What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-12 compared with 2024-11-06 · 169 added, 271 removed, 141 unchanged (76% of the section changed)

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Discussion and Analysis of Financial Condition and Results of Operations”, contained in our Annual Report on Form 10-K for the

year ended December 31, 2023, filed with the SEC on April 22, 2024 (the “Annual Report”).

year ended December 31, 2024, filed with the SEC on March 26, 2025 (the “Annual Report”).

capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited consolidated

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see the section entitled “Glossary” in our Annual Report for a list of abbreviations and definitions used throughout this

Unless the context requires otherwise, references to the “Company,”

“we,” “us,” and “our” refer specifically to Scienture Holdings, Inc., formerly TRxADE HEALTH, INC.,

and its consolidated subsidiaries.

References to “Q1”, “Q2”, “Q3”, and “Q4” refer to the

first, second, third, and fourth quarter, respectively, of the applicable year.

Unless otherwise stated or the context otherwise requires,

comparisons from one period to another are to the same period of the prior fiscal year.

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

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

References to “Q1”,

“Q2”, “Q3”, and “Q4” refer to the first, second, third, and fourth quarter, respectively, of the

applicable year.

Unless otherwise stated or the context otherwise requires, comparisons from one period to another are to the same period

of the prior fiscal year.

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

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for the remainder of MD&A.

Summary of material transactions occurring during the three and nine months ended September 30, 2024.

Summary of material transactions occurring during the three months ended March 31, 2025.

and Capital Resources .

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of Operations .

An analysis of our financial results comparing the three and nine months ended September 30, 2024, and 2023.

An analysis of our financial results comparing the three months ended March 31, 2025, and 2024.

Accounting Policies .

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in our reported financial results and forecasts.

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, 100% of Softell Inc.

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

On October 4, 2024, the Company and Softell entered into IPS Assignment

Agreement, pursuant to which the Company transferred, and Softell accepted, 100% of the membership interests of IPS.

As a result, IPS

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 include all healthcare markets including government organizations,

hospitals, clinics and independent pharmacies nationwide.

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,

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.).

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

accepted, 100% of the membership interests of IPS.

As a result, IPS 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

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.

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

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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 the Superlatus Merger Agreement with Superlatus and Merger Sub.

On July 31, 2023, the Company

completed its acquisition of Superlatus in accordance with the terms and conditions of the Superlatus Merger Agreement, pursuant to which

the Company acquired Superlatus by way of a merger of the Merger Sub with and into Superlatus, with Superlatus being a wholly owned subsidiary

of the Company and the surviving entity in the Superlatus Merger.

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

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.

all of the closing conditions of the Superlatus Merger Agreement were met.

As a result, the Company entered into Amendment No.

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 the Scienture Merger Agreement with Merger Sub I, Merger Sub II, and Scienture.

to the Scienture Merger Agreement, (i) Merger Sub I merged with and into Scienture, 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, 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, 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.

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.

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.

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.

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 “Name Change”).

Other than the Name

Change, there were no changes to the Company’s certificate of incorporation or bylaws.

September 23, 2024, the Company’s common stock trades under the ticker symbol “SCNX”.

The Name Change resulted in a

change to the CUSIP number for the Company’s outstanding shares of common stock offered on the Nasdaq Stock Market LLC.

of Legacy Subsidiaries

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.

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.

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.

Company believes that the key benefits of the divestitures include:

Operational Efficiency :

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

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

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

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

in development at its Scienture, LLC subsidiary.

and Capital Resources

was $579,103 as of September 30, 2024, compared to $314 as of December 31, 2023.

was $2,049,638 as of March 31, 2025, compared to $308,096 as of December 31, 2024.

The increase in cash was primarily due to the proceeds

in February 2024 and May 2024 related to the disposition of certain assets to MMS as described above.

We expect that our

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

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

from issuance of common stock pursuant to ELOC agreement.

We expect that our future available capital resources will consist primarily

of cash generated from operations, remaining cash balances, borrowings, and additional funds raised through sales of debt and/or equity

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

September 30,

Current assets (excluding cash)

Current liabilities

$ (6,142,917 )

Working capital

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We anticipate these uses will continue to be our principal sources of, and uses of, cash in

increase in cash as of September 30, 2024, compared to December 31, 2023, was primarily due to the proceeds received in February 2024

and May 2024 resulting from the disposition of assets to MMS as described above.

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 was

paid using a portion of the proceeds from the closing of the sale of certain assets.

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 was

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

Outlook Cash Explanation

primary objectives for the remainder of 2024 are expected to be the continued implementation of Scienture’s business plan, marketing

the IPS business, and to complete potential strategic transactions of our business-to-consumer subsidiaries, which may include a

potential sale, spin-off, fund raising, combination or other strategic transaction, and also include the winding down of such

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

be available to us, through borrowings or otherwise, on favorable terms if required in the future, or at all.

We may also raise

additional funding in the future through the sale of equity.

primary objectives for the remainder of 2025 are expected to be the continued implementation of Scienture business plan, and to complete

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

combination or other strategic transaction, and also include the winding down of such entities.

There can be no assurance that our operations

will generate significant positive cash flow, or that additional funds will be available to us, through borrowings or otherwise, on favorable

terms if required in the future, or at all.

We may also raise additional funding in the future through the sale of equity.

estimate our operating expenses and working capital requirements for the next 12 months to be approximately as follows:

Projected Expenses from October 2024 to September 2025

Projected Expenses from April 2025 to March 2026

General and administrative (1)

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may require additional funding in the future to implement on our business plan and potentially to expand or complete acquisitions.

The sources of this capital are expected to be equity investments and notes payable.

Our plan for the next twelve months is to

integrate Scienture and its research and development activities, continue using the same marketing and management strategies to

promote our IPS assets and operations, exploring strategic transactions involving our corporate assets, while also seeking to expand

our operations organically or through acquisitions, as funding and opportunities arise.

In the event we require

additional funding, we plan to raise that through the sale of debt or equity, 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.

sources of this capital are expected to be equity investments and notes payable.

Our plan for the next twelve months is to continue using

the same marketing and management strategies to promote our IPS assets and operations, exploring strategic transactions involving our

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

In the event we require additional funding, we plan to raise that through the sale of debt or equity, 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.

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

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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.

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.

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

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

Nine Months Ended

September 30,

Net cash used in operating activities from continuing operations

$ (10,585,173 )

$ (2,036,715 )

$ (8,548,457 )

Three Months Ended

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

Net cash (used in) provided by operating activities from discontinued operations

$ (1,601,291 )

Operating Activities

(10,189,673 )

$ (1,206,077 )

$ (10,149,749 )

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

$ (2,379,024 )

Net cash (used in) provided by investing activities from discontinued

(29,932,589 )

Net cash provided by investing activities from discontinued operations

Investing Activities

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

(27,432,589 )

Net cash (used in) provided by 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 from discontinued operations

Financing Activities

(13,896,011 )

$ (15,840,704 )

Net change in cash

$ (1,605,363 )

used in operating activities for the nine months ended September 30, 2024, was $11,355,826, compared to cash used in operations for the nine months

ended September 30, 2023, of $1,206,077.

The increase in cash used in operations for the nine months ended September 30, 2024 compared

to September 30, 2023, was mainly due to our net loss and cash used in operating assets and liabilities in the 2024 period.

provided by investing activities for the nine months ended September 30, 2024, was $27,552,791 and cash provided by investing

activities was $74,283 for the nine months ended September 30, 2023.

The increase in cash provided by investing activities in the

2024 period was primarily due to the MMS disposition in the first quarter, partially offset by the investment in securities of

(used) provided by in financing activities for the nine months ended September 30, 2024, was ($15,769,770) compared to $70,934 of cash provided by financing

activities for the nine months ended September 30, 2023.

used in operating activities for the three months ended March 31, 2025, was $2,956,457, compared to cash used in operations for the three

months ended March 31, 2024, of $10,189,673.

The decrease in cash used in operations for the three months ended March 31, 2025 compared

to 2024 was primarily due to a lower net loss in and less cash used in operating assets and liabilities in 2025.

provided by (used in) investing activities for the three months ended March 31, 2025, was $0 and cash provided by investing activities

was $27,432,589 for the three months ended March 31, 2024.

The cash provided by investing activities in 2024 was primarily due to the

MMS disposition in the first quarter, partially offset by the investment in securities of $2,500,000.

provided by financing activities for the three months ended March 31, 2025, was $4,697,999 compared to $13,896,011 of cash used in financing

activities for the three months ended March 31, 2024.

Cash provided by financing activities in 2025 was due to proceeds from issuance

of common stock pursuant to ELOC agreement.

The change was primarily due to the payment of dividends of $14,858,831 in 2024.

In August 2024, the Company received note proceeds of $314,000.

2024, the Company received note proceeds of $314,000 and $2,640,000 in net proceeds from convertible debenture in November 2024.

of Operations

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the notes to these statements included above.

Month Period Ended September 30, 2024, compared to Three Month Period Ended September 30, 2023

Month Period Ended March 31, 2025, compared to Three Month Period Ended March 31, 2024

Three Months Ended

September 30,

Cost of sales

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Technology expense

General and administrative (less stock-based compensation expense)

Research and development

Warrants and options expense

Total operating expenses

Change in fair value of warrant liability

Interest income

Interest expense

Net loss from operations

Income (loss) on discontinued operations

$ (3,183,601 )

$ (3,525,114 )

were $64,861 in revenues for the three months ended September 30, 2024.

Revenues decreased by $327,425, compared to the same period ended

September 30, 2023 primarily because of the disposition of the assets and operations of Softell completed in February 2024 which

resulted in the Company having fewer revenue generating operations when compared to the comparable period in 2023.

the three-month period ended September 30, 2024, cost of goods sold and gross (loss) profit were $60,978 and $3,883, and $352,694 and

$39,592, all respectively for the same period in 2023.

Gross profit as a percentage of sales was 5.99% for the three months ended September

30, 2024, compared to 10.09% for the three months ended September 30, 2023.

and salary expense increased by $701,635 for the three months ended September 30, 2024 to $708,977 compared to $7,342 for the comparable

period in 2023.

The increase is primarily due to an increase in salary of the COO and CEO of IPS, as well as the

Scienture Merger in July 2024, as compared to the same period in 2023.

fees increased by $297,867 to $593,364 compared to $295,497 for the comparable period in 2023.

The increase was primarily due to increase

in board members’ fees and consulting expense and post-acquisition professional fees expense of Scienture.

and legal expenses increased by $209,747 for the three months ended September 30, 2024 to $619,227 compared to $409,480 for the

comparable period in 2023.

The increase is primarily due to increased legal services during the three months ended

September 30, 2024 as compared to the same period in 2023.

and administrative expenses (including stock-based compensation expense) increased by $101,769 for the three months ended September

30, 2024, to $168,649 compared to $66,880 for the comparable period in 2023.

The increase was mainly due to increase in headcount in

connection with our acquisition of Scienture’s operations in July 2024.

expense increased $135,403 for the three months ended September 30, 2024 to $157,474 compared to $22,071 for the comparable period in

The increase was mainly due to increased software expense and software support expense.

and development expense increased $1,253,983 for the three months ended September 30, 2024 to $1,253,983 compared to $0 for the comparable

period in 2023.

The increase was mainly due to contract research organization costs of Scienture upon the merger in July 2024.

had interest expense of $217,433 for the three months ended September 30, 2024, compared to interest expense of $251,778 for the three

months ended September 30, 2023.

The decrease is due to the sale of note payable of Superlatus subsequent to the sale of the Company’s equity interest in Superlatus

to Superlatus Foods, Inc.

thereby transferring all assets and liabilities, and partially offset by interest expense of $43,200 deemed

incurred in full on the date of issue of convertible note of $360,000 and amortization of debt discount.

recognized a gain on the change in the fair value of the warrant liability of $502,178 for the three months ended September 30, 2024,

compared to a gain of $925,320 during the three months ended September 30, 2023, based on the underlying valuation inputs.

the three months ended September 30, 2024, the Company incurred a net loss from continuing operations of $2,783,601 compared to a net

loss from continuing operations of $88,136 for the three months ended September 30, 2023.

The increase in net loss is mainly driven by

the integration of Scienture upon its merger in July 2024.

loss from discontinued operations was $3,436,978 for the three months ended September 30, 2023.

Month Period Ended September 30, 2024, compared to Nine Month Period Ended September 30, 2023

Nine Months Ended

September 30,

Cost of sales

Operating expenses:

Wage and salary expense

Professional fees

Accounting and legal expense

Technology expense

General and administrative (less stock-based compensation expense)

General and administrative (including stock-based compensation expense)

Research and development

Warrants and options expense

Total operating expenses

Change in fair value of warrant liability

Change in fair value of derivative liability

Loss on conversion of note payable

Interest income

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Net loss from operations

Income from discontinued operations, net of tax

(27,879,455 )

Income (loss) from discontinued operations

Net income (loss)

Net (loss) income

$ (3,063,997 )

were $83,560 in revenues for the nine months ended September 30, 2024.

Revenues decreased by $1,151,608, compared to the same period ended

September 30, 2023 primarily because of the disposition of the assets and operations of Softell completed in February 2024 which resulted in the

Company having fewer revenue generating operations when compared to the comparable period in 2023.

the nine-month period ended September 30, 2024, cost of goods sold and gross (loss) profit were $80,380 and $3,180, and $1,072,178 and

$162,990, all respectively for the same period in 2023.

Gross profit as a percentage of sales was 3.81% for the nine months ended September

30, 2024, compared to 13.20% for the nine months ended September 30, 2023.

and salary expense increased by $898,386 for the nine months ended September 30, 2024 to $1,243,621 compared to $345,235 for the comparable

$ (24,310,030 )

are $10,258 in revenues for the three months ended March 31, 2025.

Revenues increased by $10,258 compared to the same period ended March

31, 2024 primarily because of the disposition of the assets and operations of Softell completed in February 2024 which resulted in the

Company having fewer revenue generating operations.

the three-month period ended March 31, 2025, cost of goods sold and gross profit were $9,585 and $673, and $0 and $0, all respectively

for the same period in 2024.

Gross profit as a percentage of sales was 6.56% for the three months ended March 31, 2025, compared to no

such gross profit (loss) for the three months ended March 31, 2024.

and salary expense increased by $473,474 for the three months ended March 31, 2025 to $696,068 compared to $222,594 for the comparable

period in 2024.

The increase is primarily due to an increase in salary of the COO and CEO of IPS, as well as the Scienture

Merger in July 2024, as compared to the same period in 2023.

The increase is primarily due to an increase in salaries for executives, as well as the Scienture Merger in July 2024,

as compared to the same period in 2024, which increased the headcount of the Company’s operations.

fees increased by $233,297 to $412,850 compared to $179,553 for the comparable period in 2024.

The increase was primarily due to increase

in Board members’ fees and consulting expense and post acquisition professional fees of Scienture.

and legal expenses increased by $347,487 for the nine months ended September 30, 2024 to $1,129,982 compared to $782,495 for the comparable

in post-acquisition professional fees expense of Scienture, including increased advisory and consulting efforts as Scienture’s

operations prepare for commercialization.

and legal expenses increased by $131,778 for the three months ended March 31, 2025 to $470,825 compared to $339,047 for the comparable

period in 2024.

The increase is primarily due to increased legal services during the nine months ended September 30, 2024 as compared

to the same period in 2023.

and administrative expenses (including stock-based compensation expense) increased by $4,800,857 for the nine months ended September

The increase is primarily due to more SEC filings and corporate actions requiring additional accounting and legal services.

and administrative expenses (including stock-based compensation expense) decreased by $3,344,214 for the three months ended March 31,

2025, to $1,355,948 compared to $4,700,162 for the comparable period in 2024.

The increase was mainly due to shares issued for services

at fair value of $4,450,919.

expense increased by $220,817 for the nine months ended September 30, 2024 to $295,763 compared to $74,946 for the comparable period

The decrease from 2024 was mainly due to a decrease in

the fair value of shares issued for services in 2025.

expense increased $10,005 for the three months ended March 31, 2025 to $61,620 compared to $51,615 for the comparable period in 2024.

The increase was mainly due to increased software expense and software support expense.

and development expense increased $1,253,983 for the nine months ended September 30, 2024 to $1,253,983 compared to $0 for the comparable

period in 2023.

The increase was mainly due to contract research organization costs of Scienture upon the merger in July 2024.

had interest expense of $320,897 for the nine months ended September 30, 2024, compared to interest expense of $494,904 for the nine

months ended September 30, 2023.

The decrease is due to the sale of note payable of Superlatus subsequent to the sale of the Company’s equity interest in Superlatus

to Superlatus Foods, Inc.

thereby transferring all assets and liabilities, and partially offset by interest expense of $43,200 deemed

incurred in full on the date of issue of convertible note of $360,000 and amortization of debt discount.

recognized a loss on the change in the fair value of the warrant liability of $392,843 for the nine months ended September 30, 2024,

compared to a loss of $443,308 during the nine months ended September 30, 2023, based on the underlying valuation inputs.

the nine months ended September 30, 2024, the Company incurred a net loss from continuing operations of $11,041,764 compared to a net

loss from continuing operations of $3,429,112 for the nine months ended September 30, 2023.

The increase in net loss is mainly driven

by stock compensation in 2024, as well as the integration of Scienture upon its merger in July 2024.

income from discontinued operations increased by $30,419,127 to a net income of $27,670,294 for the nine months ended September 30, 2024,

compared to a net loss from discontinued operations of $2,748,833 for the nine months ended September 30, 2023.

The increase was primarily

due to the disposal of Softell assets, partially offset by loss on disposal of Superlatus during

the nine months ended September 30, 2024.

and development expense pertaining to Scienture LLC’s operations post-acquisition.

Research and development expenses was mainly

due to contract research organization costs of Scienture LLC.

Total expenses by program were as follows:

Three Months Ended

Project Codes

Total research and development expense

had interest expense of $670,784 for the three months ended March 31, 2025, compared to interest expense of $98,515 for the three months

ended March 31, 2024.

The increase is due to the interest expense on Scienture LLC’s convertible debt, the convertible notes issued

in August and November 2024, and related debt discount amortization on these notes.

recognized a gain on the change in the fair value of the warrant liability of $645,986 for the three months ended March 31, 2025, compared

to a loss of $729,889 during the three months ended March 31, 2024, based on the underlying valuation inputs.

recognized a gain on the change in the fair value of the derivative liability of $603,322 for the three months ended March 31, 2025,

based on the underlying valuation inputs and the conversion features of the Arena convertible debenture.

the three months ended March 31, 2025, the Company incurred a net loss from continuing operations of $3,063,997 compared to a net loss

from continuing operations of $6,633,422 for the three months ended March 31, 2024.

The change was due to change in operating income,

other income (expense).

income from discontinued operations was $27,879,455 for the three months ended March 31, 2024.

The income was primarily due to the disposal

of Softell assets, partially offset by loss on disposal of Superlatus during the three months ended March 31, 2024.

Accounting Policies

8 unchanged sentences

general, the Company accounts for revenue recognition in accordance with Financial Accounting Standards Board (“FASB”) Accounting

Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.”

IPS is a licensed wholesaler of brand, generic and non-drug products to

IPS takes orders for products, creates invoices for each order and recognizes revenue at the time the Customer receives the

Standards Codification 606, “Revenue from Contracts with Customers.”

is a licensed wholesaler of brand, generic and non-drug products to Customers.

IPS takes orders for products, creates invoices for each

order and recognizes revenue at the time the Customer receives the product.

Customer returns are not material.

Identify the contract with the Customer – IPS requires that an application

and a credit card for payment be completed by the Customer prior to the first order.

Each transaction is evidenced by an order form sent

by the Customer and an invoice for the product is sent by IPS.

The collection is probable based on the application and credit card information

provided prior to the first order.

Identify the performance obligations in the contract – Each order is distinct and evidenced

by the shipping order and invoice.

contract with the Customer – IPS requires that an application and a credit card for payment be completed by the Customer prior

to the first order.

Each transaction is evidenced by an order form sent by the Customer and an invoice for the product is sent by IPS.

The collection is probable based on the application and credit card information provided prior to the first order.

the performance obligations in the contract – Each order is distinct and evidenced by the shipping order and invoice.

Determine the transaction price – The consideration is variable if product is returned.

The variability is determined based on the return policy of the product manufacturer.

The variability is determined based on

the return policy of the product manufacturer.

There are no sales or volume discounts.

The transaction

price is determined at the time of the order evidenced by the invoice.

Allocate the transaction price – There is no difference

between contract price and “stand-alone selling price”.

Recognize revenue when or as the entity satisfies a performance

obligation – The Revenue is recognized when the Customer receives the product.

The transaction price is determined at the time

of the order evidenced by the invoice.

Allocate the transaction price – There is no difference between contract price

and “stand-alone selling price”.

Recognize revenue when or as the entity satisfies a performance obligation –

The Revenue is recognized when the Customer receives the product.

Urgent Company, Inc., which was a wholly-owned subsidiary, is a retail and distribution provider of prepackaged, prepared foods.

to December 31, 2023, we divested our interest in The Urgent Company, Inc.

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

14 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis