024, the Company, together with Softell and Micro Merchant

Systems, Inc.

(“MMS”), entered into an asset purchase agreement (the “MMS APA”) under which MMS agreed to purchase

for cash substantially all of the assets of Softell.

On February 16, 2024, the parties consummated the closing of the transactions contemplated

by the MMS APA.

Softell operated a web-based market platform designed to enable trading among healthcare buyers and sellers of pharmaceuticals,

accessories and services.

The purchase price paid at closing was $ 22,660,182 .

Pursuant to the terms and conditions of the MMS APA, because MMS received $ 1,600,000 or greater in certain collections from third parties resulting from any

products or services sold, or provided, by the business assets and operations acquired from Softell during the period ending on the four-month

anniversary of the closing date, the Company was due an additional

$ 7,500,000 payment from MMS.

The Company received the $ 7,500,000 in May 2024.

On March 5, 2024, the Company entered into a Stock Purchase Agreement (the

“Superlatus SPA”) with Superlatus Foods Inc.

(the “Buyer”).

Pursuant to the Superlatus SPA, the Company sold all

of the issued and outstanding stock of Superlatus to the Buyer.

The $ 1.00 purchase price for the stock was delivered to the Company at

the closing, which occurred simultaneously with the execution of the Superlatus SPA.

As a result of the transaction, Superlatus ceased

to be a subsidiary of the Company, and the rights and assets of Superlatus together with various liabilities and obligations that were

specific to Superlatus became rights and obligations of the Buyer.

Note 3 for further detail on the dispositions.

of Presentation and Principles of Consolidation

accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting

principles generally accepted in the United States of America (“U.S.

GAAP”) and the rules of the SEC and should be read in

conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the

year ended December 31, 2023, as filed with the SEC on April 22, 2024.

the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial

position and the results of operations for the interim periods presented have been reflected herein.

All significant intercompany balances

and transactions have been eliminated in consolidation.

The results of operations for the interim periods are not necessarily indicative

of the results to be expected for the full year.

Notes to the financial statements that would substantially duplicate the disclosures

contained in the audited financial statements for the year ended December 31, 2023, as reported in the Company’s Annual Report

on Form 10-K have been omitted.

preparation of condensed consolidated financial statements in accordance with U.S.

GAAP requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue

and expenses in the reporting period.

The Company bases its estimates and assumptions on current facts, historical experience and various

other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about

the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.

The actual results experienced by the Company may differ materially and adversely from its estimates.

To the extent there are material

differences between estimates and the actual results, future results of operations will be affected.

Significant estimates for the nine

months ended September 30, 2024 and 2023 include the valuation of intangible assets, including goodwill, and gain (losses) on dispositions.

Value of Financial Instruments

carrying amounts for cash, accounts receivable, accounts payable, accrued liabilities, and other current liabilities approximate their

fair value because of their short-term maturity.

June 21, 2023, the Company executed a 1:15 reverse stock split for stockholders of record on that date .

This was executed to comply with

the Nasdaq Listing Rule 5550(a)(2) to have the price of the stock above $ 1.00 .

Issued Accounting Pronouncements

November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment

Disclosures .

The new guidance requires enhanced disclosure of significant expenses that are regularly reported to the chief

operating decision maker and the nature of segment expense information used to manage operations.

The new guidance is effective for

all public companies for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years

beginning after December 15, 2024.

Early adoption is permitted.

The Company will adopt the new standard in annual reporting period

beginning after December 15, 2023 and is currently evaluating the impacts of the new guidance on its disclosure within the financial

The Company does not expect any significant impact from the ASU on its consolidated financial statements.

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) :

Improvements to Income Tax Disclosures .

The new guidance

requires disaggregated information about the effective tax rate reconciliation and additional information on taxes paid that meet a quantitative

The new guidance is effective for public companies for annual reporting periods beginning after December 15, 2024, and for

non-public companies for annual reporting periods beginning after December 15, 2025, with early adoption permitted for both.

will adopt the new standard in annual reporting period beginning after December 15, 2025, and is currently evaluating the impacts of

the new guidance on its disclosures within the consolidated financial statements.

Receivable, net

January 1, 2023, the Company adopted ASU 2016-13 “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses

on Financial Instruments” and its related amendments using the prospective method.

The new standard requires the use of a current

expected credit loss impairment model to develop and recognize credit losses for financial instruments at amortized cost when the asset

is first originated or acquired, and each subsequent reporting period.

Company’s receivables are from customers and are typically collected within 90 days.

The Company determines the allowance based

on known troubled accounts, historical experience, and other currently available evidence.

of September 30, 2024 and December 31, 2023, other receivables are $ 4,505,797 and $ 1,224,702 .

As of September 30, 2024, other receivables

primarily consist of short-term advances to Wellgistics Health, Inc.

(f/k/a Danam Health Inc.).

Offering Costs

Company complies with the requirements of Accounting Standards Codification (“ASC”) 340-10-S99-1 with regards to offering costs.

completion of an offering, offering costs are capitalized.

The deferred offering costs are charged to additional paid-in capital or

as a discount to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed.

September 30, 2024, the Company has $ 69,444

capitalized deferred offering costs.

Company accounts for acquisitions and investments in businesses as business combinations if the target meets the definition of a business

and (a) the target is a variable interest entity (“VIE”) and the Company is the target’s primary beneficiary, and therefore

the Company must consolidate its financial statements, or (b) the Company acquires more than 50% of the voting interest of the target

and it was not previously consolidated.

The Company records business combinations using the acquisition method of accounting, which requires

all the assets acquired and liabilities assumed to be recorded at fair value as of the acquisition date.

The excess of the purchase price

over the estimated fair values of the net tangible and intangible assets acquired is recorded as goodwill.

application of the acquisition method of accounting for business combinations requires management to make significant estimates and assumptions

in the determination of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration

between assets that are depreciated and amortized from goodwill.

The fair value assigned to tangible and intangible assets acquired and

liabilities assumed are based on management’s estimates and assumptions, as well as other information compiled by management, including

valuations that utilize customary valuation procedures and techniques.

Significant assumptions and estimates include, but are not limited

to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost

savings expected to be derived from acquiring an asset, if applicable.

the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the Company’s financial

statements may be exposed to potential impairment of the intangible assets and goodwill.

the Company’s investment involves the acquisition of an asset or group of assets that does not meet the definition of a business,

the transaction is accounted for as an asset acquisition.

An asset acquisition is recorded at cost, which includes capitalizing transaction

costs, and does not result in the recognition of goodwill.

July 25, 2024, the Company acquired intangible assets of $ 76,400,000 and recognized goodwill of $ 7,848,747 pursuant to the Scienture

acquisition (see Note 3).

The acquired goodwill represents the value in excess of the net assets and liabilities acquired at the acquisition

of September 30, 2024, there were no indicators of impairment since the acquisition in July 2024.

Company determined that no

impairment was necessary.

Assets and Goodwill

Company tests indefinite-lived intangible assets for impairment on an annual basis or whenever events or changes occur that would more-likely-than

not reduce the fair value of the indefinite-lived intangible asset below its carrying value between annual impairment tests.

Any indefinite-lived

intangible asset assessment is performed at the Company level.

Company did not record an indefinite-lived intangible asset impairment charge for the three or nine months ended September 30, 2024 and

Company accounts for investments that it does not control using the cost method, equity method or fair value method, as applicable.

in companies in which the Company owns less than a 20% equity interest and where it does not exercise significant influence over the

operating and financial policies of the investee are accounted for using the cost method of accounting.

The Company periodically reviews

the carrying value of these investments to determine if there has been an other-than-temporary decline in fair value below carrying value.

A variety of factors are considered when determining if a decline in fair value below carrying value is other-than-temporary, including,

among others, the financial condition and business prospects of the investee, as well as the Company’s investment intent.

method investments are carried at cost, which approximates or is less than fair value.

Dividends received by the Company are recognized

in equity (losses) earnings of affiliates, net of tax on the consolidated statements of operations.

February 29, 2024, Softell entered into a Subscription Agreement (the “Subscription Agreement”) with Lafayette Energy

Corp., a Delaware corporation (“Lafayette”).

Pursuant to the Subscription Agreement, Softell agreed, in two equal

tranches, to invest a total of up to $ 5,000,000

in Lafayette in exchange for up to 2,000,000

shares of Lafayette’s Series A Convertible Preferred Stock, with the second tranche becoming payable only upon Softell’s

receipt of notice that Lafayette has successfully drilled its first oil and gas well and produced at least one hundred (100) barrels

of September 30, 2024, the Company’s investment in Lafayette was $ 2,500,000 .

The Company determined there was no impairment necessary

as of September 30, 2024.

& Development Expenses

and development costs are expensed in the period incurred in accordance with ASC 730, Research and Development.

These expenses

consist of independent contractor costs, costs for outsourced analytical research and development activities, batch manufacturing

cost and, advisory costs as a part of research, market research costs and other regulatory consulting costs.

(loss) Per Common Share

net income per common share is computed by dividing net income available to common stockholders by the weighted average number of common

shares outstanding.

Diluted net income per common share is computed similar to basic net income per common share except that the denominator

is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been

issued and if the additional common shares were dilutive.

The dilutive effect of the Company’s options and warrants is computed

using the treasury stock method.

As of September 30, 2024, we had 238,594 outstanding warrants to purchase shares of common stock, 15,759

shares of Series B preferred stock and 23,930 options to purchase shares of common stock.

following table sets forth the computation of basic and diluted loss per share:

Scienture, LLC (f/k/a Scienture,

Inc.) (“Scienture”) is a New York based branded, specialty pharmaceutical research company which is engaged in the research

and development of branded pharmaceutical products.

The intellectual property application process was initiated in November 2019 and the

product development activities commenced in January 2020.

Scienture also plans to foray into commercialization of innovative and branded

pharmaceutical products in the US market.

Scienture’s assets in development are across therapeutics areas and indications and cater

to different market segments.

Scienture’s mission is to identify, develop and bring to market innovative technology-based products

to address unmet medical needs.

Its targeted portfolio consists of short term and long-term opportunities with efficient development,

regulatory, and go to market strategies.

Disposition of Legacy Subsidiaries

On April 8, 2025, the Company

entered into a Membership Interest Purchase Agreement (the “IPS MIPA”) with Tollo Health, Inc.

(“Tollo”), pursuant

to which Tollo agreed to purchase and the Company agreed to sell all of the Company’s membership interests in IPS.

Suren Ajjarapu,

the Company’s Chief Executive Officer, and Prashant Patel, the Company’s President and Chief Operating Officer, each have

a beneficial interest in Tollo.

On April 8, 2025, the Company

also entered into a Stock Purchase Agreement (the “Bonum SPA” and together with the IPS MIPA, the “Agreements”)

with Tollo, pursuant to which Tollo agreed to purchase and the Company agreed to sell all issued and outstanding shares of common stock

of Bonum Health, Inc.

In connection with each of the

Agreements, the Company agreed to retain certain excluded liabilities of IPS and Bonum including all liabilities:

(i) related to, in connection

with or arising out of any claims, charges, complaints, actions, suits, settlements, hearings, investigations, proceedings, or governmental

or regulatory inquiries with respect to IPS or Bonum, respectively, prior to the closing under the applicable Agreement;

to, in connection with or arising out of any breach by the Company of the applicable Agreement or any other agreements and documents required

to be delivered by the Company;

(iii) not disclosed by the Company in accordance with each Agreement;

(iv) related to any actions threatened

or initiated by a governmental entity against IPS or Bonum, respectively;

and (v) related to tax returns or tax matters of the Company,

IPS, or Bonum, respectively, for any periods prior to closing under the applicable Agreement.

The Company and Tollo have agreed

to consummate the closing of each of the Agreements on June 30, 2025, or such other time as the Company and Tollo may agree.

As consideration

for acquiring IPS and Bonum, Tollo has agreed to pay the Company $ 5 million in the form of a promissory note bearing interest at the prime

The promissory note matures on June 30, 2030.

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

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

The divestitures are part of a

broader strategic realignment at the Company designed to sharpen operational focus and unlock long-term value.

It is aligned with the

Company’s commitment to streamline its core operations, optimize its portfolio, and accelerate growth in the Branded and Specialty

Pharma markets.

The Company intends to use the proceeds obtained from the divestment to facilitate the high-growth commercial and strategic

product development activities at its Scienture, LLC subsidiary (see Note 15).

Basis of Presentation and Principles of Consolidation

The accompanying unaudited interim

condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted

in the United States of America (“U.S.

GAAP”) and the rules of the SEC and should be read in conjunction with the audited

financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024,

as filed with the SEC on March 26, 2025.

In the opinion of management,

all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of

operations for the interim periods presented have been reflected herein.

All significant intercompany balances and transactions have been

eliminated in consolidation.

The results of operations for the interim periods are not necessarily indicative of the results to be expected

for the full year.

Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial

statements for the year ended December 31, 2024, as reported in the Company’s Annual Report on Form 10-K have been omitted.

Use of Estimates

The preparation of condensed consolidated

financial statements in accordance with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts

of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period.

The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to

be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and

liabilities and the accrual of costs and expenses that are not readily apparent from other sources.

The actual results experienced by

the Company may differ materially and adversely from its estimates.

Significant estimates for the three months ended March 31, 2025 and

2024 include the valuation of intangible assets, including goodwill, and gain (losses) on dispositions.

Fair Value of Financial Instruments

Certain assets and liabilities

of the Company are carried at fair value under GAAP.

Fair value is defined as the exchange price that would be received for an asset or

paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction

between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable

inputs and minimize the use of unobservable inputs.

Financial assets and liabilities carried at fair value are to be classified and disclosed

in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered

unobservable:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The carrying amounts for cash,

accounts receivable, accounts payable, accrued liabilities, and other current liabilities approximate their fair value because of their

short-term maturity.

The Company’s notes payables approximate the fair value of such instruments as the notes bear interest rates

that are consistent with current market rates.

The Company’s derivative liability is a Level

3 liability measured at fair value on a recurring basis (see Note 8).

Concentration of Credit Risks and Major Customers

Financial instruments that potentially

subject the Company to credit risk consist principally of cash and cash equivalents and receivables.

The Company places its cash and cash

equivalents with financial institutions.

Deposits are insured to Federal Deposit Insurance Corp limits.

During the three months ended

March 31, 2025 and 2024, no sales to customers represented greater than 10 % of revenue.

Accounts Receivable, net

The Company’s receivables

are from customers and are typically collected within 90 days.

The Company determines the allowance based on known troubled accounts,

historical experience, and other currently available evidence.

Other Receivables

As of March 31, 2025 and December

31, 2024, other receivables are $ 4,043,769 and $ 4,138,770 , respectively.

As of March 31, 2025, other receivables primarily consist of

short-term advances to Wellgistics Health, Inc.

(f/k/a Danam Health Inc.) and Tollo Health, Inc.

The Company expects to be repaid on all

related party receivables in 2025.

Deferred Offering Costs

The Company complies with the

requirements of Accounting Standards Codification (“ASC”) 340-10-S99-1 with regards to offering costs.

Prior to the completion

of an offering, offering costs are capitalized.

The deferred offering costs are charged to additional paid-in capital or as a discount

to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed.

As of March 31, 2025, the Company

has not capitalized any amount in deferred offering costs.

During the three months ended March 31, 2025, $ 534,800 of deferred offering

costs capitalized as of December 31, 2024 were charged to additional paid-in capital upon the Company’s equity offering.

The Company accounts for acquisitions

and investments in businesses as business combinations if the target meets the definition of a business and (a) the target is a variable

interest entity and the Company is the target’s primary beneficiary, and therefore the Company must consolidate

its financial statements, or (b) the Company acquires more than 50% of the voting interest of the target and it was not previously consolidated.

The Company records business combinations using the acquisition method of accounting, which requires all the assets acquired and liabilities

assumed to be recorded at fair value as of the acquisition date.

The excess of the purchase price over the estimated fair values of the

net tangible and intangible assets acquired is recorded as goodwill.

The application of the acquisition

method of accounting for business combinations requires management to make significant estimates and assumptions in the determination

of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration between assets

that are depreciated and amortized from goodwill.

The fair value assigned to tangible and intangible assets acquired and liabilities assumed

are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that

utilize customary valuation procedures and techniques.

Significant assumptions and estimates include, but are not limited to, the cash

flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost savings expected

to be derived from acquiring an asset, if applicable.

If the actual results differ from

the estimates and judgments used in these estimates, the amounts recorded in the Company’s financial statements may be exposed to

potential impairment of the intangible assets and goodwill.

If the Company’s investment

involves the acquisition of an asset or group of assets that does not meet the definition of a business, the transaction is accounted

for as an asset acquisition.

An asset acquisition is recorded at cost, which includes capitalizing transaction costs, and does not result

in the recognition of goodwill.

On July 25, 2024, the Company

acquired intangible assets of $ 76,400,000 and recognized goodwill of $ 21,372,960 pursuant to the Scienture acquisition (see Note 3).

acquired goodwill represents the value in excess of the net assets and liabilities acquired at the acquisition date.

Goodwill is an asset representing

the excess cost over the fair market value of net assets acquired in business combinations.

In accordance with Intangibles - Goodwill

and Other (Topic 350), goodwill is not amortized but is tested annually for impairment or on an interim basis when indicators of potential

impairment exist.

Goodwill is tested for impairment at the reporting unit level.

The Company’s reporting units discrete financial

information is available and management regularly reviews the operating results.

For purposes of impairment testing, goodwill is allocated

to the applicable reporting units based on the reporting structure.

The Company has the option to

first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than

its carrying value.

Qualitative factors assessed for each of the applicable reporting units include, but are not limited to, changes in

macroeconomic conditions, industry and market considerations, cost factors, discount rates, competitive environments and financial performance

of the reporting units.

If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting

unit exceeds its estimated fair value, a quantitative test is required.

The Company also has the option

to proceed directly to the quantitative test.

Under the quantitative impairment test, the estimated fair value of each reporting unit

is compared to its carrying value, including goodwill.

If the carrying value of the reporting unit including goodwill exceeds its fair

value, an impairment charge equal to the excess would be recognized, up to a maximum amount of goodwill allocated to that reporting unit.

Management can resume the qualitative assessment in any subsequent period for any reporting unit.

As of March 31, 2025, management

performed a qualitative impairment assessment of our reporting units, of which there were no indications that it was more likely than

not that the fair value of our reporting units were less than their respective carrying values.

As such, a quantitative goodwill test

was not required, and no goodwill impairment was recognized during the three months ended March 31, 2025 and 2024.

Intangible Assets

In connection with the Scienture

acquisition, the Company identified product technologies assets.

The product technologies represent a broad range of novel product candidates

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

Each of the product technologies

are in various phases of development and had not achieved regulatory approval as of the valuation date.

The product technologies are 505(b)(2)

products and represent modifications and new delivery methods of already approved drugs (rather than novel drug compounds/formulations/treatments

which require significant regulatory approvals and testing).

These assets should be amortized over their expected remaining economic life.

The product technology assets will remain unamortized, subject to potential impairment testing, until the assets are placed in service,

which is when commercialization of the product commences.

At that point, the assets will be amortized over their expected remaining life

(likely a period of 15 - 20 years based on the patent lives).

Impairment of Long-Lived Assets

The Company continually monitors

events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable.

When such events

or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying

value of such assets will be recovered through undiscounted expected future cash flows.

If the total of the future cash flows is less

than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the

fair value of the assets.

Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

The Company did not record an

impairment charge for the three months ended March 31, 2025 and 2024.

Stock-Based Compensation

The Company accounts for stock-based

compensation to employees in accordance with ASC 718, “Compensation-Stock Compensation”.

ASC 718 requires companies to measure

the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant date

fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange

for the award, usually the vesting period.

Stock option forfeitures are recognized at the date of employee termination.

Effective January

1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2018-07 for the accounting of share-based payments granted to non-employees for goods and services.

The Company accounts for its leases

under ASC 842, Leases.

Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases,

and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease

payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate.

Lease liabilities are

increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term.

For operating

leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease

For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense

over the lease term.

Variable lease expenses are recorded when incurred.

In calculating the right of use

asset and lease liability, the Company has elected to combine lease and non-lease components.

The Company excludes short-term leases having

initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line

basis over the lease term.

Research & Development Expenses

Research and development costs

are expensed in the period incurred in accordance with ASC 730, Research and Development.

These expenses consist of independent contractor

costs, costs for outsourced analytical research and development activities, batch manufacturing cost and, advisory costs as a part of

research, market research costs and other regulatory consulting costs.

Income (loss) Per Common Share

Basic net income per common share

is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding.

net income per common share is computed similar to basic net income per common share except that the denominator is increased to include

the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional

common shares were dilutive.

The dilutive effect of the Company’s options and warrants is computed using the treasury stock method.

As of March 31, 2025, we had 238,594 outstanding warrants to purchase shares of common stock, 15,759 shares of Series B preferred stock

and 23,930 options to purchase shares of common stock.

The following table sets forth the computation of

basic and diluted loss per share:

SCHEDULE OF BASIC AND DILUTIVE LOSS PER SHARE

Three Months Ended

Nine Months Ended

September 30,

Net loss from continuing operations

1 unchanged sentence

$ ( 6,633,422 )

$ ( 3,429,112 )

Net (loss) income on discontinued operations

( 3,436,978 )

( 2,748,833 )

Net income on discontinued operations

Net (loss) income

$ ( 3,063,997 )

$ ( 3,525,114 )

$ ( 6,177,945 )

Denominator for EPS – weighted average shares

Net loss per common share from continuing operations

Net loss (income) per common share from discontinued operations

Net income per common share from discontinued operations

Net (loss) income

Company’s provision for income taxes was $ 0 for the three and nine months ended September 30, 2024 and 2023.

The income tax provisions

for these periods are based upon estimates of annual income (loss), annual permanent differences and statutory tax rates in

the various jurisdictions in which the Company operates.

For all periods presented, the Company utilized net operating loss carryforwards

to offset the impact of any taxable income.

The Company’s tax rate differs from the applicable statutory rates due primarily to

the establishment of a valuation allowance, utilization of deferred and the effect of permanent differences and adjustments.

2 – GOING CONCERN

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

which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the

date the consolidated financial statements are issued.

In accordance with Financial Accounting Standards Board, or the FASB, Accounting

Standards Update No.

2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether

there are conditions or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern

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

of September 30, 2024, the Company had an accumulated deficit of $ 31,876,241 .

As of September 30, 2024, the Company had $ 579,103 in cash.

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

any businesses or assets we acquire.

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

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

If we are unable to access additional

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

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

Unless management is able to obtain

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

The financial

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

3 – ACQUISITIONS AND DISPOSITIONS

The Company evaluated the Scienture Merger Agreement pursuant to ASC 805

and ASU 2017-01, Topic 805, Business Combinations.

The Company first determined that Scienture met the definition of a business as it

includes inputs and a substantive process that together significantly contribute to the ability to create outputs.

Scienture’s results

of operations are included in the Company’s consolidated financial statements from the date of acquisition.

The acquisition method

of accounting requires, among other things, that the assets acquired and liabilities assumed in a business combination be measured at

their estimated respective fair values as of the closing date of the acquisition.

Goodwill recognized in connection with this transaction

represents primarily the potential economic benefits that the Company believes may arise from the acquisition.

The purchase price allocation

is preliminary and could be significantly revised as a result of additional information obtained regarding assets acquired and liabilities

assumed and revisions of estimates of fair values of tangible assets and related deferred tax assets and liabilities.

The Company will

finalize its valuation and the allocation of the purchase price, along with required retrospective adjustments, if any, within a year

following the acquisition date.

July 25, 2024, the Company issued 291,536

shares of common stock and 6,826,753

shares of Series X Preferred Stock pursuant to the Scienture Merger Agreement.

The aggregate fair value of the purchase price

consideration was $ 78,646,184 .

The fair value was determined by the underlying stock price of the common stock on the date of the Scienture Merger, which was

per share, which was utilized for both the issuance of common and preferred stock after evaluating the terms of the Series X Preferred Stock.

The Company’s provision

for income taxes was $ 0 for the three months ended March 31, 2025 and 2024.

The income tax provisions for these periods are based upon

estimates of annual income (loss), annual permanent differences and statutory tax rates in the various jurisdictions in which the Company

For all periods presented, the Company utilized net operating loss carryforwards to offset the impact of any taxable income.

The Company’s tax rate differs from the applicable statutory rates due primarily to the establishment of a valuation allowance,

utilization of deferred and the effect of permanent differences and adjustments.

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material

effect on the accompanying financial statements.

As new accounting pronouncements are issued, the Company will adopt those that are applicable

under the circumstances.

NOTE 2 – GOING CONCERN

The accompanying interim consolidated

financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates realization of

assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial

statements are issued.

In accordance with Financial Accounting Standards Board, or the FASB, Accounting Standards Update No.

Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether there are conditions or events,

considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date

that the financial statements are issued.

As of March 31, 2025, the Company

had an accumulated deficit of $ 42,102,970 .

As of March 31, 2025, the Company had $ 2,049,638 in cash.

The Company will need to raise additional

capital or secure debt funding to support on-going operations, and to fund the assets and operations of any businesses or assets we acquire.

The sources of this capital are expected to be the sale of equity and debt, which may not be available on favorable terms, if at all,

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

If we are unable to access additional capital moving forward, it

may hurt our ability to grow and to generate future revenues, our financial position, and liquidity.

These factors raise substantial doubt

about the ability of the Company to continue as a going concern.

Unless management is able to obtain additional financing, it is unlikely

that the Company will be able to meet its funding requirements during the next 12 months.

The financial statements do not include any

adjustments that might result from the outcome of this uncertainty.

NOTE 3 – ACQUISITIONS AND DISPOSITIONS

Scienture, Inc.

The Company evaluated the Scienture

Merger Agreement pursuant to ASC 805 and ASU 2017-01, Topic 805, Business Combinations.

The Company first determined that Scienture met

the definition of a business as it includes inputs and a substantive process that together significantly contribute to the ability to

create outputs.

Scienture’s results of operations are included in the Company’s consolidated financial statements from the

date of acquisition.

The acquisition method of accounting requires, among other things, that the assets acquired and liabilities assumed

in a business combination be measured at their estimated respective fair values as of the closing date of the acquisition.

Goodwill recognized

in connection with this transaction represents primarily the potential economic benefits that the Company believes may arise from the

The purchase price allocation is preliminary and could be significantly revised as a result of additional information obtained

regarding assets acquired and liabilities assumed and revisions of estimates of fair values of tangible assets and related deferred tax

assets and liabilities.

The Company will finalize its valuation and the allocation of the purchase price, along with required retrospective

adjustments, if any, within a year following the acquisition date.

On July 25, 2024, the Company

issued 291,536 shares of common stock and 6,826,753 shares of Series X Preferred Stock pursuant to the Scienture Merger Agreement.

aggregate fair value of the purchase price consideration was $ 78,646,184 .

The fair value was determined by the underlying stock price

of the common stock on the date of the Scienture Merger, which was $ 11.63 per share, which was utilized for both the issuance of common

and preferred stock after evaluating the terms of the Series X Preferred Stock.

The Company also applied a discount for lack of marketability

of 5% due to certain lock-up terms on the shares issued.

following summarizes the purchase price consideration and the preliminary purchase price allocation as of the acquisition date:

The following summarizes the purchase

price consideration and the preliminary purchase price allocation as of the acquisition date:

OF PURCHASE PRICE ALLOCATION

6 unchanged sentences

Intangible assets - product technologies

Prepaid expenses

Accounts payable

7 unchanged sentences

( 2,000,000 )

Accounts payable and other current liabilities

Purchase price payable

Notes payable

Deferred tax liability

( 13,524,213 )

Net assets acquired

is primarily attributable to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible

assets that do not qualify for separate recognition.

Goodwill is primarily attributable

to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible assets that do not qualify

for separate recognition.

The goodwill is not deductible for tax purposes.

results of Scienture have been included in the consolidated financial statements since the date of acquisition.

revenue and net loss included in the consolidated financial statements since the acquisition date through September 30, 2024 were

and a loss of $ 1,643,455 ,

respectively.

Pro Forma Financial Information

following unaudited pro forma financial information presents the Company’s financial results as if the Scienture Merger had occurred

as of January 1, 2023.

The unaudited pro forma financial information is not necessarily indicative of what the financial results actually

would have been had the acquisitions been completed on this date.

In addition, the unaudited pro forma financial information is not indicative

of, nor does it purport to project, the Company’s future financial results.

The pro forma information does not give effect to any

estimated and potential cost savings or other operating efficiencies that could result from the acquisition:

Unaudited Pro Forma Financial

The following unaudited pro forma

financial information presents the Company’s financial results as if the Scienture Merger had occurred as of January 1, 2024.

unaudited pro forma financial information is not necessarily indicative of what the financial results actually would have been had the

acquisitions been completed on this date.

In addition, the unaudited pro forma financial information is not indicative of, nor does it

purport to project, the Company’s future financial results.

The pro forma information does not give effect to any estimated and

potential cost savings or other operating efficiencies that could result from the acquisition:

SCHEDULE OF PRO

FORMA FINANCIAL INFORMATION

Nine Months Ended

September 30,

Net loss from continuing operations

$ ( 9,698,339 )

$ ( 4,644,587 )

Net loss from continuing operations per share

July 31, 2023, the Company entered into the Superlatus Merger Agreement (see Note 1) with Superlatus whereby the Company acquired 100 %

of the stock of Superlatus in the Superlatus Merger.

Superlatus includes a wholly-owned subsidiary, Sapientia.

Consideration for the

Superlatus Merger consisted of (i) 136,441

shares of the Company’s common stock at a fair value of $ 7.30 per share and (ii) 306,855

shares of the Company’s Series B Preferred Stock, each share of which is convertible into 100 shares of common stock.

total fair value of the common stock and Series B Preferred Stock on the closing date was $ 225,000,169

Dispositions and Divestitures

On February 16, 2024, the Company,

together with Softell and MMS, entered into the MMS APA under which MMS agreed to purchase for cash substantially all of the assets of

On February 16, 2024, the parties consummated the closing of the transactions contemplated by the MMS APA.

The purchase price

On January 8, 2024, the Company entered into the Superlatus Amendment.

Under the terms of the

Superlatus Amendment, the merger consideration to the shareholders of Superlatus was adjusted to an aggregate of 136,441

shares of the Company’s common stock and 15,759

shares of the Company’s Series B Preferred Stock.

The total fair value of the common stock and Series B Preferred Stock on the

closing date was adjusted to $ 12,500,089

(the “Amended Purchase Price”).

Additionally, the shareholders of Superlatus agreed to surrender back to the Company 289,731

shares of the Company’s Series B Preferred Stock received before the Superlatus Amendment.

acquisition of Superlatus was accounted for as a business combination using the acquisition method pursuant to FASB ASC Topic 805.

the acquirer for accounting purposes, the Company had estimated the Purchase Price, assets acquired and liabilities assumed as of the

acquisition date, with the excess of the Purchase Price over the fair value of net assets acquired recognized as goodwill.

An independent

valuation expert assisted the Company in determining these fair values.

Amended Purchase Price allocation as of the acquisition date is presented as follows:

OF PURCHASE PRICE ALLOCATION

July 31, 2023

Purchase consideration:

Common Stock, at fair value

Series B Preferred Stock, at fair value

Total purchase consideration

Purchase price allocation:

Prepaid expenses

Intangible assets, net

Assets acquired

Accounts payable and other current liabilities

Purchase price payable

Notes payable

( 1,905,000 )

Liabilities assumed

( 2,538,548 )

Net assets acquired

Urgent Company, Inc.

September 27, 2023, the Company entered into an Asset Purchase Agreement (the “TUC APA”) with The Urgent Company, Inc.

and its wholly owned subsidiaries, pursuant to which, the Company was assigned certain inventory and property and equipment and assumed

certain operating leases for consideration of $ 4,400,000 in promissory notes (see Note 11).

Subsequent to December 31, 2023, we divested our interest

transaction was accounted for as an asset acquisition pursuant to FASB ASC Topic 805.

As the acquirer for accounting purposes, the Company

allocated the cost of the asset acquisition to the assets acquired and liabilities assumed as of the acquisition date based on their

respective relative fair value as of the date of the transaction.

following summarizes the provisional relative fair values of the assets acquired as of the acquisition date based on the allocation of

the cost of the asset acquisition:

OF FAIR VALUES OF ASSETS ACQUIRED

September 27, 2023

Purchase consideration:

Promissory note

Total purchase consideration

Allocation of cost of assets acquired:

Property and equipment

Assets acquired

Net assets acquired

and Divestitures

Pharma Solutions, LLC and Community Specialty Pharmacy, LLC

August 22, 2023, the Company and Wood Sage, LLC (“Wood Sage”) entered into (i) a Membership Interest Purchase Agreement

(the “APS MIPA”), pursuant to which the Company sold its 100 %

membership interest in Alliance Pharma Solutions, LLC (“APS”) for consideration of a $ 125,000

promissory note (the “APS Sale Price”) and (ii) a Membership Interest Purchase Agreement (the “CSP MIPA”),

pursuant to which the Company sold 100 %

of the membership interest in Community Specialty Pharmacy, LLC (“CSP”) in exchange for a $ 100,000

promissory note (the “CSP Sale Price”).

As a result, the results of APS and CSP were classified as discontinued

operations in our condensed statements of operations and excluded from both continuing operations and segment results for the nine

months ended September 30, 2023.

part of recognizing the business as held for sale in accordance with U.S.

GAAP, the Company was required to measure APS and CSP at the

lower of its carrying amount or fair value less cost to sell.

As a result of this analysis, during the year ended December 31, 2023,

the Company recognized a non-cash, pre-tax loss on disposal of $ 3,300,225 .

The loss is included in “Net loss from discontinued

operations” in the consolidated statements of operations.

The loss was determined by comparing the fair value of the consideration

received for the sale of a 100% interest in APS and CSP with the net assets of APS and CSP, respectively, immediately prior to the transaction.

a result of the transactions, the following assets and liabilities of APS and CSP were transferred to Wood Sage as of August 22, 2023:

OF ASSETS AND LIABILITIES

Solutions, LLC

Pharmacy, LLC

Accounts receivable, net

Prepaid assets

Intangible assets and capitalized software, net

Accounts payable

Accrued liabilities

Net assets sold

On February 16, 2024, the Company, together with Softell and MMS, entered

into the MMS APA under which MMS agreed to purchase for cash substantially all of the assets of Softell.

On February 16, 2024, the parties

consummated the closing of the transactions contemplated by the MMS APA.

The purchase price paid at closing was $ 22,660,182 .

Subject to the terms and conditions of the MMS APA, because MMS received $ 1,600,000 or greater in certain collections from third parties resulting from any

products or services sold, or provided, by the business assets and operations acquired from Softell during the period ending on the four-month

anniversary of the closing date, the Company was due an additional $ 7,500,000

paid at closing was $ 22,660,182 .

Subject to the terms and conditions of the MMS APA, because MMS received $ 1,600,000 or greater in certain

collections from third parties resulting from any products or services sold, or provided, by the business assets and operations acquired

from Softell during the period ending on the four-month anniversary of the closing date, the Company was due an additional $ 7,500,000

payment from MMS.

The Company received the payment in May 2024.

MMS APA was accounted for a business disposition in accordance with ASC 810-40-40-3A.

As of February 16, 2024, the Company no longer

consolidated the assets, liabilities, revenues and expenses of Softell.

The MMS APA was accounted for

a business disposition in accordance with ASC 810-40-40-3A.

As of February 16, 2024, the Company no longer consolidated the assets, liabilities,

revenues and expenses of Softell.

The components of the disposition are as follows:

2 unchanged sentences

Other receivable from MMS

Fair value of consideration received

Total fair value of consideration received

3 unchanged sentences

Property, plant and equipment, net

Intangible assets, net

Operating lease right-of-use assets

Purchase price payable

Accounts payable

4 unchanged sentences

Lease liability, net of current portion

Notes payable

Total carrying amount of assets and liabilities

Gain on disposition of business

gain on disposition of business of $ 29,685,946 was included in income from discontinued operations, net of tax in the consolidated statements

of operations.

On March 5, 2024, the Company entered into the Superlatus SPA with the

Pursuant to the Superlatus SPA, the Company sold all of the issued and outstanding stock of Superlatus to the Buyer.

purchase price for the stock was delivered to the Company at the closing, which occurred simultaneously with the execution of the Superlatus

As a result of the transaction, Superlatus ceased to be a subsidiary of the Company, and the rights and assets of Superlatus together

with various liabilities and obligations that were specific to Superlatus became rights and obligations of the Buyer.

transaction was accounted for a business disposition in accordance with ASC 810-40-40-3A.

As of March 5, 2024, the Company no longer

consolidated the assets, liabilities, revenues and expenses of Superlatus.

The gain on disposition of business

of $ 29,685,946 was included in income from discontinued operations, net of tax in the consolidated statements of operations of the year

ended December 31, 2024.

Superlatus SPA

On March 5, 2024, the Company

entered into the Superlatus SPA with the Buyer.

Pursuant to the Superlatus SPA, the Company sold all of the issued and outstanding stock

of Superlatus to the Buyer.

The $ 1.00 purchase price for the stock was delivered to the Company at the closing, which occurred simultaneously

with the execution of the Superlatus SPA.

As a result of the transaction, Superlatus ceased to be a subsidiary of the Company, and the

rights and assets of Superlatus together with various liabilities and obligations that were specific to Superlatus became rights and obligations

of the Buyer.

The transaction was accounted

for a business disposition in accordance with ASC 810-40-40-3A.

As of March 5, 2024, the Company no longer consolidated the assets, liabilities,

revenues and expenses of Superlatus.

The components of the disposition are as follows:

17 unchanged sentences

$ ( 2,083,742 )

loss of disposition of business of $ 2,083,742 was included in income from discontinued operations, net of tax in the consolidated statements

of operations.

accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing

operations in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023.

The results of the discontinued operations for the three and nine months ended September 30, 2024 and 2023 consist of the following:

The loss of disposition of business of $ 2,083,742

was included in income from discontinued operations, net of tax in the consolidated statements of operations of the year ended December

Discontinued Operations

In accordance with the provisions

of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying

consolidated statements of operations for the three months ended March 31, 2025 and 2024.

The results of the discontinued operations for

the three months ended March 31, 2025 and 2024 consist of the following:

OF DISCONTINUED OPERATIONS

September 30,

Three Months Ended

Cost of sales

Gross profit (loss)

Operating expenses:

4 unchanged sentences

Total operating expenses

Operating income (loss)

Non-operating income (expense):

Operating income

Other income (expense):

Goodwill impairment

Gain on dispositions

( 2,083,742 )

( 1,783,209 )

( 3,209,776 )

Net income (loss) on discontinued operations

$ ( 440,268 )

$ ( 1,565,080 )

$ ( 1,738,235 )

$ ( 3,436,978 )

September 30,

Cost of sales

Gross profit (loss)

Operating expenses:

Wage and salary expense

Professional fees

Technology expense

General and administrative

Total operating expenses

Operating income (loss)

Non-operating loss, net:

Gain (loss) on dispositions

( 2,083,742 )

( 1,426,567 )

( 1,783,209 )

Other expense

Interest expense

Total other income(expense)

( 2,083,742 )

Provision for income taxes

Net income(loss) on discontinued operations

$ ( 2,083,742 )

$ ( 440,268 )

$ ( 1,952,304 )

$ ( 1,818,480 )

$ ( 2,748,833 )

the second quarter of 2024, the Company determined to dissolve Bonum Health, Inc.

and Bonum Health, LLC, and have presented the

results of operations in net income (loss) from discontinued operations.

4- RELATED PARTY TRANSACTIONS

On November 21, 2023, but effective September 14, 2023, the Company issued

a promissory note (the “Wellgistics Note”) to Wellgistics Health, Inc.

(f/k/a Danam Health Inc.) (“Wellgistics”)

in the amount of $ 300,000 .

In the second quarter of 2024,

the Company determined to dissolve Bonum Health, Inc.

and Bonum Health, LLC, and have presented the results of operations in net income

(loss) from discontinued operations.

NOTE 4- RELATED PARTY TRANSACTIONS

Wellgistics Health and Tollo Health

On November 21, 2023, but effective

September 14, 2023, the Company issued a promissory note (the “Wellgistics Note”) to Wellgistics Health, Inc.

Health Inc.) (“Wellgistics”) in the amount of $ 300,000 .

Wellgistics prepaid $ 250,000 prior to the execution date.

The Wellgistics Note did not accrue interest.

The Wellgistics

Note did not accrue interest.

As of December 31, 2023, the balance of the Wellgistics Note was $ 50,000 .

The Wellgistics Note was fully paid off in February 2024.

February 29, 2024, the Company’s wholly owned subsidiary, Softell, entered into the Subscription Agreement with Lafayette.

Pursuant to the Subscription Agreement, Softell agreed, in two equal tranches, to invest a total of up to $ 5,000,000

in Lafayette in exchange for up to 2,000,000

shares of Lafayette’s newly created Series A Convertible Preferred Stock, with the second tranche becoming payable only upon

Softell’s receipt of notice that Lafayette has successfully drilled its first oil and gas well and produced at least one

hundred (100) barrels of oil.

of September 30, 2024, other receivables includes a $ 3,302,115 receivable from Wellgistics and $ 1,203,682 receivable from APS and

The advances are unsecured, non-interest bearing and due on demand.

Note 7 for note receivable from Wood Sage.

July 2024, the executives of Scienture issued a short-term loan to Scienture for an aggregate amount of $ 265,000 .

The loans are unsecured,

non-interest bearing and due on demand.

The loans were still outstanding as of the date of the Scienture Merger and September 30, 2024.

5 – REVENUE RECOGNITION

Company derives revenue from one primary source—product revenue.

revenue consists of shipments of:

of pharmaceutical products to pharmacies;

for our products are recognized and invoiced when the product is shipped to the customer.

Revenues for one-time

services are recognized at the point in time when services are rendered.

terms for products and services are generally 0 to 60 days and the Company has no contract assets or liabilities.

following table presents disaggregated revenue by major product categories during the three and nine months ended September 30, 2024

OF DISAGGREGATED REVENUE

Three Months Ended

Nine Months Ended

September 30,

Product revenues

Pharmaceutical product resale

Total product revenue

Total revenue

6 – INVENTORY

value is determined using the weighted average cost method and is stated at the lower of cost or net realizable value.

As of September

30, 2024 and December 31, 2023, inventory was comprised of the following:

September 30,

Finished goods

of September 30, 2024, prepaid expenses and other current assets includes $ 750,000

in deposits for future inventory.

7 – NOTES RECEIVABLE – RELATED PARTY

August 22, 2023, the Company received a Promissory Note (the “Wood Sage Note”) in the amount of $ 1,300,000 from Wood Sage.

The Wood Sage Note bears no interest and is currently due

As of both September 30, 2024 and December 31, 2023, the outstanding balance of the Wood Sage Note was $ 1,300,000 .

8 – GOODWILL AND INTANGIBLE ASSETS

connection with the Scienture Merger on July 25, 2024, the Company recorded goodwill of $ 7,848,747 and intangible assets of $ 76,400,000 .

The intangible assets acquired consist of developed technology and the related intellectual property and of the Company’s products.

The Company is currently assessing whether the assets are indefinite-lived such as in-process research and development assets, or whether

they will begin amortization upon commercialization.

9 – CONTINGENT FUNDING LIABILITIES

December 13, 2023, the Company entered into a non-recourse funding agreement with a third-party for the purchase and sale of future

receivables (the “December Receivables Agreement”).

Pursuant to the December Receivables Agreement, the third party

agreed to fund the Company $ 150,000

to purchase $ 214,500

of future receivables.

The Company also paid $ 7,500

as a one-time origination fee in connection with the December Receivables Agreement.

This agreement was fully paid off in February

November 22, 2023, the Company entered into a non-recourse funding agreement with a third-party for the purchase and sale of future

receivables (the “November Receivables Agreement”).

Pursuant to the November Receivables Agreement, the third party

agreed to fund the Company $ 275,000

to purchase $ 393,250

of future receivables.

The Company also paid $ 13,750

as a one-time origination fee in connection with the November Receivables Agreement.

This agreement was fully paid off in February

October 25, 2023, the Company entered into a non-recourse funding agreement with a third-party for the purchase and sale of future

receivables (the “October Receivables Agreement”).

Pursuant to the October Receivables Agreement, the third party agreed

to fund the Company $ 1,200,000

to purchase $ 1,728,000

of future receivables.

The Company also paid $ 60,000

as a one-time origination fee in connection with the October Receivables Agreement.

This agreement was fully paid off in February

Company’s relationship with the funding source meets the criteria in ASC 470-10-25 – Sales of Future Revenues or Various

Other Measures of Income (“ASC 470”), which relates to cash received from a funding source in exchange for a specified percentage

or amount of revenue or other measure of income of a particular product line, business segment, trademark, patent or contractual right

for a defined period.

Under this guidance, the Company recognized the fair value of its contingent obligation to the funding source,

as of the acquisition date, as a current liability in its consolidated balance sheet.

ASC 470, amounts recorded as debt are to be amortized under the interest method.

The Company made an accounting policy election to utilize

the prospective method when there is a change in the estimated future cash flows, whereby a new effective interest rate is determined

based on the revised estimate of remaining cash flows.

The new rate is the discount rate that equates the present value of the revised

estimate of remaining cash flows with the carrying amount of the debt, and it will be used to recognize interest expense for the remaining

Under this method, the effective interest rate is not constant, and any change in expected cash flows is recognized prospectively

as an adjustment to the effective yield.

As of September 30, 2024, and December 31, 2023, the total contingent funding liability was

$ 0 and $ 1,246,346 respectively, and the effective interest rate was approximately 0 % and 31 %, respectively.

This rate represents the

discount rate that equates the estimated future cash flows with the fair value of the debt and is used to compute the amount of interest

to be recognized each period.

Any future payments made to the funding source will decrease the contingent funding liability balance accordingly.

The Wellgistics Note was fully

paid off in February 2024.

As of March 31, 2025, other receivables

include a $ 3,828,769 receivable from Wellgistics and $ 215,000 receivable from Tollo Health.

The advances are unsecured, non-interest bearing

and due on demand.

See Note 6 for detail on the note

receivable from Wood Sage.

Both Wellgistics Health and Tollo

Health have common ownership and management with the Company.

In July 2024, the executives of

Scienture issued a short-term loan to Scienture for an aggregate amount of $ 265,000 .

The loans are unsecured, non-interest bearing and

due on demand.

The loans were still outstanding as of March 31, 2025.

In November 2024, the executives

of Scienture issued a short-term loan to Scienture for $ 150,000 .

The loans is unsecured, non-interest bearing and due on demand.

was outstanding as of March 31, 2025.

In February 2025, the executives

of Scienture issued a short-term loan to Scienture for $ 100,000 .

The loan is unsecured, non-interest bearing and due on demand.

was outstanding as of March 31, 2025.

NOTE 5 – REVENUE RECOGNITION

The Company derives revenue from

two primary sources—product revenue and service revenue.

Product revenue consists of shipments

Resale of pharmaceutical products to pharmacies;

Revenues for our products are recognized and invoiced

when the product is shipped to the customer.

Revenues for one-time services are

recognized at the point in time when services are rendered.

Payment terms for products and services are generally 0 to 60 days and the

Company has no contract assets or liabilities.

Revenues for the three months ended

March 31, 2025 and 2024 were $ 10,258

respectively.

In 2025, all revenue was product revenue.

NOTE 6 – NOTES RECEIVABLE – RELATED

On August 22, 2023, the Company

received a Promissory Note (the “Wood Sage Note”) in the amount of $ 1,300,000 from Wood Sage.

The Wood Sage Note bears no

interest and is currently due and payable.

As of both March 31, 2025 and December 31, 2024, the outstanding balance of the Wood Sage Note

was $ 1,300,000 .

NOTE 7 – GOODWILL AND INTANGIBLE ASSETS

In connection with the Scienture

Merger on July 25, 2024, the Company recorded goodwill of $ 21,372,960 and intangible assets of $ 76,400,000 .

The purchase price allocation

of intangible assets was evaluated under ASC 805.

The identified intangible assets were determined to be product technologies, and were

valued accordingly by each product candidate:

OF INTANGIBLE ASSETS WERE DETERMINED TO BE PRODUCT TECHNOLOGIES

Product Candidate

Management expects SCN-102

to achieve regulatory approval in mid 2025, with product commercialization projected to begin in late 2025.

Management expects SCN-104 to achieve regulatory approval in late 2025 or early 2026, with product commercialization projected to begin in 2026.

Management expects SCN-106 to achieve regulatory approval in 2027 or 2028, with product commercialization projected to begin in 2028.

Management expects SCN-107 to achieve regulatory approval in 2028 or 2029, with product commercialization projected to begin in 2029.

The fair value of the product

technologies was determined by the Income Approach:

Multi-Period Excess Earnings Methods (“MPEEM”).

The MPEEM measures economic

benefits by calculating the cash flows attributable to an asset after deducting appropriate returns for contributory assets used by the

business in generating the asset’s revenue and earnings.

The MPEEM utilized revenue and cash flow projections through 2030 based

on each product candidate’s phase of development.

Key assumptions include a 2% long-term revenue growth rate and 3% contributory

asset charge rate.

The Company discounted the expected future cash flows at a 53.0% rate of return, equal to the weighted-average cost

of capital (“WACC”) plus 10%, to reflect the risk of the cash flows related to the product technologies.

The Company then

summed the present values of the estimated future cash flows and included an amortization tax benefit to the value indication of each

of the product technologies.

As of March 31, 2025, the Company

has not begun amortizing any of the product technology intangible assets.

8 – CONVERTIBLE DEBT AND NOTES PAYABLE

Scienture Convertible Debt

In September 2023, Scienture entered into a Loan and Security Agreement

(the “NVK Loan Agreement”) with NVK Finance, LLC, a Nebraska Limited Liability Company (“NVK”) for $ 2,000,000 .

The debt accrues interest at a per annum rate equal to the Prime Rate (as

defined in the NVK Loan Agreement) plus 7 percent and the prime rates are adjusted quarterly.

As of September 30,

2024, the interest rate was 15.50 %.

The debt is collateralized by all of Scienture’s receivables, cash and cash equivalents and its right, title

and interest in, to and under its Intellectual Property (as defined in the NVK Loan Agreement) and all proceeds thereof.

The principal

is entirely repayable on the maturity date in September 2025 and interest shall be paid monthly following a Qualified Financing (as defined

in the NVK Loan Agreement).

The NVK debt is convertible into common stock of Scienture at a fully-diluted Scienture valuation of

Debenture – Arena

November 22, 2024, the Company entered into a Securities Purchase Agreement with the Arena Finance Markets, LP (“Arena Finance”),

Arena Special Opportunities Partners III, LP (“ASOP” and, together with Arena Finance, the “Arena Investors”).

Under the Securities Purchase Agreement, the Company will issue 10 % original issue discount secured convertible debentures (“Debentures”)

in a principal amount of up to $ 12,222,222 , divided into up to three separate tranches that are each subject to certain closing conditions.

The conversion price per share of each Debenture is equal to 92.5 % of the lowest daily VWAP (as defined in the Debentures) of the Company’s

shares of common stock during the five trading day period ending on the trading day immediately prior to delivery or deemed delivery

of the applicable conversion notice, subject to adjustments related to the trading price of the Company’s common stock.

closing of the first tranche was consummated on November 25, 2024 (the “First Closing”) and the Company issued to the Arena

Investors Debentures in an aggregate principal amount of $ 3,333,333 (the “First Closing Debentures”).

The First Closing Debentures

were sold to the Arena Investors for a purchase price of $ 3,000,000 , representing an original issue discount of ten percent ( 10 %).

convertible debenture will be matured eighteen months from the date first closing.

First Closing Debentures contain customary events of default.

If an event of default occurs, until it is cured, the holder may increase

the interest rate applicable to the First Closing Debentures to two percent ( 2 %) per annum and accelerate the full indebtedness under

the First Closing Debentures, in an amount equal to 125 % of the outstanding principal amount and accrued and unpaid interest.

to limited exceptions set forth in the First Closing Debentures, the First Closing Debentures prohibit the Company and, as applicable,

its subsidiaries from incurring any new indebtedness that is not subordinated to the Arena Investors and, as applicable, any subsidiary’s

obligations in respect of the First Closing Debentures until the First Closing Debentures are paid in full.

consideration for the Arena Investors’ consummation of the First Closing, concurrently with the First Closing, the Company issued

to each Arena Investor participating in the First Closing its pro rata portion of the 55,000 shares of common stock (the “SPA Commitment

Fee Shares”) issued to the Arena Investors as a commitment fee upon the execution of the Securities Purchase Agreement.

as consideration for the Arena Investors’ consummation of subsequent closings, the Company shall issue to the Arena Investors participating

in such closing a certain number of Company common stock as agreed upon among the Company and the Arena Investors participating.

fair value of the shares of common stock issued was $ 420,200 , which was included as a debt discount as noted below.

Company agreed, pursuant to a Security Agreement, dated November 25, 2024 (the “Security Agreement”), to grant the Arena

Investors a security interest in all of its assets to secure the prompt payment, performance, and discharge in full of all of the Company’s

obligations under the Debentures.

In addition, the Company’s wholly-owned subsidiary, Scienture, LLC, entered into a Guarantee

Agreement, dated November 25, 2024 (the “Guarantee”), with the Arena Investors, pursuant to which it agreed to guarantee

the prompt payment,

shall accrue on the outstanding principal amount of this Debenture at a rate equal to 10.00 % per annum paid in kind (the “PIK Interest”)

unless there is an Event of Default, in which case Default Interest shall accrue and be paid instead of PIK Interest.

The PIK Interest

shall be added to the outstanding principal amount of this Debenture on a monthly basis as additional principal obligations hereunder

and shall automatically and thereafter constitute a part of the outstanding principal amount for all purposes hereof (including the accrual

of interest thereon at the rates applicable to the principal amount generally).

The Company will not issue additional debentures to represent

the PIK Interest.

Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall

accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and

unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made.

the three months ended March 31, 2025, the Company accrued $ 84,167 in interest expense pertaining to the Arena debentures.

a result of the debentures, the Company recognized an aggregate debt discount of $ 3,333,333 .

Through December 31, 2024, $ 869,692 of the

debt discount was amortized to interest expense.

During the three months ended March 31, 2025, $ 480,186 of the debt discount was amortized

to interest expense.

At March 31, 2025, the outstanding balance of the debentures, including the outstanding principal of $ 3,333,333

less the unamortized discount of $ 2,240,872 , was $ 1,092,461 .

The following is a summary of the Arena Debentures:

OF THE ARENA DEBENTURES

Convertible debenture - Arena Principal

Original issuance discount

Other issuance costs

Fair value of shares issued

Derivative liability recognized as debt discount

( 2,477,217 )

The balance of the NVK debt upon the Scienture Merger and at September

30, 2024 was $ 2,000,000 .

Interest expense on the NVK debt was $ 154,454 for the period ended September

August 2024, the Company issued a convertible note of $ 360,000 ,

for which the Company received $ 314,000

in net proceeds.

On the six-month anniversary of the issuance, the Company will be required to make a payment of $ 360,000

to the noteholder and each month thereafter the Company will be required to make a payment of $ 7,200

to the noteholder towards repayment of the note (each, an “Amortization Payment”).

The note bears interest at 12 %

per annum and shall be deemed earned in full and guaranteed as of the note issuance date.

If the Company fails to pay any

Amortization Payment, the noteholder will have the right to convert the outstanding principal and accrued interest at a conversion

price equal to the Conversion Price (as defined below and subject to a floor price of $ 1.50 ).

The Conversion Price is the lesser of i) $ 8.36

of the lowest volume-weighted average prices of the preceding five

trading days .

Excess debt discount amortization at issuance date

Amortization of debt discount

Arena note, net of unamortized debt discount, at March 31, 2025

Company evaluated the terms of the conversion features of the debentures as noted above in accordance with ASC Topic No.

815 - 40, Derivatives

and Hedging - Contracts in Entity’s Own Stock, and determined they are not indexed to the Company’s common stock and

that the conversion feature, which is akin to a redemption feature, meet the definition of a liability.

The notes contain an indeterminate

number of shares to settle with conversion options outside of the Company’s control.

Therefore, the Company bifurcated the conversion

feature and accounted for it as a separate derivative liability.

Upon issuance of the convertible debenture, the Company recognized a

derivative liability at a fair value of $ 2,477,217 , which is recorded as a debt discount and will be amortized over the life of the debentures.

Company measured the derivative liability at fair value based on significant inputs not observable in the market, which causes it to

be classified as a Level 3 measurement within the fair value hierarchy.

The valuation of the derivative liability uses assumptions and

estimates the Company believes would be made by a market participant in making the same valuation.

The Company assesses these assumptions

and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained.

Changes in the fair value

of the contingent consideration liability related to updated assumptions and estimates are recognized within the statements of operations.

Company valued the derivative liability using a Black-Scholes method using following assumptions:

OF DERIVATIVE LIABILITY

Risk-free interest rate

Expected term (in years)

Expected volatility+A13

Expected dividend yield

following is a summary of the derivative liability:

OF THE DERIVATIVE LIABILITY LIABILITY

Outstanding as of December 31, 2024

Change in fair value

Outstanding as of March 31, 2025

Convertible Debt

September 2023, Scienture entered into a Loan and Security Agreement (the “NVK Loan Agreement”) with NVK Finance, LLC, a

Nebraska Limited Liability Company (“NVK”) for $ 2,000,000 .

The debt accrues interest at a per annum rate equal to the Prime Rate (as defined in the NVK Loan Agreement) plus 7 percent and the

prime rates are adjusted quarterly.

As of both March 31, 2025 and December 31, 2024, the interest rate was 15.50 %.

The debt is collateralized by all of Scienture’s receivables, cash and cash equivalents and its right, title and interest in,

to and under its Intellectual Property (as defined in the NVK Loan Agreement) and all proceeds thereof.

The principal is entirely

repayable on the maturity date in September

2025 and interest shall be paid monthly following a Qualified Financing (as defined in the NVK Loan Agreement).

is convertible into common stock of Scienture at a fully-diluted Scienture valuation of $ 60,000,000 .

The balance of the NVK debt upon the Scienture Merger and at March 31, 2025 was $ 2,000,000 .

Interest expense on the NVK debt was $ 77,500

for the three months ended March 31, 2025.

August 2024, the Company issued a convertible note of $ 360,000 , for which the Company received $ 314,000 in net proceeds.

On the six-month

anniversary of the issuance, the Company will be required to make a payment of $ 360,000 to the noteholder and each month thereafter the

Company will be required to make a payment of $ 7,200 to the noteholder towards repayment of the note (each, an “Amortization Payment”).

The note bears interest at 12 % per annum and shall be deemed earned in full and guaranteed as of the note issuance date.

If the Company

fails to pay any Amortization Payment, the noteholder will have the right to convert the outstanding principal and accrued interest at

a conversion price equal to the Conversion Price (as defined below and subject to a floor price of $ 1.50 ).

The Conversion Price is the

lesser of i) $ 8.36 or (ii) 85 % of the lowest volume-weighted average prices of the preceding five trading days .

The note matures on August

During the three and nine months ended September 30, 2024, the Company

incurred $ 43,200

in interest expense pertaining to the note.

connection with the note, the Company issued 76,923 warrants to purchase common stock.

3 unchanged sentences

discount and will be amortized to interest expense over the life of the note.

debt discount recognized in connection with the note was $ 117,332 , of which $ 13,180 was amortized through September 30, 2024.

payable, net of unamortized discount of $ 104,152 , was $ 255,848 as of September 30, 2024.

of the promissory notes described below were obligations of Superlatus Foods, Inc., and all liabilities related to these notes ceased

to be obligations of the Company upon the Company disposing of its entire interest in Supoerlatus in March 2024.

November 17, 2023, the Company issued a promissory note to Moku Foods, Inc.

(the “Moku Foods November 2023 Note”) in

the amount of $ 50,000 .

The promissory note accrues interest at 11.5 %

per annum, compounded monthly and is payable upon demand at any time after November 30, 2023.

As of December 31, 2023, the balance

of the Moku Foods November 2023 Note was $ 50,000 .

The Company has accrued interest of $ 945

as of December 31, 2023.

On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

October 16, 2023, the Company issued a promissory note to Moku Foods, Inc.

(the “Moku Foods October 2023 Note”) in the

amount of $ 150,000 .

The promissory note accrues interest at 11.5 %

per annum, compounded monthly and is payable upon demand at any time after October 31, 2023.

As of December 31, 2023, the balance of

the Moku Foods October 2023 Note was $ 150,000 .

The Company has accrued interest of $ 4,300

as of December 31, 2023.

On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

September 27, 2023, the Company issued a promissory note to Perfect Day, Inc.

(the “Perfect Day Note”) in the amount of

as consideration for the TUC APA (see Note 3).

The promissory notes do not accrue interest and are payable upon demand at any time

after October 31, 2023.

The entire aggregate, unpaid principal sum of the note is immediately due and payable upon the occurrence of

a change in control, as defined in the agreement.

On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

September 14, 2023, the Company issued a promissory note to Wellgisitcs (the “Wellgistics Note”) in the amount of $ 300,000 .

The Company received a deposit of $ 200,000 on September 14, 2023, and an additional deposit of $ 100,000 on October 13, 2023.

The Wellgisitcs

Note accrues interest at 0 % per annum and is due and payable no later than 30 days after a change in control of borrower, as defined

in the note agreement.

As of December 31, 2023, the balance of the Wellgistics Note was $ 50,000 .

The Wellgistics Note was fully paid off in February

June 16, 2023, the Company issued a secured debenture to Eat Well Investment Group, Inc.

(the “Eat Well June 2023 Note”)

in the amount of $ 1,150,000 for the purchase of Sapientia, a wholly-owned subsidiary of Superlatus.

The Eat Well June 2023 Note is secured

by 100 % of the membership interests in Sapientia.

The Eat Well June 2023 Note began accruing interest at 12 % per annum, compounded monthly,

as of October 31, 2023.

The Eat Well June 2023 Note matured on December 31, 2023 .

As of December 31, 2023, the balance of the Eat Well

June 2023 Note was $ 1,150,000 .

The Company has accrued interest of $ 23,063 as of December 31, 2023.

On March 5, 2024, the Company entered

into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

February 8, 2023, Sapientia, a wholly-owned subsidiary of Superlatus, entered into a Loan Agreement with Eat Well Investment Group, Inc.

(the “Eat Well February 2023 Note”) in the amount of $ 25,000 .

The Eat Well February 2023 Note is unsecured, accrues interest

at a rate of 1.87 % per annum, and matures February 7, 2025 .

As of December 31, 2023, the balance of the Eat Well February 2023 Note was

The Company has accrued interest of $ 418 as of December 31, 2023.

On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

September 14, 2022, Sapientia entered into a Loan Agreement with Eat Well Investment Group, Inc.

(the “Eat Well September 2022

Note”) in the amount of $ 50,000 .

The Eat Well September 2022 Note is unsecured, accrues interest at a rate of 1.87 % per annum,

and matures September 13, 2024 .

As of December 31, 2023, the balance of the Eat Well September 2022 Note was $ 50,000 .

The Company has

accrued interest of $ 1,212 as of December 31, 2023.

On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

July 26, 2022, Sapientia entered into a Loan Agreement with Eat Well Investment Group, Inc.

(the “Eat Well July 26, 2022 Note”)

in the amount of $ 35,000 .

The Eat Well July 26, 2022 Note is unsecured, accrues interest at a rate of 1.87 % per annum, and matures July

As of December 31, 2023, the balance of the Eat Well July 26, 2022 Note was $ 35,000 .

The Company has accrued interest of $ 938

as of December 31, 2023.

On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

July 12, 2022, Sapientia entered into a Loan Agreement with Eat Well Investment Group, Inc.

(the “Eat Well July 12, 2022 Note”)

in the amount of $ 25,000 .

The Eat Well July 12, 2022 Note is unsecured, accrues interest at a rate of 1.87 % per annum, and matures July

As of December 31, 2023, the balance of the Eat Well July 12, 2022 Note was $ 25,000 .

The Company has accrued interest of $ 688

as of December 31, 2023.

On March 5, 2024, the Company entered the Superlatus SPA, whereby the Company sold its entire interest

in Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

March 15, 2022, Sapientia entered into a Loan Agreement with Eat Well Investment Group, Inc.

(the “Eat Well March 2022 Note”)

in the amount of $ 100,000 .

The Eat Well March 2022 Note is unsecured, accrues interest at a rate of 1.87 % per annum, and matures March

As of December 31, 2023, the balance of the Eat Well March 2022 Note was $ 100,000 .

The Company has accrued interest of $ 3,361

as of December 31, 2023.

On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

February 1, 2022, Sapientia entered into a Loan Agreement with Eat Well Investment Group, Inc.

(the “Eat Well February 2022 Note”)

in the amount of $ 100,000 .

The Eat Well February 2022 Note is unsecured, accrues interest at a rate of 1.87 % per annum, and matures February

As of December 31, 2023, the balance of the Eat Well February 2022 Note was $ 100,000 .

The Company has accrued interest of $ 3,576

as of December 31, 2023.

On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

January 20, 2022, Sapientia entered into a Loan Agreement with Eat Well Investment Group, Inc.

(the “Eat Well January 2022 Note”)

in the amount of $ 20,000 .

The Eat Well January 2022 Note is unsecured, accrues interest at a rate of 1.87 % per annum, and matures January

As of December 31, 2023, the balance of the Eat Well January 2022 Note was $ 20,000 .

The Company has accrued interest of $ 728

as of December 31, 2023.

On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

December 24, 2021, Sapientia entered into a Loan Agreement with Eat Well Investment Group, Inc.

(the “Eat Well December 2021 Note”)

in the amount of $ 100,000 .

The Eat Well December 2021 Note is unsecured, accrues interest at a rate of 1.87 % per annum, and matured December

As of December 31, 2023, the balance of the Eat Well December 2021 Note was $ 100,000 .

The Company has accrued interest of $ 3,776

as of December 31, 2023.

On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

November 10, 2021, Sapientia entered into a Loan Agreement with Eat Well Investment Group, Inc.

(the “Eat Well November 2021 Note”)

in the amount of $ 50,000 .

The Eat Well November 2021 Note is unsecured, accrues interest at a rate of 1.87 % per annum, and matured November

As of December 31, 2023, the balance of the Eat Well November 2021 Note was $ 50,000 .

The Company has accrued interest of $ 2,001

debt discount recognized in connection with the note was $ 117,332 , with $ 42,755 amortized through December 31, 2024, and an additional

$ 28,931 amortized during the three months ended March 31, 2025.

The net carrying value of the note payable, after deducting the remaining

unamortized discount of $ 45,646 , was $ 314,354 .

On March 31, 2025, the Company converted the outstanding note into equity by issuing 274,000

shares of common stock at a fair value of $ 411,000 .

As a result, it recognized a $ 96,646 loss on conversion, reported as a non-operating

expense in the unaudited condensed consolidated statements of operations.

following is a summary of the Company’s debt as of March 31, 2025 and December 31, 2024:

As of March 31, 2025

Unamortized debt

Debt, net of unamortized

debt discount

Convertible debenture - Arena

$ ( 2,240,872 )

Scienture convertible debt

( 2,240,872 )

Current maturity of debt

Total long-term debt

$ ( 2,240,872 )

As of December 31, 2024

On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

August 18, 2021, Sapientia entered into a Loan Agreement with Eat Well Investment Group, Inc.

(the “Eat Well August 2021 Note”)

in the amount of $ 250,000 .

The Eat Well August 2021 Note is unsecured, accrues interest at a rate of 1.87 % per annum, and matured August

As of December 31, the balance of the Eat Well August 2021 Note was $ 250,000 .

The Company has accrued interest of $ 11,079 as

of December 31, 2023.

On March 5, 2024, the Company entered into the Superlatus SPA, whereby the Company sold its entire interest in

Superlatus to Superlatus Foods, Inc.

thereby transferring all assets and liabilities.

Unamortized debt

Debt, net of unamortized

debt discount

Convertible debenture - Arena

$ ( 2,721,058 )

August 2024 note

Scienture convertible debt

( 2,795,635 )

Current maturity of debt

Total long-term debt

$ ( 2,721,058 )

9 – STOCKHOLDERS’ EQUITY

11 unchanged sentences

Common Stock as to distributions of assets upon liquidation, dissolution, or winding up of the Company.

As consideration for the Scienture Merger, at the Effective Time o, the

shares of Scienture common stock issued and outstanding immediately prior to the Effective Time were converted into the right to receive,

in the aggregate, (i) 291,536 shares of the Company’s common stock and (ii)

6,826,753 shares of the Company’s Series X Preferred Stock, each share of which

is convertible into one share of common stock.

consideration for the Scienture Merger, at the Effective Time of First Merger, the shares of Scienture common stock issued and outstanding

immediately prior to the Effective Time were converted into the right to receive, in the aggregate, (i) 291,536 shares of the Company’s

common stock and (ii) 6,826,753 shares of the Company’s Series X Preferred Stock, each share of which is convertible into one share

of common stock.

September 20, 2024, all previously issued shares of Series X Preferred Stock were converted into a total of 6,826,753 shares of common

of Series C Preferred Stock

October 4, 2023, the Company filed a Certificate of Designation, Preferences, Rights and Limitations of the Series C Preferred Stock

with the Secretary of the State of Delaware which designated 1,000 shares of the Company’s authorized and unissued preferred stock

as convertible Series C Preferred Stock at a par value of $ 0.00001 per share.

Global Ventures Stock Purchase Agreement

On October 4, 2023, the Company entered into a Securities Purchase Agreement

the “Hudson SPA”) with Hudson Global Ventures, LLC (“Hudson”).

Under the terms of the Hudson SPA, the Company

agreed to sell, and Hudson agreed to purchase, Two Hundred Ninety ( 290 ) shares of Series C Preferred Stock (the “Purchased Shares”) at a price of $ 1,000 per share and a

Warrant to purchase up to 41,193 shares of Common Stock.

Additionally, pursuant to the Agreement, 40,000 shares of Common Stock were

issued to Hudson upon closing for a commitment fee.

The Company received $ 250,000 in exchange for the Purchased Shares, Common Stock,

and Warrants, net of issuance costs.

July 12, 2024, the Company converted 290 shares of Series C Preferred Stock into 52,158 shares of common stock at the election of the

of Series B Preferred Stock

June 26, 2023, the Company filed a Certificate of Designation, Preferences, Rights and Limitations of the Series B Preferred Stock with

the Secretary of the State of Delaware which designated 787,754 shares of the Company’s authorized and unissued preferred stock

as convertible Series B Preferred Stock at a par value of $ 0.00001 per share.

1:15 Stock Split

June 21, 2023, the Company executed a 1:15 reverse stock split for stockholders of record on that date .

This was executed to comply with

the Nasdaq Listing Rule 5550(a)(2) to have the price of the stock above $ 1 .

the nine months ended September 30, 2024, the Company issued 470,482 shares of common stock for services.

the three months ended March 31, 2025, the Company issued 240,000 shares of common stock for services.

The fair value of shares issued

for services was $ 4,450,919 and was included in general and administrative expenses in the consolidated statements of operations.

the nine months ended September 30, 2024, a warrants holder exercised a warrant and acquired 28,487 shares of common stock for $ 16,567

in proceeds (see Note 13).

the nine months ended September 30, 2024, an options holder exercised an option and acquired 2,371 shares of common stock for $ 9,840

in proceeds (see Note 14).

July 12, 2024, the Company converted 290 shares of Series C Preferred Stock into 52,158 shares of common stock at the election of the

July 25, 2024, the Company issued 291,536 shares of common stock and 6,826,753 shares of Series X Preferred Stock pursuant to the Scienture

Merger Agreement.

The aggregate fair value of the purchase price consideration was $ 78,646,184 .

August 2024, the Company issued 28,571 shares of common stock pursuant to the exercise of warrants.

September 20, 2024, all previously issued shares of Series X Preferred Stock were converted into a total of 6,826,753 shares of common

Cash Dividend

March 6, 2024, the Company announced the declaration of a special cash dividend of eight dollars ($ 8.00 ) per share of common stock, payable

to stockholders of record as of March 18, 2024, with the dividend being paid on March 22, 2024.

The special dividend of $ 12,671,072 (in

the aggregate) was paid using a portion of the proceeds from the closing of the sale of certain assets to MMS.

July 9, 2024, the Company announced the declaration of a special cash dividend of one dollar and fifty cents ($ 1.50 ) per share of common

stock, payable to stockholders of record as of July 19, 2024, with the dividend being paid on July 22, 2024.

The special dividend of

$ 2,187,759 was paid using a portion of the proceeds received in May 2024 in connection with the sale of certain assets to MMS.

for services was $ 1,080,000 and was included in general and administrative expenses in the unaudited condensed consolidated statements

of operations.

the three months ended March 31, 2025, the Company issued 274,000 shares of common stock at a fair value of $ 411,000 pursuant to the

conversion of the August 2024 convertible note of $ 314,354 .

Accordingly, the Company recognized a $ 96,646 loss on conversion.

Note Commitment Shares

additional consideration for the Purchaser’s execution and delivery of this Agreement, (i) concurrently with the execution and

delivery of this Agreement on the First Closing Date (as defined below), the Company shall cause the Transfer Agent, to issue to each

Purchaser participating in the first Closing or its designee on the First Closing Date its pro rata portion of 55,000 of the shares of

Common Stock being issued as Commitment Shares in connection with the First Closing, and (ii) in connection with any Closing following

the First Closing, the Company shall cause its Transfer Agent to issue to each Purchaser participating in such Closing or its designee

a certain number of Commitment Shares.

The aggregate number of Commitment Shares owing to each Purchaser in connection with any Closing

following the First Closing will be agreed among the Company and the Purchasers participating in such Closing, and shall be set forth

in an allocation table prior to such Closing (each a “Commitment Shares Allocation Table.”) For the avoidance of doubt, all

of the Commitment Shares issuable in connection with the First Closing on the First Closing Date shall be fully earned as of the First

Closing Date regardless of whether a Subsequent Closing shall occur (see Note 8).

this connection, the Company issued to each Arena Investor participating in the First Closing its pro rata portion of 55,000 shares of

the Company’s common stock.

The fair value of shares issued was $ 420,200 was recognized as a debt discount, which was amortized

to interest expense in full as commitment shares in connection with first closing was fully earned as of first closing date.

Line of Credit

November 25, 2024, the Company entered into a purchase agreement (“ELOC Agreement”) with Arena Business Solutions Global

SPC II, Ltd (the “Investor”).

Under the ELOC Agreement, the Company has the right, but not the obligation, to direct the

Investor to purchase up to $ 50,000,000 in shares of the Company’s common stock (the “ELOC Shares”) upon satisfaction

of certain terms and conditions contained in the ELOC Agreement, including, without limitation, and additional shares to be sold to the

Investor from time to time under the ELOC Agreement.

The term of the ELOC Agreement began on the date of execution and ends on the earlier

of (i) the first day of the month following the 36-month anniversary of the execution date, (ii) the date on which the Investor shall

have purchased the maximum amount of ELOC Shares, or (iii) the effective date of any written notice of termination delivered pursuant

to the terms of the ELOC Agreement (the “Commitment Period”).

consideration for the Investor’s execution and delivery of the ELOC Agreement, the Company agreed to issue to the Investor, as

a commitment fee:

(i) 70,000 shares of the Company’s Common Stock (“Initial Commitment Fee Shares”) and (ii) in two

separate tranches, a number of additional shares of common stock (“Additional Commitment Fee Shares” and, together with the

Initial Commitment Fee Shares, the “Commitment Fee Shares”) equal to (a) with respect to the first tranche, 500,000 divided

by the simple average of the daily VWAP of our common stock during the five (5) trading days immediately preceding the effectiveness

of the initial registration statement on which the Commitment Fee Shares are registered (the “Effectiveness Date”) and (b)

with respect to the second tranche, 500,000 divided by the simple average of the daily VWAP of our common stock during the five (5) trading

days immediately preceding the two (2) month anniversary of the Effectiveness Date.

The Additional Commitment Fee Shares shall be subject

to a true-up after each issuance pursuant to the terms of the ELOC Agreement.

consideration for the Investor’s execution and delivery of the ELOC Agreement, the Company issued to the Investor, as a commitment

fee, 70,000 shares of the Company’s common stock on November 25, 2024.

The fair value of shares issued was $ 534,800 and was included

in deferred offering costs in the consolidated balance sheets.

In March 2025, the deferred offering costs previously capitalized were

offset against the gross proceeds from the ELOC share issuances (see below).

2025, the Company issued to the Investor, as another commitment fee, in aggregate 450,437 shares of the Company’s common stock.

The fair value of shares issued was $ 971,732 and was recognized as offering costs in connection with the related ELOC Agreement share

Accordingly, the fair value of the shares issued were offset against the gross proceeds and there was no net effect to stockholders’

March 2025, the Company issued in aggregate 2,800,000 shares of common stock pursuant to the above ELOC Agreement for aggregate gross

proceeds of $ 4,597,999 .

After recognition of the related offering costs, the Company recognized a net increase to additional paid-in

capital of $ 2,691,467 .

Compensation Awards

independent member of the Company’s board of directors (the “Board”) is to receive an annual grant of restricted common stock of the Company equal to $ 55,000 in value on

April 1st of each year (or such date thereafter as the awards are approved by the Board), and valued on such same date, based on the

closing sales price on such date (or the first business day thereafter), which restricted stock awards will vest at the rate of 1/4th

of such awards over the following four calendar quarters, subject to such directors continued service to the Company.

on August 13, 2023, the Board approved the issuance of 24,444 shares of common stock of the Company to each of Mr.

(who each at the time of issuance were members of the Board) for services rendered to the Company during fiscal 2023, which

shares were valued at $ 110,000 .

The Board also approved the issuance of 14,056 shares of common stock of the Company to Jeff Newell (who,

at the time of issuance was a member of the Board) for services rendered during fiscal 2023, which were valued at $ 63,250

based on the most recent close price of the Company’s common stock on the date approved by the Board.

The shares vest at the rate

of 1/4th of such shares immediately on the grant date, and 1/4th of such shares on each of October 1, 2023, January 1, 2024 and April

1, 2024, subject to each applicable independent director’s continued service to the Company on such dates.

Additionally, the Board

approved 10,000 shares with immediate vesting to each Board member to recognize the significant additional work for various financing,

sales, acquisitions, operations restructuring.

of the awards discussed above were issued under the Company’s Second Amended and Restated 2019 Equity Incentive Plan (the “Plan”)

and all restricted stock awards discussed above were evidenced by Restricted Stock Grant Agreements.

The Company’s board of directors and stockholders approved an amendment

to the Plan increasing the available shares under the Plan to 5,000,000 shares of the Common Stock

as such common stock existed on July 24, 2024 (see Note 19).

12 – PREFUNDED AND PRIVATE PLACEMENT WARRANTS

On October 4, 2022 the Company entered into a securities purchase agreement

(the “2022 SPA”) with an institutional investor (the “Purchaser”) which provided for the sale and issuance by

the Company of (i) the Company’s common stock, (ii) pre-funded warrants (the “Pre-Funded Warrants”) and (iii) warrants

(the “Private Placement Warrants” and, together with the shares of common stock and the Pre-Funded Warrants, the “Securities”).

January 4, 2023, the investor exercised the Pre-Funded Warrants for a purchase price of $ 6.02 .

The investor was issued the shares on

Each Private Placement Warrant has an exercise price of $ 22.50 per share and is exercisable following the stockholder approval

obtained in December 2022, and will expire on the fifth anniversary of the date on which the Private Placement Warrants became exercisable.

The Private Placement Warrants contain standard adjustments to the exercise price including for stock splits, stock dividend, rights

offerings and pro rata distributions, and include full ratchet anti-dilutive rights in the event the Company issues shares of Common

Stock or Common Stock equivalents within fifteen months of the initial exercise date, with a value less than the then exercise price

of such Private Placement Warrants, subject to certain customary exceptions, and further subject to a minimum exercise price of $ 3.48

The Private Placement Warrants also include certain rights upon ‘fundamental transactions’ as described in the

Private Placement Warrants, including allowing the holders thereof to require that the Company re-purchase such Private Placement Warrants

at the Black Scholes Value of such securities.

independent member of the Company’s board of directors (the “Board”) is to receive an annual grant of restricted common

stock of the Company equal to $ 55,000 in value on April 1st of each year (or such date thereafter as the awards are approved by the Board),

and valued on such same date, based on the closing sales price on such date (or the first business day thereafter), which restricted

stock awards will vest at the rate of 1/4th of such awards over the following four calendar quarters, subject to such directors continued

service to the Company.

Company’s board of directors and stockholders approved an amendment to the Second Amended and Restated 2019 Equity Incentive

Plan (Plan increasing the available shares under the Plan to 5,000,000

shares of the Common Stock as such common stock existed on July 24, 2024.

10 – WARRANTS

the nine months ended September 30, 2024, 28,487 warrants to purchase shares of common stock were exercised for a total purchase price

of $ 16,567 (see Note 12).

connection with a note (see Note 8), in August 2024 the Company issued 76,923 warrants to purchase common stock.

3 unchanged sentences

warrants for shares of commons stock on a cashless basis.

Company uses the Black-Scholes pricing model to estimate the fair value of stock-based awards on the date of the grant.

cost related to the warrants for the nine months ended September 30, 2024, and 2023 was $ 71,332 and $ 0 , respectively.

As of September

30, 2024, the Company remeasured the fair value of warrants outstanding at $ 1,129,796 .

In connection with remeasurement of warrants, a $ 502,178

gain and $ 392,843

loss was recognized during the three and nine months ended September 30, 2024, respectively, as the change in fair value of warrant

The Company recognized a $ 925,320

gain and $ 443,308

loss during the three and nine months ended September 30, 2023, respectively, as the change in fair value of warrant liability.

Company’s outstanding and exercisable warrants, as of September 30, 2024, are presented below:

of March 31, 2025, the Company remeasured the fair value of warrants outstanding at $ 273,949 .

In connection with remeasurement of warrants,

a $ 645,986 gain and $ 729,889 loss was recognized during the three months ended March 31, 2025 and 2024, respectively, as the change in

fair value of warrant liability.

Company’s outstanding and exercisable warrants, as of March 31, 2025, are presented below:

OF OUTSTANDING AND EXERCISABLE WARRANTS

Number Outstanding

Weighted Average Exercise Price

Contractual Life

Intrinsic Value

Exercise Price

Warrants outstanding as of December 31, 2024

Warrants exercisable as of December 31, 2024

Warrants granted

1 unchanged sentence

Warrants exercised

Warrants outstanding as of September 30, 2024

Warrants exercisable as of September 30, 2024

Warrants outstanding as of March 31, 2025

Warrants exercisable as of March 31, 2025

Company maintains stock option plans under which certain employees are awarded option grants based on a combination of performance and

The stock option plans provide for the grant of up to 155,556 shares, and the Plan provides for automatic increases in the number of shares available under such plan (currently 133,333 shares) on

April 1 st of each calendar year, beginning in 2021 and ending in 2029 (each a “Date of Determination”), in each

case subject to the approval and determination of the administrator of the plan (the Board of Directors or Compensation Committee) on

or prior to the applicable Date of Determination, equal to the lesser of (A) ten percent (10%) of the total shares of common stock of

the Company outstanding on the last day of the immediately preceding fiscal year and (B) such smaller number of shares as determined

by the administrator.

The administrator as a result of the annual meeting shareholder vote increased the number of shares available to

grant to employees under the Plan by 2,000,000.

The administrator did not approve an increase in the number of shares

covered under the Plan as of April 1, 2022.

The Company’s board of directors and stockholders approved an amendment

to the Plan increasing the available shares under the Plan to 5,000,000 shares of the Common Stock as such common stock existed on July

the nine months ended September 30, 2024, no options to purchase shares were granted.

For the nine months ended September 30, 2024, 2,371

options to purchase shares of common stock were exercised for $ 9,840 in cash (see Note 12).

compensation cost related to stock options granted was $ 437 and $ 3,761 for the three months ended September 30, 2024, and 2023, respectively.

Total compensation cost related to stock options granted was $ 25,147 and $ 25,978 for the nine months ended September 30, 2024 and 2023,

respectively.

following table represents stock option activity for the nine-month period ended September 30, 2024:

The stock option plans provide for the grant of up to 155,556 shares, and the Plan provides for automatic increases in the number

of shares available under such plan (currently 133,333 shares) on April 1 st of each calendar year, beginning in 2021 and ending

in 2029 (each a “Date of Determination”), in each case subject to the approval and determination of the administrator of

the plan (the Board of Directors or Compensation Committee) on or prior to the applicable Date of Determination, equal to the lesser

of (A) ten percent (10%) of the total shares of common stock of the Company outstanding on the last day of the immediately preceding

fiscal year and (B) such smaller number of shares as determined by the administrator.

The administrator as a result of the annual meeting

shareholder vote increased the number of shares available to grant to employees under the Plan by 2,000,000.

The administrator did not

approve an increase in the number of shares covered under the Plan as of April 1, 2022.

Company’s board of directors and stockholders approved an amendment to the Plan increasing the available shares under the Plan

to 5,000,000 shares of the Common Stock as such common stock existed on July 24, 2024.

compensation cost related to stock options granted was $ 437 and $ 24,266 for the three months ended March 31, 2025, and 2024, respectively.

following table represents stock option activity for the three-month period ended March 31, 2025:

OF STOCK OPTION ACTIVITY

Number Outstanding

Weighted-Average Exercise Price

Weighted-Average Contractual Life in Years

Intrinsic Value

Weighted-Average

Exercise Price

Weighted-Average

Contractual Life

Options outstanding as of December 31, 2024

4 unchanged sentences

Options exercised

Options outstanding as of September 30, 2024

Options exercisable as of September 30, 2024

Options outstanding as of March 31, 2025

Options exercisable as of March 31, 2025

12 – CONTINGENCIES

Defense Group, LLC

July 2020, the Company’s wholly-owned subsidiary, IPS, entered into an agreement with Studebaker Defense Group, LLC (“Studebaker”)

wherein IPS would pay Studebaker a down payment of $ 550,000 and Studebaker would deliver 180,000 boxes of nitrile gloves by August 14,

IPS wired the $ 550,000 to Studebaker, but to date, Studebaker has not delivered the gloves or provided a refund of the deposit.

In December 2020, the Company filed a complaint against Studebaker in Florida state court, Case No.

20-CA-010118 in the Circuit Court

for the Thirteenth Judicial Circuit in Hillsborough County, for among other things, breach of contract.

Studebaker did not answer the

complaint, nor did counsel for Studebaker file an appearance.

Accordingly, in February 2021, the Company filed for a default judgment;

however, on March 22, 2021, counsel for Studebaker filed an appearance and shortly thereafter filed a motion to vacate the default judgment

and dismiss the complaint on jurisdictional grounds.

The court granted Studebaker’s motion to set aside the default judgment but

denied the motion to dismiss.

At June 30, 2021, the $ 500,000 was recorded as Loss on Inventory Investment.

The Company won this case

but has not collected any settlement yet, another lawsuit was filed to collect.

April 13, 2023, a settlement was reached in the Studebaker and IPS legal case.

The court found in favor of IPS and ordered Studebaker

to pay $ 550,000 to IPS.

The payments were to commence on May 1, 2023 and continue monthly in 17 instalments until the full amount is

paid in full but as of the filing date, no payment has been received by IPS.

November 19, 2021, IPS filed a complaint against GSG PPE, LLC (“GSG”) and Gary Waxman (“Waxman”), the owner,

alleging three counts of breach of contract for a purchase agreement, a promissory note, and a personal guaranty.

Collectively, the company

alleges that GSG and Waxman have materially breached all three contracts.

In late 2020, GSG and IPS executed a valid initial contract

setting the terms of a business transaction.

GSG failed to pay IPS approximately 75% of the amount owed to IPS.

GSG acknowledged it owed

the money and executed a promissory note in favor of IPS in the amount of $ 630,000 which matured on September 30, 2021 .

The note provides

for attorney fees and interest in addition to the $ 630,000 .

Waxman’s personal guaranty confirmed that GSG owed IPS $ 630,000 .

September 30, 2021, the $ 630,000 was recorded as Bad Debt Expense.

A settlement was entered into between the parties in June 2022, whereby

GSG and Waxman agreed to pay $ 743,000 which included attorney fees and interest, which is required to be paid to the Company in monthly

instalments over 17 months.

The Company received additional monthly instalment payments as part of the agreement through January 2023.

As of September 30, 2024, and through the date of this filing, the Company has not received the monthly installment payments due to the

Company from GSG since January of 2023.

License and Commercial Agreements

entered into an exclusive license and commercial agreement with Kesin Pharma Corporation (“Kesin”) whereby Scienture

granted the exclusive license rights to commercialize SCN-102 in 2022 and SCN-104 in 2023 to Kesin (SCN-102 and SCN-104 are together

referred to as “the Products”) for use in the United States of America.

March 2024, the parties terminated the agreement, and the parties agreed that Scienture shall pay Kesin a total gross amount of

entered into an exclusive license and commercial agreement with Kesin Pharma Corporation (“Kesin”) whereby Scienture granted

the exclusive license rights to commercialize SCN-102 in 2022 and SCN-104 in 2023 to Kesin (SCN-102 and SCN-104 are together referred

to as “the Products”) for use in the United States of America.

March 2024, the parties have terminated the agreement, and the parties agreed that Scienture shall pay Kesin a total gross amount of

$ 1,285,000 upon commercialization of product via a royalty arrangement

5 unchanged sentences

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

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

Scienture has disputed that the amount is

now payable, and the parties are in discussions to resolve the issue.

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

Scienture LLC has disputed that the

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

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

seeking payment of the disputed $ 1.285 million.

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

If Kesin brings a legal action, Scienture will vigorously defend it.

Company entered into a warehouse lease in October 2023.

The Company determined that the new lease required measurement and

recognition of the lease liability and right-of-use assets of $ 351,581 .

Scienture LLC

intends to vigorously defend itself in the litigation.

Company entered into a lease agreement for the period of October 2018 to November 2023.

At inception, management had included the renewal

period from November 2023 to November 2028 within the initial recognition of the related right of use assets and lease liabilities, as

it was reasonably expected, at the time, that the renewal option would be exercised.

The Company determined that the new lease required

measurement and recognition of the lease liability and right-of-use assets of $ 313,301 .

The lease is classified as an operating lease.

No incentives

were included in the lease.

On July 25, 2024, the Company entered into and closed the Scienture Merger

Pursuant to the Scienture Merger Agreement, the Company acquired right of use asset value of $ 61,578 and right of use liability of $ 61,886 on the acquisition date together with

all the assets and liabilities of Scienture.

table below reconciles the fixed component of the undiscounted cash flows for and the total

remaining years to the lease liabilities recorded in the consolidated balance sheet as of September 30, 2024.

No incentives were included in the lease.

July 25, 2024, the Company entered into and closed the Scienture Merger Agreement.

Pursuant to the Scienture Merger Agreement, the Company

acquired right of use asset value of $ 61,578 and right of use liability of $ 61,886 on the acquisition date together with all the assets

and liabilities of Scienture.

table below reconciles the fixed component of the undiscounted cash flows for and the total remaining years to the lease liabilities

recorded in the consolidated balance sheet as of March 31, 2025.

Supplemental balance sheet information

related to leases are as follows:

OF BALANCE SHEET INFORMATION RELATED TO LEASES

March 31, 2025

December 31, 2024

Weighted-average remaining lease term (in years)

Weighted-average discount rate

SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR OPERATING LEASE LIABILITIES

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Long-term lease obligations

the three months ended September 30, 2024, and 2023, total operating lease expense was $ 28,034

and $ 75,496 ,

respectively, which is included in general and administrative expenses in the condensed consolidated statements of operations, as

well as $ 62,656

from discontinued operations, respectively.

the nine months ended September 30, 2024, and 2023, total operating lease expense was $ 53,715

and $ 226,488 ,

respectively, which is included in general and administrative expenses in the condensed consolidated statements of operations, as

well as $ 187,968

from discontinued operations, respectively.

the three months ended September 30, 2024, and 2023, total short-term lease expense was $ 0 and

respectively, which is included in general and administrative expenses in the condensed consolidated statements of operations,

respectively.

the nine months ended September 30, 2024, and 2023, total short-term lease expense was $ 10,228

and $ 20,049 ,

respectively, which is included in general and administrative expenses in the condensed consolidated statements of operations,

respectively.

the three months ended March 31, 2025, and 2024, total operating lease expense was $ 36,402 and $ 12,840 , respectively, which is included

in general and administrative expenses in the unaudited condensed consolidated statements of operations.

14 – SEGMENT REPORTING

segments are defined as the components of an enterprise about which separate financial information is available that is evaluated regularly

by the chief operating decision makers in deciding how to allocate resources and in assessing performance.

The Company’s chief

operating decision makers direct the allocation of resources to operating segments based on the profitability, cash flows, and growth

opportunities of each respective segment.

used to identify the Company’s reportable segments include the organizational structure of the Company and the financial information

available for evaluation by the chief operating decision-maker in making decisions about how to allocate resources and assess performance.

The Company’s operating segments have been broken out based on similar economic and other qualitative criteria.

The Company operates

all reporting segments in one geographical area (the United States).

Company’s CEO is the chief operating decision-maker.

Company classifies its business interests into reportable segments which are:

3 unchanged sentences

OF BUSINESS INTERESTS INTO REPORTABLE SEGMENTS

Three Months Ended September 30, 2024

Segment Assets

Segment Profit/Loss

( 1,643,455 )

( 3,183,601 )

Three Months Ended March 31, 2025

Cost of Sales

Three Months Ended September 30, 2023

Segment Assets

Segment Profit/Loss

Net income (loss)

( 1,420,095 )

( 1,345,501 )

Cost of Sales

Nine Months Ended September 30, 2024

Segment Assets

Segment Profit/Loss

( 3,063,997 )

Interest expense

Total Assets as of March 31, 2025

$ 106,358,530

information as of and for the three months ended March 31, 2025 is presented below:-

OF GEOGRAPHIC INFORMATION

March 31, 2025

United States

$ 106,358,530

Three Months Ended March 31, 2024

Cost of Sales

Nine Months Ended September 30, 2023

Segment Assets

Segment Profit/Loss

Net income (loss)

Interest expense

Total Assets as of December 31, 2024

$ 104,853,805

information as of and for the three months ended March 31, 2024 is presented below:-

Revenues For The

March 31, 2024

December 31, 2024

United States

$ 104,853,805

Cost of Sales

15 – SUBSEQUENT EVENTS

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

(“Tollo”), pursuant to which Tollo agreed to purchase and the Company agreed to sell all of the Company’s membership

interests in IPS.

Suren Ajjarapu, the Company’s Chief Executive Officer, and Prashant Patel, the Company’s President and

Chief Operating Officer, each have a beneficial interest in Tollo.

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

the “Agreements”) with Tollo, pursuant to which Tollo agreed to purchase and the Company agreed to sell all issued and outstanding

shares of common stock of Bonum Health, Inc.

connection with each of the Agreements, the Company agreed to retain certain excluded liabilities of IPS and Bonum including all liabilities:

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

proceedings, or governmental or regulatory inquiries with respect to IPS or Bonum, respectively, prior to the closing under the applicable

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

and documents required to be delivered by the Company;

(iii) not disclosed by the Company in accordance with each Agreement;

to any actions threatened or initiated by a governmental entity against IPS or Bonum, respectively;

and (v) related to tax returns or

tax matters of the Company, IPS, or Bonum, respectively, for any periods prior to closing under the applicable Agreement.

Company and Tollo have agreed to consummate the closing of each of the Agreements on June 30, 2025, or such other time as the

Company and Tollo may agree.

As consideration for acquiring IPS and Bonum, Tollo has agreed to pay the Company $ 5

million in the form of a promissory note bearing interest at the prime rate.

The promissory note matures on June 30, 2030.

Tollo is required to pay 20% of the proceeds of a future equity financing toward repayment of the principal and accrued but unpaid

interest owed under the promissory note.

The parties closed on the transaction on April 30, 2025.

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

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

the Branded and Specialty Pharma markets.

The Company intends to use the proceeds obtained from the divestment to facilitate the high-growth

commercial and strategic product development activities at its Scienture, LLC subsidiary.

On April 16, 2025, the Company

issued to the Investor, as a commitment fee, 601,410 shares of the Company’s common stock, in consideration for the Investor’s

execution, delivery of the ELOC Agreement and shares issued in quarter one of 2025 (see Note 9).

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

What changed 10-Q

Item 1. Financial Statements