Scienture Holdings (SCNX) posts Q1 2026 loss and adds $11.4M secured debt
Rhea-AI Filing Summary
Scienture Holdings, Inc. posted modest early commercialization revenue while continuing to generate sizable losses in the quarter ended March 31, 2026. Revenue rose to $56,325, driven entirely by initial sales of ARBLI™ (SCN-102), but the company recorded a net loss of $3.4 million and an operating loss of $3.5 million.
Cash and cash equivalents were $3.54 million with positive working capital of about $1.97 million, versus an accumulated deficit of $83.95 million. Intangible assets tied to the Scienture pipeline totaled roughly $70.5 million after prior impairments, with SCN-102 now amortizing over 13 years.
Management highlights substantial doubt about the company’s ability to continue as a going concern, relying on ARBLI™ commercialization, tight cost control, and access to additional capital. After quarter-end, Scienture entered into new secured Streeterville notes totaling $11.42 million, funding $8.0 million immediately and placing $3.0 million in a controlled account, secured by substantially all assets.
Positive
- None.
Negative
- Going concern risk highlighted: Management states that conditions, including an accumulated deficit of $83.95 million and dependence on ARBLI™ commercialization and new financing, raise substantial doubt about the company’s ability to continue as a going concern within one year.
- High cash burn relative to revenue: For Q1 2026, revenue was only $56,325 versus operating expenses of $3.56 million, resulting in a net loss of $3.40 million and operating cash use of $2.92 million, pressuring limited cash resources.
- New secured debt with tight terms: Subsequent Streeterville financing adds $11.42 million of secured notes with up to 18% default interest, event-based balance step-ups, and first-priority liens on substantially all assets, increasing financial risk if covenants or trigger events are breached.
Insights
Early ARBLI™ revenue is small versus cash burn and balance-sheet risk.
Scienture is transitioning into a branded specialty pharma model, but Q1 2026 revenue of $56,325 is minimal against operating expenses of $3.56 million and a net loss of $3.40 million. Cash fell to $3.54 million, roughly one quarter of annualized operating cash burn.
The balance sheet is dominated by product technology intangibles of $70.52 million following prior impairments, while goodwill has been fully written off. A $5.0 million long-dated note receivable provides some non-cash asset value but no near-term liquidity. Management still discloses substantial doubt about going concern, despite positive working capital.
Post-quarter, the company added $11.42 million of secured Streeterville notes, funded with $8.0 million in cash and $3.0 million in a controlled account, bearing interest of 9% and 5% and secured by substantially all assets. This strengthens liquidity but introduces meaningful leverage, complex covenants, and default triggers that could pressure equity holders if commercialization and pipeline timelines slip.
Key Figures
Key Terms
going concern financial
intangible assets financial
goodwill impairment financial
in-process research and development (IPR&D) financial
original issue discount financial
at-the-market offering program financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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the Quarterly Period Ended
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Scienture Holdings, Inc. formerly TRxADE HEALTH, INC.
FORM 10-Q
For the Quarter Ended March 31, 2026
TABLE OF CONTENTS
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | 3 |
| PART I: FINANCIAL INFORMATION | 4 |
| ITEM 1. FINANCIAL STATEMENTS | 4 |
| ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 26 |
| ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 34 |
| ITEM 4. CONTROLS AND PROCEDURES | 34 |
| PART II. OTHER INFORMATION | 35 |
| ITEM 1. LEGAL PROCEEDINGS | 35 |
| ITEM 1A. RISK FACTORS | 35 |
| ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 35 |
| ITEM 3. DEFAULTS UPON SENIOR SECURITIES | 35 |
| ITEM 4. MINE SAFETY DISCLOSURES | 35 |
| ITEM 5. OTHER INFORMATION | 35 |
| ITEM 6. EXHIBITS | 36 |
| 2 |
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”), including without limitation, the section of this Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements, within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, regarding future events and the future results of Scienture Holdings, Inc. (f/k/a TRxADE Health, Inc.) (the “Company,” “we,” “us,” and “our”) that are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the management of the Company. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. These factors include, but are not limited to:
| ● | Our limited amount of cash; | |
| ● | The negative effect on our business and our ability to raise capital that is created by the fact that there is a substantial doubt about our ability to continue as a going concern; | |
| ● | Our limited revenue generating operations, and risks of our operations not being profitable; | |
| ● | Claims relating to alleged violations of intellectual property rights of others; | |
| ● | Cybersecurity risks; | |
| ● | Risks relating to implementing our acquisition strategies, and, risks related to our ability to integrate the business operations of businesses that we acquire from time to time; | |
| ● | Negative effects on our operations associated with the opioid pain medication health crisis; | |
| ● | Regulatory and licensing requirement risks; | |
| ● | Risks related to changes in the U.S. healthcare environment; | |
| ● | The status of our information systems, facilities and distribution networks; | |
| ● | Risks associated with the operations of our more established competitors; | |
| ● | Healthcare fraud; | |
| ● | Inflation, interest rate volatility, governmental responses thereto and macro economic concerns, including our ability to respond to such concerns; | |
| ● | Changes in laws relating to our operations; | |
| ● | Privacy laws; | |
| ● | System errors; | |
| ● | Dependence on current management; | |
| ● | Our growth strategy and ability to effectively manage our growth; | |
| ● | Our ability to maintain compliance with the continued listing standards of Nasdaq and for our common stock to remain listed on Nasdaq; and | |
| ● | Other factors discussed in this Report and our Annual Form 10-K for the year ended December 31, 2025. |
While forward-looking statements reflect our good faith beliefs, assumptions and expectations, they are not guarantees of future performance. The forward-looking statements speak only as of the date of this Report. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Moreover, because we operate in a very competitive and rapidly changing environment, new risk factors are likely to emerge from time to time. We caution investors not to place undue reliance on these forward-looking statements and urge you to carefully review the disclosures we make concerning risks in this Report and in our Annual Report on Form 10-K filed on March 30, 2026, and amended on April 30, 2026, and other reports filed with the Securities and Exchange Commission (“SEC”). Readers of this Report should also read our other periodic filings made with the SEC and other publicly filed documents for further discussion regarding such factors.
| 3 |
Table of Contents
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Scienture Holdings, Inc. formerly TRxADE HEALTH, INC.
Condensed Consolidated Balance Sheets
As of March 31, 2026 and December 31, 2025
(Unaudited)
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Deferred offering costs | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Notes receivable | ||||||||
| Interest receivable | ||||||||
| Intangible assets, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Operating lease liability - current | ||||||||
| Warrant liability | ||||||||
| Development agreement liability - current portion | ||||||||
| Total current liabilities | ||||||||
| Development agreement liability | ||||||||
| Deferred tax liability | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 15) | ||||||||
| Stockholders’ equity: | ||||||||
| Series A preferred stock, $ par value; and shares authorized; shares issued and outstanding as of both March 31, 2026 and December 31, 2025 | ||||||||
| Series B preferred stock, $ par value; shares authorized; shares issued and outstanding as of both March 31, 2026 and December 31, 2025 | ||||||||
| Series C preferred stock, $ par value; shares authorized; shares issued and outstanding as of both March 31, 2026 and December 31, 2025 | ||||||||
| Series X preferred stock, $ par value; shares authorized; shares issued and outstanding as of both March 31, 2026 and December 31, 2025 | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively and shares unvested as of March 31, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
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Scienture Holdings, Inc. formerly TRxADE HEALTH, INC.
Condensed Consolidated Statements Of Operations
For the Three Months Ended March 31, 2026 and 2025
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenues | $ | $ | ||||||
| Cost of sales | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Wage and salary expense | ||||||||
| Professional fees | ||||||||
| Accounting and legal expense | ||||||||
| Technology expense | ||||||||
| General and administrative | ||||||||
| Research and development | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Non-operating income (expense): | ||||||||
| Change in fair value of warrant liability | ||||||||
| Change in fair value of derivative liability | ||||||||
| Loss on conversion of note payable | ( | ) | ||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total non-operating expense | ||||||||
| Benefit (provision) for income taxes | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per common share | ||||||||
| Basic | $ | ( | ) | $ | ( | ) | ||
| Diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
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Scienture Holdings, Inc. formerly TRxADE HEALTH, INC.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
| Series A | Series B | Series C | Series X | Common | Additional | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||
| 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 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2026 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements
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Scienture Holdings, Inc. formerly TRxADE HEALTH, INC.
Condensed Consolidated Statements of Cash Flows
For The Three Months Ended March 31, 2026 and 2025
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | ||||||||
| Amortization of intangible assets | ||||||||
| Change in fair value of warrant liability | ( | ) | ( | ) | ||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Loss on conversion of note payable | ||||||||
| Stock-based compensation | ||||||||
| Common stock issued for services | ||||||||
| Amortization of debt discount | ||||||||
| Amortization of right-of-use assets | ||||||||
| Interest income | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and deposits | ( | ) | ||||||
| Inventory | ||||||||
| Other receivables | ||||||||
| Lease liability | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from loan payable, related party | ||||||||
| Gross proceeds from issuance of common stock | ||||||||
| Repayment of development liability | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net change in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Conversion of note payable into common stock | $ | $ | ||||||
| Equity line of commitment shares issued as offering costs | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 7 |
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NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Overview
On September 20, 2024, the Company changed its legal name from “TRxADE HEALTH, Inc.” to “Scienture Holdings, Inc.” As of the date of these financial statements, the Company’s primary operating subsidiary is Scienture, LLC (f/k/a Scienture, Inc.) (“Scienture”). Scienture was acquired in July 2024.
Bonum Health, LLC was formed to hold certain telehealth assets acquired in October 2019. The “Bonum Health Hub” was launched in February 2020; however, the Company does not anticipate installations moving forward. On April 30, 2025, the Company completed the sale of Bonum Health, LLC.
Scienture 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.
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Disposition of Legacy Subsidiaries
The
Company also previously owned
Softell & IPS Entities
On
October 4, 2024, the Company and Softell entered into an Assignment and Assumption of Membership Interests, pursuant to which the Company transferred, and Softell accepted,
On April 8, 2025, the Company entered into a Membership Interest Purchase Agreement 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 former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer, each had a beneficial interest in Tollo as of June 30, 2025. In August 2025, Integral Health, including its subsidiary IPS, were acquired by third parties. Therefore, at March 31, 2026 and December 31, 2025, Integral Health and Tollo was no longer considered a related party.
On April 8, 2025, the Company also entered into a Stock Purchase Agreement with Tollo, pursuant to which Tollo agreed to purchase and the Company agreed to sell all issued and outstanding shares of common stock of Softell.
Bonum Health Entities
On April 8, 2025, the Company also entered into a Stock Purchase Agreement 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 November 2025, the Company dissolved Bonum Health, LLC.
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The divestitures described above 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 subsidiary.
See Note 3 for further detail on the dispositions.
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, 2025, as filed with the SEC on March 30, 2026, and amended on April 30, 2026.
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, 2025, 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, 2026 and 2025 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. |
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The carrying amounts for cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value because of their short-term maturity. The Company’s outstanding warrant liability is measured at fair value on a recurring basis and is classified within Level 3 of the fair value hierarchy. See Note 11 – Warrants for the significant unobservable inputs used in the valuation and a roll-forward of the warrant liability for the three months ended March 31, 2026.
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 Corporation
limits. During the three months ended March 31, 2026, two customers accounted for
Accounts Receivable, net
Accounts receivable represent amounts due from wholesale distributors for the sale of pharmaceutical products. These receivables are recorded at the invoiced amount, net of estimated variable consideration including rebates, chargebacks, discounts, and other gross-to-net sales adjustments, consistent with the Company’s revenue recognition policy.
Payment terms are generally net 90 days from the date of invoice. The Company monitors the creditworthiness of its customers and evaluates the collectability of outstanding receivables on an ongoing basis. The Company estimates expected credit losses on trade receivables in accordance with ASC 326 using an allowance for credit losses (“ACL”). The ACL reflects management’s estimate of lifetime expected credit losses based on historical loss experience, current conditions, and reasonable and supportable forecasts. Trade receivables are pooled by similar risk characteristics. Balances are written off when deemed uncollectible, and recoveries are recorded when received. The Company monitors credit risk primarily through aging and customer-specific evaluations.
Inventory
Inventory is stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method and includes the purchase price, inbound freight, and other costs directly attributable to the acquisition of finished goods.
Inventories primarily consist of finished pharmaceutical products held for sale. The Company regularly evaluates inventory for obsolescence and slow-moving items and records a reserve, if necessary, to write down inventories to their estimated net realizable value. Factors considered in the valuation include current market conditions, historical sales trends, product expiration dates, and projected demand.
Inventory write-downs are recorded as a component of cost of goods sold and are not reversed if the market value of the inventory subsequently increases.
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, 2026, the Company has capitalized $
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Acquisitions
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 $
During
the year ended December 31, 2025, the Company performed its annual impairment assessment of goodwill and indefinite-lived intangible
assets and recognized aggregate impairment charges of $
Goodwill
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.
During
the year ended December 31, 2025, the Company performed its annual impairment assessment of goodwill and indefinite-lived intangible
assets and recognized aggregate impairment charges of $
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.
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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
See Note 9 – Goodwill and Intangible Assets for detail on impairment testing results.
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.
During
the year ended December 31, 2025, the Company performed its annual impairment assessment of goodwill and indefinite-lived intangible
assets and recognized aggregate impairment charges of $
As
of December 31, 2025, SCN-102 passed the ASC 360 undiscounted cash flow recoverability test, therefore, no impairment was recorded. The
three other intangible assets failed their annual ASC 350 fair value tests, fair values determined via discounted cash flow analysis
were below carrying amounts, resulting in total impairment charges of $
The Company did not record an impairment charge for the three months ended March 31, 2026 and 2025.
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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.
Leases
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 term. 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. 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 March 31, 2026, we had outstanding warrants and stock options, each exercisable for shares of common stock, as well as shares of Series B Preferred Stock outstanding.
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Numerator: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Denominator for EPS – weighted average shares | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| Net loss | ||||||||
| Basic | $ | ( | ) | $ | ( | ) | ||
| Diluted | $ | ( | ) | $ | ( | ) | ||
Income Taxes
The Company’s provision for income taxes was $ for the three months ended March 31, 2026 and 2025. 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.
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Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose, in tabular format, the nature of certain expenses included in specific income statement line items, including disaggregation by natural classification (inventory purchases, employee compensation, depreciation, intangible asset amortization, and other categories) and disclosure of total selling expenses. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard and anticipates it will result in additional footnote disclosures but does not expect a material impact on its financial position, results of operations, or cash flows.
Management does not believe that any other recently issued, but not yet effective, accounting standards will have a material effect on the accompanying consolidated 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 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 (“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.
As
of March 31, 2026, the Company had an accumulated deficit of $
As
of March 31, 2026, the Company had cash and cash equivalents of $
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NOTE 3 – ACQUISITIONS AND DISPOSITIONS
Acquisitions
Scienture, Inc.
The Company evaluated the Agreement and Plan of Merger, dated July 25, 2024, by and among the Company, MEDS Merger Sub I, Inc., MEDS Merger Sub II, LLC, and Scienture (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.
On
July 25, 2024, the parties consummated the mergers contemplated by the Scienture Merger Agreement (together, the “Scienture Merger”)
and the Company issued shares of common stock and shares of Series X Preferred Stock at the closing. The aggregate
fair value of the purchase price consideration was $
The following summarizes the purchase price consideration and the preliminary purchase price allocation as of the acquisition date:
| July 25, 2024 | ||||
| Purchase consideration: | ||||
| Common stock | $ | |||
| Series X preferred stock | ||||
| Total purchase consideration | $ | |||
| Purchase price allocation: | ||||
| Cash | $ | |||
| Operating lease right-of-use assets | ||||
| Goodwill | ||||
| Intangible assets - product technologies | ||||
| Accounts payable | ( | ) | ||
| Accrued liabilities | ( | ) | ||
| Loan payable, related party | ( | ) | ||
| Lease liability | ( | ) | ||
| Development agreement liability | ( | ) | ||
| Long-term convertible notes | ( | ) | ||
| Deferred tax liability | ( | ) | ||
| Net assets acquired | $ | |||
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.
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Dispositions and Divestitures
Refer to Note 1 and 4 for further detail on the disposition of the Company’s legacy subsidiaries.
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, 2026 and 2025, the results
of the discontinued operations for the three months ended March 31, 2026 and 2025 was $
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. (f/k/a Danam Health Inc.) (“Wellgistics”) in the amount of $
As
of March 31, 2025, other receivables included a $
On
April 30, 2025, the Company completed the sale of its subsidiaries, IPS, Softell, and Bonum Health, Inc. to Tollo in exchange for a $
See Note 6 for detail on the note receivable from Wood Sage, LLC.
Suren Ajjarapu, the Company’s former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer, each had a beneficial interest in Tollo as of June 30, 2025. In August 2025, Integral Health, including its subsidiary IPS, were acquired by third parties. Therefore, at March 31, 2026 and December 31, 2025, Integral Health and Tollo was no longer considered a related party.
NOTE 5 – REVENUE RECOGNITION
The Company’s sole source of revenue is product revenue from the sale of pharmaceutical products through wholesale distribution channels. ARBLI™ (SCN-102, Losartan Potassium Oral Suspension) received FDA approval in March 2025 and commenced commercialization in the third quarter of 2025. Revenue is recognized when control transfers to the wholesale distributor, generally upon delivery.
Revenue is measured at the net transaction price equal to the gross invoice price reduced by estimated variable consideration. Gross-to-net adjustments include:
Chargebacks. The difference between the invoice price charged to wholesale distributors and the lower contract price distributors extend to end-customers (retail pharmacies, hospitals, clinics). Estimated based on expected sell-through and contractual terms.
Wholesaler Rebates and Distribution Service Fees. Fees and rebates paid to wholesale distributors and group purchasing organizations under contractual arrangements. Estimated based on contracted rates and expected sales volumes.
Prompt Pay Discounts. Discounts offered to wholesale distributors for timely payment, estimated based on contractual terms.
Product Returns. Returns accepted under limited conditions (generally damaged, expired, or defective product). Returns have not been material to date given the early stage of ARBLI™ commercialization.
Estimates of variable consideration are reassessed each reporting period. Changes in estimates are recorded as adjustments to revenue in the period identified. Accrued gross-to-net liabilities are included within accrued liabilities on the consolidated balance sheets.
Revenue disaggregated by product for the three months ended March 31, 2026 and 2025 is as follows:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| Product | 2026 | 2025 | ||||||
| ARBLI™ (SCN-102, Losartan Potassium Oral Suspension) | $ | $ | ||||||
Pharmaceutical product resale | ||||||||
| Total revenues | $ | $ | ||||||
NOTE 6 – NOTES RECEIVABLE – RELATED PARTY
On
August 22, 2023, the Company received a Promissory Note (the “Wood Sage Note”) in the amount of $
On
April 30, 2025, the Company completed the sale of its subsidiaries, IPS, Softell and Bonum Health, Inc., to Tollo in exchange for a $
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NOTE 7 – INVENTORY
Inventory value is determined using the weighted average cost method and is stated at the lower of cost or net realizable value. As of March 31, 2026 and December 31, 2025, inventory was comprised of the following:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Finished goods | $ | $ | ||||||
| Inventory | $ | $ | ||||||
NOTE 8 – GOODWILL AND INTANGIBLE ASSETS
In
connection with the Scienture Merger on July 25, 2024, the Company recorded goodwill of $
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:
| Product Candidate | Fair Value | |||
| SCN-102(a) | $ | |||
| SCN-104(b) | ||||
| SCN-106(c) | ||||
| SCN-107(d) | ||||
| $ | ||||
| (a) | ||
| (b) | ||
| (c) | ||
| (d) |
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.
Goodwill Impairment – ASC 350
In accordance with ASC 350-20, the Company performs its annual goodwill impairment test as of December 31. The Company operates as a single operating segment and, accordingly, goodwill is allocated to and tested at the consolidated entity level as a single reporting unit, consistent with ASC 280 and the manner in which the Company’s Chief Operating Decision Maker reviews operating results for purposes of resource allocation and performance evaluation.
As of December 31, 2025, management identified the following indicators of impairment: (i) continued operating losses from continuing operations; (ii) a significant decline in the Company’s market capitalization relative to the carrying value of its net assets; and (iii) challenging conditions within the specialty pharmaceutical sector. Based on the presence of these triggering events, the Company bypassed the qualitative assessment and proceeded directly to a quantitative impairment test.
The
fair value of the reporting unit was estimated using the Market Capitalization Method, representing a Level 1 input under ASC 820, based
on the Company’s quoted share price of $ and shares outstanding as of December 31, 2025, resulting in an estimated
fair value of approximately $
Intangible Assets – Classification and Annual Assessment
The Company’s intangible assets consist of four product technology assets acquired in connection with the Scienture Merger. SCN-102 (ARBLI™ – Losartan Oral Suspension) received FDA approval in March 2025 and commenced commercialization during the third quarter of 2025; accordingly, it is classified as a finite-lived intangible asset amortized on a straight-line basis over an estimated useful life of 13 years, reflecting remaining patent life. SCN-104 (DHE Mesylate Injection), SCN-106 (Cathflo Injection – Potential Biosimilar), and SCN-107 (Bupivacaine Long-Acting Injection) remain in pre-commercial development and are classified as indefinite-lived in-process research and development (“IPR&D”) assets subject to annual impairment testing under ASC 350-30.
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Indefinite-Lived IPR&D – Annual Impairment Test (ASC 350-30)
Finite-Lived Intangible Asset – Recoverability Test (ASC 360)
SCN-102
(ARBLI™ – Losartan Oral Suspension) received FDA approval in March 2025 and commenced commercialization during the third
quarter of 2025. Upon commencement, SCN-102 was reclassified from indefinite-lived IPR&D to a finite-lived intangible asset and amortization
commenced on a straight-line basis over an estimated useful life of 13 years. Amortization expense recognized from commercialization
through December 31, 2025 was $
Due
to the presence of impairment indicators as of December 31, 2025, the Company evaluated SCN-102 for recoverability under ASC 360-10-35.
The recoverability test compares the carrying amount of the asset to the sum of undiscounted future cash flows expected to result from
its use and eventual disposition. The total undiscounted future cash flows attributable to SCN-102, based on management’s projections,
were approximately $
The following table summarizes the carrying amounts of intangible assets as of March 31, 2026 and December 31, 2025 (in thousands):
| Asset | March 31, 2026 | Dec 31, 2025 | ||||||
| SCN-102 – finite-lived (net of $454 amortization each in 2026 and 2025) | $ | $ | ||||||
| SCN-104 – indefinite-lived IPR&D | $ | $ | ||||||
| SCN-106 – indefinite-lived IPR&D | $ | $ | ||||||
| SCN-107 – indefinite-lived IPR&D | $ | $ | ||||||
| Total intangible assets, net | $ | $ | ||||||
The
decrease in intangible assets from $
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NOTE 9 – DEBT
Streeterville Note
On
October 14, 2025, the Company entered into a note purchase agreement with Streeterville Capital, LLC (“Streeterville”), providing
for the issuance of a senior secured promissory note in the aggregate principal amount of $
During
the year ended December 31, 2025, the Streeterville Note was fully repaid. In connection with this repayment, the Company recognized
interest expense of $
August 2024 Note
In
August 2024, the Company issued a convertible note of $
In
connection with the note, the Company issued
Total
debt discount recognized in connection with the note was $
NOTE 10 – STOCKHOLDERS’ EQUITY
Designation of Series B Preferred Stock
Effective June 26, 2023, the Company filed a Certificate of Designation, Preferences, Rights and Limitations of the Series B Preferred Stock (the “Series B Preferred Stock”) with the Secretary of the State of Delaware that designated shares of the Company’s authorized and unissued preferred stock as convertible Series B Preferred Stock at a par value of $ per share.
Holders
of the Series B Preferred Stock are not entitled to receive dividends and do not have redemption or voting rights. Furthermore, the Series
B Preferred Stock does not have a liquidation preference. Shares of Series B Preferred Stock are automatically convertible into shares
of the Company’s common stock at a ratio of
As of March 31, 2026 and December 31, 2025, there were issued and outstanding shares of Series B Preferred Stock.
Designation of Series X Preferred Stock
On July 25, 2024, the Company revoked the authorization to issue shares of the Company’s Series A Preferred Stock, par value $ per share (the “Series A Preferred Stock”) and concurrently authorized the issuance of up to shares of the Series X Preferred Stock, a then new class of preferred stock.
Holders of the Series X Preferred Stock are entitled to receive dividends on shares of the Series X Preferred Stock on an as-if-converted-to-Common-Stock basis, without regard to any beneficial ownership limitation described in a letter of transmittal, equal to and in the same form and manner as dividends are paid to holders of the shares of Common Stock. Subject to any requirements of the General Corporation Law of the State of Delaware, the Series X Preferred Stock has no voting rights. The Series X Preferred Stock ranks on parity with shares of Common Stock as to distributions of assets upon liquidation, dissolution, or winding up of the Company.
As consideration for the Scienture Merger, the shares of Scienture common stock issued and outstanding immediately prior to the “Effective Time” of the mergers were converted into the right to receive, in the aggregate, (i) shares of the Company’s common stock and (ii) shares of the Company’s Series X Preferred Stock, each share of which was convertible into one share of common stock.
In September 20, 2024, all previously issued shares of Series X Preferred Stock were converted into a total of shares of common stock. As such, there were no issued and outstanding shares of Series X Preferred Stock as of December 31, 2025.
Hudson 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 () shares of Series C Preferred Stock (the “Purchased Shares”) at a price of $ per share and a Warrant to
purchase up to
On July 12, 2024, the Company converted shares of Series C Preferred Stock into shares of common stock at the election of the holder.
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Common Stock
The
Company did not issue any shares of common stock during the three-months ended March 31, 2026. During the year ended December 31,
2025, the Company issued an aggregate of
shares of common stock for net proceeds of $
Private Placements
In
July 2025, the Company’s board of directors approved a capital raise in an aggregate amount of up to $
Registered Direct Offering
On
August 15, 2025, the Company issued an aggregate of shares
of common stock for aggregate proceeds of $
ATM Program
On
September 19, 2025, the Company entered into an Equity Distribution Agreement (the “ATM Agreement”) with Maxim Group LLC
(“Maxim”), acting as the sole sales agent for the offer and sale of the Company’s common stock, par value $
per share, through an “at-the-market” offering program (the “ATM Program”). These shares are issued pursuant
to the Shelf Registration Statement on Form S-3 (File No. 333-289198), which was filed with the Commission on
August 1, 2025, and declared effective on August 8, 2025. Under the terms of the ATM Agreement, the Company may sell shares having an
aggregate gross sales price of up to $
During
the year ended December 31, 2025, the Company issued and sold an aggregate of shares of common stock under the ATM Program.
These transactions resulted in aggregate net proceeds to the Company of $
Restricted Common Stock
As
of March 31, 2026 and December 31, 2025, the Company had restricted shares of common stock outstanding under the option plans.
As of March 31, 2026 and December 31, 2025, shares were vested. The Company recorded stock-based compensation expense of $
Equity Compensation Awards
Each
independent member of the Company’s board of directors is to receive an annual grant of restricted common stock of the Company
equal to $
The board of directors and the Company’s stockholders approved an amendment to the Second Amended and Restated 2019 Equity Incentive Plan (the “Plan”), which increased the available shares under the Plan to shares of the common stock.
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NOTE 11 – WARRANTS
In
connection with a note (see Note 9 – Debt), in August 2024 the Company issued
Warrant liability
As
of March 31, 2026, the Company remeasured the fair value of warrants outstanding at $
The Company classifies its outstanding warrant liability within Level 3 of the fair value hierarchy, as the fair value is determined using the Black-Scholes option-pricing model with unobservable inputs. The following assumptions were used to estimate the fair value of the warrant liability as of March 31, 2026:
| Three Months Ended | ||||
| March 31, | ||||
| 2026 | ||||
| Expected stock price | $ | |||
| Exercise price | $ | |||
| Remaining contractual term (years) | ||||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
| Expected dividend yield | % | |||
Changes in the fair value of the warrant liability, which is measured on a recurring basis using Level 3 inputs, for the three months ended March 31, 2026, were as follows:
| Warrant | ||||
| Liability | ||||
| Outstanding as of December 31, 2025 | $ | |||
| Change in fair value | ( | ) | ||
| Rounding off | ( | ) | ||
| Outstanding as of March 31, 2026 | $ | |||
The Company’s outstanding and exercisable warrants, as of March 31, 2026, are presented below:
| Number Outstanding | Weighted Average Exercise Price | Contractual Life In Years | Intrinsic Value | |||||||||||||
| Warrants outstanding as of December 31, 2025 | $ | $ | ||||||||||||||
| Warrants granted | - | - | ||||||||||||||
| Warrants forfeited, expired, cancelled | - | - | ||||||||||||||
| Warrants exercised | - | - | ||||||||||||||
| Warrants outstanding as of March 31, 2026 | $ | |||||||||||||||
| Warrants exercisable as of March 31, 2026 | $ | |||||||||||||||
The Plan allows for and the Company maintains stock option award agreements under which certain employees may be awarded option grants based on a combination of performance and tenure. The number of shares available to grant to employees under the Plan is .
The Board and stockholders approved an amendment to the Plan increasing the available shares under the Plan to shares of the Common Stock as such common stock existed on July 24, 2024.
Total
compensation cost related to stock options granted was $
On September 17, 2025, the Company cancelled stock options and granted the related option holders shares of common stock. This modification resulted in the Company recognizing the remaining expense under the original option and an additional incremental consideration as a result of the modification. Total stock-based compensation cost as a result of this transaction was $.
| Number Outstanding | Weighted- Average Exercise Price | Weighted- Average Contractual Life in Years | Intrinsic Value | |||||||||||||
| Options outstanding as of December 31, 2025 | $ | $ | ||||||||||||||
| Options granted | - | - | ||||||||||||||
| Options cancelled | - | - | ||||||||||||||
| Forfeited/expired | - | - | ||||||||||||||
| Options exercised | - | - | ||||||||||||||
| Options outstanding as of March 31, 2026 | $ | $ | ||||||||||||||
| Options exercisable as of March 31, 2026 | $ | |||||||||||||||
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NOTE 13 – COMMITMENTS AND CONTINGENCIES
Eat Well
In
July 2023, the Company entered into, and closed on the transactions contemplated by, an Amended and Restated Agreement and Plan of Merger
with Superlatus, whereby the Company acquired Superlatus (the “Superlatus Acquisition”). In connection with
the Superlatus Acquisition, former shareholders of Superlatus received shares of the Company’s Series B Preferred Stock,
par value $ per share (the “Series B Preferred Stock”). The Series B Preferred Stock are convertible
into shares of the
In January 2024, shareholders holding shares of Series B Preferred Stock surrendered shares of the Series B Preferred Stock back to the Company as a result of Superlatus failing to meet certain post-closing conditions associated with the Superlatus Acquisition, such that only shares of Series B Preferred Stock remained outstanding.
On March 5, 2024, the Company sold all of the issued and outstanding stock of Superlatus Inc. to Superlatus Foods Inc. pursuant to the Superlatus SPA. As a result of the transaction, Superlatus Inc. 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 Inc. became rights and obligations of the Buyer. The shares of Series B Preferred Stock issued in connection with the Superlatus Acquisition remain outstanding.
In
January 2025, Eat Well Investment Group, Inc., a Canadian company (“Eat Well”) holding shares of
the Series B Preferred Stock, filed a complaint against the Company in the United States District Court for the Middle District of Florida
alleging, among other things, that the Company is responsible for paying certain consideration to Eat Well in connection with Superlatus’
acquisition of Eat Well in June 2023 prior to the Company’s acquisition of Superlatus. Ultimately, Eat Well is seeking $
Kesin Pharma Corporation
Scienture entered into an exclusive license and commercial agreement (the “Kesin 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 for use in the United States of America.
In
March 2024, the parties terminated the Kesin Agreement, and the parties agreed that Scienture would pay Kesin a total gross amount of
$
| Development Agreement Liability | March 31, 2026 | December 31, 2025 | ||||||
| Current portion | $ | $ | ||||||
| Long-term portion | ||||||||
| Total development agreement liability | $ | $ | ||||||
In 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 disputed that the amount is payable, and the parties entered into discussions to resolve the issue.
On
March 11, 2025, Kesin filed a complaint against Scienture in the United States District Court for the Eastern District of New York seeking
payment of the disputed $
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NOTE 14 – LEASES
The
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 $
On
April 30, 2025, the Company completed the sale of its subsidiaries, IPS, Softell and Bonum Health, Inc., to Tollo. In connection with
the transaction, the Company derecognized subsidiary’s operating lease right-of-use assets of $
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 $
The 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, 2026.
Supplemental balance sheet information related to leases are as follows:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
| Future lease obligations | ||||
| 2026 | $ | |||
| Total minimum lease payments | ||||
| Less: effect of discounting | ( | ) | ||
| Present value of future minimum lease payments | ||||
| Less: current obligation under lease | ||||
| Long-term lease obligations | $ |
For
the three months ended March 31, 2026, and 2025, total operating lease expense was $
NOTE 15 – SEGMENT REPORTING
Factors 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).
The Company’s chief operating decision-makers are its co-Chief Executive Officers (the “CODM”), who make resource allocation decisions and assess performance based on financial information presented on an aggregate basis. There are no segment managers who are held accountable by the CODM for any planning, strategy and key decision-making regarding operations. Accordingly, as of March 31, 2026, the Company has a single reportable segment and operating segment structure. The Company operates entirely within the United States.
The
key measures of segment profit or loss reviewed by the CODM are total revenues, gross profit, total operating expenses (including research
and development expenses), and net loss from continuing operations. The CODM uses these measures to allocate resources, evaluate operational
performance, and make strategic decisions regarding pipeline development and commercialization activities. The CODM does not evaluate
performance based on asset information at the segment level. Significant segment expenses that are regularly provided to the CODM and
included in the reported measure of segment profit or loss include: research and development expenses (SCN-102: $
The following table presents key financial information for the Company’s single reportable segment for the three months ended March 31, 2026 and 2025:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenues | $ | $ | ||||||
| Cost of sales | ||||||||
| Gross profit | ||||||||
| Research and development expense | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Total assets (at period end) | ||||||||
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NOTE 16 – SUBSEQUENT EVENTS
Streeterville Capital Secured Note Financing
On
April 27, 2026, the Company entered into and closed a Note Purchase Agreement (the “Streeterville Purchase Agreement”)
with Streeterville Capital, LLC (the “Lender”) pursuant to which the Company issued two secured promissory notes: (i) a
Secured Promissory Note A-1 in the original principal amount of $
At
closing, Streeterville funded $
The
A-1 Note bears interest at
Each
time the outstanding balance of the A-1 Note is reduced by $
The Company’s obligations under the Streeterville Purchase Agreement are secured by (i) the Deposit Account Control Agreement, (ii) a guaranty from Scienture, LLC and SCNX Sub, (iii) security agreements granting Streeterville a first-priority security interest in substantially all assets of the Company and Scienture, LLC, (iv) an intellectual property security agreement covering Scienture, LLC’s intellectual property, and (v) a pledge by the Company of all of its membership interests in SCNX Sub. The Streeterville Purchase Agreement contains affirmative and negative covenants, including requirements to maintain SEC reporting status and national exchange listing, restrictions on additional liens, restrictions on Restricted Issuances (as defined in the Purchase Agreement), and limitations on subsidiary indebtedness and equity issuances.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General Information
This information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this Report, and the audited financial statements and notes thereto and “Part II. Other Information – Item 7. Management’s 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, 2025, filed with the SEC on March 30, 2026, and amended on April 30, 2026 (the “Annual Report”).
Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited consolidated financial statements included above under “Part I – Financial Information – Item 1. Financial Statements.”
Unless the context requires otherwise, references to the “Company,” “we,” “us,” and “our” refer specifically to Scienture Holdings, Inc., formerly TRxADE HEALTH, INC., and our 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.
In addition, unless the context otherwise requires and for the purposes of this Report only:
| ● | “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; and | |
| ● | “Securities Act” refers to the Securities Act of 1933, as amended. |
Summary of The Information Contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:
| ● | Company Overview. Discussion of our business and overall analysis of financial and other highlights affecting us, to provide context for the remainder of MD&A. | |
| ● | Liquidity and Capital Resources. An analysis of changes in our consolidated balance sheets and cash flows and discussion of our financial condition. | |
| ● | Results of Operations. An analysis of our financial results comparing the three months ended March 31, 2026 and 2025. | |
| ● | Critical Accounting Policies. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. |
Company Overview
On July 25, 2024, we acquired a wholly-owned subsidiary, Scienture LLC. Scienture LLC is a specialty pharmaceutical company focused on the commercialization and development of products for the treatment of Cardiovascular (“CVS”) and Central Nervous System (“CNS”) diseases. Scienture LLC launched its first commercial product for hypertension and is in the process of commercializing its second product for the treatment of opioid overdose. Its development pipeline consists of a broad range of novel product candidates including new potential treatments for migraine, thrombosis, pain and other related disorders. Scienture LLC’s mission is to bring to market innovative technology-based products to address unmet medical needs. Its targeted portfolio consists of short term and long-term opportunities with efficient development, regulatory, and go to market strategies.
After our acquisition of Scienture, we existed as a holding company owning all equity interests of Softell Inc. (f/k/a Trxade Inc.) (“Softell”), Integra Pharma Solutions, LLC d.b.a. Trxade Prime (“IPS”), Bonum Health, LLC, Bonum Health Inc., and Scienture.
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 became a wholly-owned subsidiary of Softell. During the year ended December 31, 2023 and a portion of the quarter ended March 31, 2024, Softell, operated a web-based market platform that enabled commerce among healthcare buyers and sellers of pharmaceuticals, accessories and services. Softell’s current primary operations are conducted 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.
On September 20, 2024, the Company fil changed its legal name from “TRxADE HEALTH, Inc.” to “Scienture Holdings, Inc.”
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Bonum Health, LLC was formed to hold certain telehealth assets acquired in October 2019. The “Bonum Health Hub” was launched in February 2020; however, the Company does not anticipate installations moving forward. On April 30, 2025, the Company completed the sale of Bonum Health, Inc. and Bonum Health, LLC.
Disposition of Legacy Subsidiaries
On April 8, 2025, the Company entered into a Membership Interest Purchase Agreement (the “IPS MIPA”) with Tollo Health, LLC (“Tollo”), pursuant to which Tollo agreed to purchase and the Company agreed to sell all of the Company’s membership interests in IPS.
On April 8, 2025, the Company also entered into a Stock Purchase Agreement (the “Bonum and Softell SPA” and together with the IPS MIPA, the “Agreements”) with Tollo, pursuant to which Tollo agreed to purchase and the Company agreed to sell all issued and outstanding shares of common stock of Bonum Health, Inc. and Softell. Suren Ajjarapu, the Company’s former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer, each had a beneficial interest in Tollo at the time the Company entered into the each of the Agreements.
In connection with each of the Agreements, the Company agreed to retain certain excluded liabilities of IPS, Softell and Bonum Health, Inc. including all liabilities: (i) related to, in connection with or arising out of any claims, charges, complaints, actions, suits, settlements, hearings, investigations, proceedings, or governmental or regulatory inquiries with respect to IPS, Softell or Bonum Health, Inc., respectively, prior to the closing under the applicable Agreement; (ii) related to, in connection with or arising out of any breach by the Company of the applicable Agreement or any other agreements and documents required to be delivered by the Company; (iii) not disclosed by the Company in accordance with each Agreement; (iv) related to any actions threatened or initiated by a governmental entity against IPS, Softell, or Bonum Health, Inc., respectively; and (v) related to tax returns or tax matters of the Company, IPS, Softell, or Bonum Health, Inc., respectively, for any periods prior to closing under the applicable Agreement.
The Company and Tollo consummated the closing of each of the Agreements on April 30, 2025. As consideration for acquiring IPS, Softell, and Bonum Health, Inc., Tollo agreed to pay the Company $5 million, with that consideration delivered in the form of a promissory note bearing interest at the prime rate. The promissory note matures on June 30, 2030. However, Tollo is required to pay 20% of the proceeds of a future equity financing toward repayment of the principal and accrued but unpaid interest owed under the promissory note. On June 24, 2025, the promissory note was assigned to Integral Health, Inc., which (at the time of the assignment) was owned by Suren Ajjarapu, the Company’s former Chief Executive Officer, and Prashant Patel, the Company’s former President and Chief Operating Officer.
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 subsidiary.
The Company believes that the key benefits of the divestitures include:
| ● | Increased Operational Efficiency: Streamlining the Company’s structure aimed at strengthening its balance sheet, providing for leaner operations and a more agile decision-making framework. | |
| ● | Realize Synergies: Consolidating overlapping functions and eliminating redundancies intended to cause annualized cost savings. | |
| ● | Dedicated Focus: Affording the full focus and deployment of resources to the commercial products and the high value product pipeline in development at its Scienture subsidiary. |
Existing Business
Subsequent to the disposition of IPS, Softell, and Bonum Health, Inc. we now exist as a holding company for existing and planned pharmaceutical operating companies focused on providing enhanced value to patients, physicians and caregivers through developing, bringing to market, and distributing novel specialty pharmaceutical products to satisfy unmet market needs. We are in the process of winding down our Bonum Health, LLC subsidiary.
Operating since 2019, Scienture, located in Commack, New York, is a specialty pharmaceutical company focused providing enhanced value to patients, physicians and caregivers by offering novel specialty products to satisfy unmet market needs. In this regard, Scienture is in the process of developing and commercializing products for the treatment of CNS and CVS diseases as well as a broad range of novel product candidates including new potential treatments for hypertension, migraine, pain and thrombosis and other related disorders.
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Scienture’s vision is to be a leader in the industry by developing and commercializing new medicines for the treatment of CNS and CVS diseases and across other therapeutic areas. Key elements of Scienture’s strategy to achieve this vision include:
| ● | Advance product candidates through clinical studies and toward commercialization. Scienture is in various stages of clinical development for the product candidates in its pipeline, and it intends to move these programs efficiently toward being commercially available to patients, subject to approval by the U.S. Food and Drug Administration (the “FDA”). | |
| ● | Drive growth and profitability. Using dedicated sales and marketing resources in the U.S., which Scienture is in the process of building, Scienture will seek to begin to generate revenues and then drive the revenue growth of its product candidates approved for marketing by the FDA. | |
| ● | Continue to grow pipeline. Scienture will continue to evaluate and seek to develop additional product candidates that it believes have significant commercial potential through Scienture’s internal research and development efforts. | |
| ● | Target strategic business development opportunities. Scienture is exploring a broad range of strategic opportunities. This may include in-licensing products and entering into co-promotion and co-development partnerships for Scienture’s product candidates, although no agreements have been reached. |
Scienture currently has four primary product candidates in its development pipeline, summarized below, and is engaged in a variety of research and development efforts to develop novel product candidates for the treatment of various disease conditions. To date, Scienture has generated limited revenue from product sales and will not generate meaningful revenues until it fully commercializes its FDA-approved product candidate (SCN-102) and successfully obtains regulatory approval for, and commercializes, its other product candidates. The progress of Scienture products its development pipeline to date is represented by the green bars shown below.
Scienture has devoted and will continue to devote significant resources to research and development activities, and expects to incur significant expenses as Scienture continues advancing its product candidates towards FDA approval and expanding product indications for approved products and its intellectual property portfolio. Scienture’s expectations regarding its research and development programs are subject to risks, including the risk that Scienture’s financial condition and results of operations may be materially and adversely affected by delays and failures in the completion of clinical development of its product candidates, which could increase its costs or delay or limit our ability to generate revenues.
Scienture currently depends on third-party commercial manufacturing organizations (“CMOs”) for its manufacturing operations, including the production of raw materials, finished dosage form product, and product packaging for both its planned product commercialization and for use in its preclinical and clinical research. Scienture does not own or operate manufacturing facilities for the production of any of its product candidates nor does Scienture have plans to develop its own manufacturing operations in the foreseeable future to support clinical trials or commercial production. Scienture currently employs internal resources to manage its manufacturing contractors.
Scienture is in discussion with CMOs headquartered in North America, Europe and Asia for its pipeline product candidates. These CMOs offer a comprehensive range of commercial contract manufacturing and packaging services.
If Scienture fails to produce its products and product candidates in the volumes that it requires on a timely basis, or fails to comply with stringent regulations applicable to pharmaceutical drug manufacturers, Scienture may face delays in the development and commercialization of its products and product candidates or be required to withdraw its products from the market for risks associated with manufacturing and supply of its products and product candidates.
SCN-102 (ARBLITM - Losartan Oral Suspension)
SCN-102, with the brand name ArbliTM, is an oral liquid formulation of losartan potassium for (i) treatment of hypertension, to lower blood pressure in adults and children greater than 6 years old, (ii) reduction of the risk of stroke in patients with hypertension and left ventricular hypertrophy, and (iii) treatment of diabetic nephropathy with an elevated serum creatinine and proteinuria in patients with type 2 diabetes and a history of hypertension. SCN-102 was approved by the FDA in March 2025, making SCN-102 the first and only FDA-approved ready-to-use oral liquid losartan in the U.S. market.
Losartan is classified as an angiotensin receptor blocker (ARB) for treating hypertension and is one of the highest prescribed molecules for this indication. Current products in the market containing losartan are available only as oral solids, which can be further compounded to a liquid formulation. ArbliTM is the first liquid formulation of losartan on the U.S. market that does not require compounding and has reduced dosing volume and long-term shelf life at room temperature storage.
SCN-102 has two formulation composition and method of use patents listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the “orange book”: (i) Patent #: 11,890,273, Issue Date: February 6, 2024, titled “LOSARTAN LIQUID FORMULATIONS AND METHODS OF USE”, Expiration Date: October 7, 2041 and (ii) Patent # 12,156,869; Issue Date: December 3, 2024, titled “LOSARTAN LIQUID FORMULATIONS AND METHODS OF USE”. SCN-102 also has a third patent titled “LOSARTAN LIQUID FORMULATION AND METHODS OF USE” that was issued on April 21, 2026, and expires on October 7, 2041.
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SCN-110 (REZENOPYTM – Naloxone HCl Nasal Spray)
Scienture LLC entered into an Exclusive Commercial and Supply Agreement (the “Kindeva Agreement”) with Summit Biosciences Inc., a wholly-owned subsidiary of Kindeva, on March 4, 2025, pursuant to which Kindeva granted Scienture LLC an exclusive, non-transferrable, non-sublicensable right and license to commercialize REZENOPYTM (Nalaxone HCI nasal spray 10mg/0.11mL) within the United States and its territories. Scienture LLC intends to use the exclusive right and license to price, launch, promote, market, distribute, and educate the public on REZENOPYTM.
Approved by the FDA in 1971, naloxone is considered the standard of care and has been shown to be effective in opioid overdose reversals. The opioid overdose reversal market (specifically for naloxone-based products) includes several branded and generic products across nasal spray, auto-injector, and injectable formulations. Most growth in recent years has been in intranasal products, such as Narcan 4mg, RiVive 3mg and Kloxxado 8mg, which are needle free and easier for bystanders and community responders to use. Real world studies suggest the need for multiple naloxone administrations (“MNA”) using these products among bystanders and EMS providers continues to increase. With the increase of synthetic opioids and the rapid onset of effect, evidence is emerging suggesting the need for increased doses of naloxone to reverse opioid toxicity.
REZENOPYTM (Naloxone HCl Nasal Spray, 10mg) is the highest FDA-approved nasal spray dose available in the U.S. market. The product provides maximum naloxone protection in a single easy-to-use device and caters to the segment of patients who need multiple doses of lower strength for stabilization in emergency situations. REZENOPYTM provides potential longer duration of opioid receptor block, improves chances of quicker reversal and possible coverage against multiple abuse agents inclusive of synthetic opioids and combinations, through a single dose administration of 10mg naloxone hydrochloride. High dose REZENOPY™ improves the chances of reversing potent opioids quickly and reducing the requirement of MNA.
SCN-110 has one issued formulation composition and method of use patents listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the “orange book”: (i) Patent #: 12,514,854 B2, Issue Date: January 6, 2026, an Orange Book-listable patent, titled “DRUG PRODUCTS FOR INTRANASAL ADMINISTRATION AND USES THEREOF”, Expiration Date: February 5, 2041.
SCN-104 (Multi-dose Dihydroergotamine Mesylate (“DHE”) injection pen)
The SCN-104 injection pen is a disposable, multiple fixed dose, single entity combination product comprised of a small molecule drug that is administered using a customized injection pen. SCN-104 is a drug product containing DHE as the active ingredient. The mechanism of action of SCN-104 is mediated through DHE and is the same as that of DHE. DHE is available in the market as a single dose nasal spray, which has a high degree of variability in clinical outcomes. While DHE is also available in the market as single dose ampoules for injection, we believe that the process of dose withdrawal from the ampoule followed by self-injection at the time of intense need is cumbersome and difficult for the patient. We believe that the SCN-104 multi-dose self-injection pen is easy to use, provides enhanced patient convenience, and provides for consistent and accurate delivery of doses. The SCN-104 injection pen is being developed via the 505(b)(2) regulatory pathway for the acute treatment of migraine headaches with or without aura and the acute treatment of cluster headache episodes.
As shown in third party studies of DHE, SCN-104’s mechanism of action for its antimigraine effect is due to its potential action as an agonist at the serotonin 5-HT1D receptors. SCN-104 is intended for subcutaneous administration. SCN-104 is also intended for acute use and is not intended for chronic administration. Scienture has conducted two preclinical studies of SCN-104 and the SCN-104 injection pen: (i) a 30-day repeated dose toxicity study of dimethyl sulfoxide and caffeine following thrice daily, 3 times per week subcutaneous administration in Sprague-Dawley rats and (ii) a 30-day repeated dose toxicity study of dimethyl sulfoxide and caffeine following thrice daily, 3 times per week subcutaneous administration in Göttingen minipigs. Both studies support a conclusion that SCN-104 is considered to have no toxicological significance across hematology, coagulation parameters, clinical chemistry and urinalysis.
Scienture has had discussions with the FDA regarding its development program for SCN-104, with the FDA indicating that the reference product selected for a comparative regulatory study and proposed plan for manufacturing New Drug Application registration batches are acceptable. The FDA also provided Scienture with feedback on nonclinical safety studies and stability testing. Scienture is working to scale the formulation to enable future commercial scale production and the pen has been optimized for commercial use. Currently, Scienture is focused on planning bioequivalence studies and increasing manufacturing activities for the SCN-104 injection pen. Scienture plans to initiate a Phase 1 single dose study in healthy adults in 2026, following submission of an Investigational New Drug application (an “IND”), if the IND is cleared by the FDA.
SCN-104 has a formulation composition and method of use application pending in the U.S. (Appl. No. 17/757,924; Filing Date: June 23, 2022; Expiration Date: June 15, 2035).
SCN-106 (Potential Biosimilar)
Scienture is developing a potential biosimilar, SCN-106, based on Cathflo Activase, a reference product that is a thrombolytic agent that binds to fibrin in clots and converts entrapped plasminogen to plasmin. SCN-106 is a sterile, purified glycoprotein that is synthesized using the complementary DNA for natural human tPA obtained from a Chinese hamster ovary cell-line.
Scienture is working with Anthem Biosciences Pvt, Ltd. to develop a biosimilar product that utilizes the same mechanism(s) of action for the proposed condition of use, and has the same route of administration, dosage form, and strength as the reference product. The development program is focused on establishing the analytical similarity of SCN-106 to the reference product. Multiple clones of CHO cells have been produced to synthesize lots of SCN-106 which were screened for similarity to the reference product for several key biochemical quality attributes as well as overall protein yield and finalization of a lead clone.
Scienture completed a Biosimilar Initial Advisory meeting with the FDA in June 2023 to discuss the CMC, non-clinical, and clinical studies required for regulatory approval. As a result of this meeting, Scienture learned that its analytical strategy for initiating analytical similarity studies between SCN-106 and a proposed biosimilar product is acceptable. Scienture also learned that SCN-106 is suitable for further development and received guidance from the FDA on a comparable clinical study needed to demonstrate biosimilarity of SCN-106 and the reference product. In this regard, Scienture was informed that no additional safety, PK, toxicology or dose range finding studies will be required due to the method of use (very limited exposure) and the availability of an extensive amount of data on the original brand product. The only clinical requirement is a comparative phase 3 clinical study in the sensitive population to demonstrate that there are no clinically meaningful differences between SCN-106 and the currently marketed product.
SCN-106 is a potential biosimilar and considered by the Company to be part of its product development portfolio, however the Company is not pursuing patent protection for this product.
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SCN-107 (Bupivacaine Long-Acting Injection)
SCN-107 is a long-acting injection suspension formulation of a non-opioid analgesic that is indicated for postsurgical local and regional analgesia. Scienture’s long-acting formulation, SCN-107, is a novel microsphere-based formulation of bupivacaine that comprises the drug in polymer-based microspheres and is intended to provide pain management over a period of 5-7 days. The product candidate is designed to potentially provide longer term post-surgical pain relief compared to the currently available products in the market.
Based on initial discussions with FDA regarding this program, Scienture believes this product candidate would require at least one Phase 3 clinical trial to support submission of a marketing application. Scienture anticipates submitting an IND and, if cleared by the FDA, initiating a Phase 1 single dose study in healthy adults in 2025 to conduct an initial assessment of safety and tolerability of SCN-107.
Scienture has entered into Feasibility Study and Animal Trial Material Manufacturing Agreement with Innocore Technologies, B.V. (“Innocore”), as amended on December 2, 2022 (the “Innocore License”), for certain intellectual property rights associated with SCN-107. Under the Innocore License, Innocore granted Scienture a worldwide exclusive, milestone, royalty-bearing and sublicensable license to certain patent rights for the research and development of SCN-107 in postsurgical local and regional analgesia. Pursuant to the Innocore License, Scienture is required to make low single-digit percentage royalty payments based on annual net sales of licensed products for the first three years of sales on a country-by-country basis, subject to a low single digit increase as of the fourth year of sales on a country-by-country basis.
SCN-107 has a formulation composition and method of use application pending in the U.S. (Appl. No. 17/996,995; Filing Date: October 24, 2022; Expiration Date: on or after April 22, 2041). Applications in Canada and Europe are currently pending. As described above, the Company licenses certain patent rights from Innocore for the research and development of SCN-107.
Liquidity and Capital Resources
Cash
Cash was $3,542,754 as of March 31, 2026, compared to $6,662,008 as of December 31, 2025. We expect that our future available capital resources will consist primarily of cash generated from Scienture’s operations, remaining cash balances, borrowings, and additional funds raised through sales of debt and/or equity securities.
Liquidity
Cash, current assets, current liabilities, short term debt and working capital at the end of each period were as follows:
| March 31, | December 31, | Percent | ||||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Cash | $ | 3,542,754 | $ | 6,662,008 | $ | (3,119,254 | ) | (47) | % | |||||||
| Current assets (excluding cash) | $ | 1,231,290 | $ | 1,254,398 | $ | (23,108 | ) | (2) | % | |||||||
| Current liabilities | $ | 2,803,669 | $ | 2,735,351 | $ | 68,319 | 2 | % | ||||||||
| Working capital | $ | 1,970,374 | $ | 5,181,055 | $ | (3,210,681 | ) | (62) | % | |||||||
Our principal sources of liquidity have historically been cash provided by operations, sales of business assets and operations from time to time, sales of equity, and borrowings under various debt arrangements. Our principal uses of cash have been for operating expenses, technology development, and acquisitions. We anticipate these uses will continue to be our principal sources of, and uses of, cash in the future.
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Liquidity Outlook Cash Explanation
Cash Requirements
Our primary objectives for the remainder of 2026 are expected to be the continued implementation of Scienture business plan, and to complete potential strategic transactions of our business-to-consumer subsidiaries, which may include a potential sale, spin-off, fund raising, combination or other strategic transaction. 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 securities.
We 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 continue exploring strategic transactions or relationships with counterparties in industries that we deem synergistic or complimentary to those of the Company, while also seeking to expand our Scienture operations organically or through acquisitions, as funding and opportunities arise. 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.
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. 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.
As of March 31, 2026, the Company had an accumulated deficit of $83,953,501. As of March 31, 2026, the Company had $3,542,754 in cash.
We 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.
Cash Flows
The following table summarizes our Consolidated Statements of Cash Flows for the following periods:
| Three Months Ended | ||||||||||||||||
| March 31, | Percent | |||||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Net cash used in operating activities | (2,919,255 | ) | (2,956,457 | ) | 37,202 | -1 | % | |||||||||
| Net cash used in investing activities | - | - | - | - | ||||||||||||
| Net cash (used in) provided by financing activities | (200,000 | ) | 4,697,999 | (4,897,999 | ) | -104 | % | |||||||||
| Net change in cash | (3,119,255 | ) | 1,741,542 | (4,860,797 | ) | -279 | % | |||||||||
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Cash used in operating activities for the three months ended March 31, 2026 was $2,919,255, compared to cash used in operating activities of $2,956,457 for the three months ended March 31, 2025. The slight decrease was primarily due to changes in working capital, partially offset by higher operating expenses during the 2026 period.
There was no cash provided by or used in investing activities for the three months ended March 31, 2026 or 2025.
Cash used in financing activities for the three months ended March 31, 2026 was $200,000, compared to cash provided by financing activities of $4,697,999 for the three months ended March 31, 2025. Cash used in financing activities for the three months ended March 31, 2026 reflected the $200,000 repayment of the development agreement liability. Cash provided by financing activities for the three months ended March 31, 2025 was primarily attributable to gross proceeds of approximately $4,598,000 from the issuance of common stock pursuant to the equity line commitment, partially offset by other financing activity.
Results of Operations
The following selected consolidated financial data should be read in conjunction with the unaudited consolidated financial statements and the notes to these statements included above.
Three Month Period Ended March 31, 2026 compared to Three Month Period Ended March 31, 2025
| Three Months Ended | ||||||||||||||||
| March 31, | Percent | |||||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Revenues | $ | 56,325 | $ | 10,258 | 46,067 | 449 | % | |||||||||
| Cost of sales | 2,475 | 9,585 | (7,110 | ) | -74 | % | ||||||||||
| Gross profit | 53,850 | 673 | 53,177 | 7902 | % | |||||||||||
| Operating expenses: | ||||||||||||||||
| Wage and salary expense | 420,008 | 696,068 | (276,060 | ) | -40 | % | ||||||||||
| Professional fees | 932,552 | 412,850 | 519,702 | 126 | % | |||||||||||
| Accounting and legal expense | 326,178 | 470,825 | (144,647 | ) | -31 | % | ||||||||||
| Technology expense | 15,763 | 61,620 | (45,857 | ) | -74 | % | ||||||||||
| General and administrative (including stock-based compensation expense) | 1,074,864 | 1,355,948 | (281,084 | ) | -21 | % | ||||||||||
| Research and development | 793,984 | 574,679 | 219,305 | 38 | % | |||||||||||
| Total operating expenses | 3,563,349 | 3,571,990 | (8,641 | ) | 0 | % | ||||||||||
| Change in fair value of warrant liability | 10,910 | 645,986 | (635,076 | ) | -98 | % | ||||||||||
| Change in fair value of derivative liability | - | 603,322 | (603,322 | ) | -100 | % | ||||||||||
| Loss on conversion of note payable | - | (96,646 | ) | 96,646 | -100 | % | ||||||||||
| Interest income | 133,344 | 25,442 | 107,902 | 424 | % | |||||||||||
| Interest expense | (37,019 | ) | (670,784 | ) | 633,765 | -94 | % | |||||||||
| Net loss | (3,402,264 | ) | (3,063,997 | ) | (338,267 | ) | 11 | % | ||||||||
| Benefit / (provision) for income taxes | - | - | - | - | ||||||||||||
| Net loss | (3,402,264 | ) | (3,063,997 | ) | (338,267 | ) | 11 | % | ||||||||
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Revenues for the three months ended March 31, 2026 were $56,325, compared to $10,258 for the three months ended March 31, 2025, an increase of $46,067. The increase was primarily attributable to the continued ramp of wholesale distribution sales of SCN-102 (ARBLI™) following its commercial launch.
Cost of goods sold for the three months ended March 31, 2026 was $2,475, compared to $9,585 for the three months ended March 31, 2025, resulting in gross profit of $53,850 for the three months ended March 31, 2026 compared to gross profit of $673 for the three months ended March 31, 2025.
Wage and salary expense decreased by $276,060 for the three months ended March 31, 2026 to $420,008 compared to $696,068 for the comparable period in 2025. The decrease was primarily due to lower headcount following the disposition of legacy subsidiaries in April 2025.
Professional fees increased by $519,702 to $932,552 for the three months ended March 31, 2026, compared to $412,850 for the comparable period in 2025. The increase was primarily attributable to higher external consulting fees during the 2026 period.
Accounting and legal expense decreased by $144,647 for the three months ended March 31, 2026 to $326,178, compared to $470,825 for the comparable period in 2025. The decrease was primarily due to lower SEC filing and corporate transaction-related professional services activity during the 2026 period.
General and administrative expenses (including stock-based compensation expense) decreased by $281,084 for the three months ended March 31, 2026 to $1,074,864, compared to $1,355,948 for the comparable period in 2025. The decrease was primarily due to lower stock-based compensation expense during the 2026 period.
Technology expense decreased by $45,857 for the three months ended March 31, 2026 to $15,763, compared to $61,620 for the comparable period in 2025. The decrease was primarily due to lower software-related expenses following the disposition of IPS in April 2025.
Research and development expense for the three months ended March 31, 2026 was $793,984, compared to $574,679 for the comparable period in 2025, an increase of $219,305. The increase was primarily due to higher contract research organization costs related to advancement of pipeline product candidates. Total expenses by program were as follows:
| Three Months Ended | ||||||
| Project Codes | Product Name | March 31, 2026 | ||||
| SCN-102 | Losartan | $ | 40,701 | |||
| SCN-104 | DHE | 110,543 | ||||
| SCN-106 | Alteplase | 642,740 | ||||
| Total research and development expense | $ | 793,984 | ||||
Interest expense was $37,019 for the three months ended March 31, 2026, compared to $670,784 for the three months ended March 31, 2025. The decrease was primarily due to the repayment in full of the Arena convertible debentures during 2025 and the related cessation of debt discount amortization.
We recognized a gain on the change in the fair value of the warrant liability of $10,910 for the three months ended March 31, 2026, compared to a gain of $645,986 for the three months ended March 31, 2025, in each case based on the underlying valuation inputs.
There was no gain or loss on the change in the fair value of the derivative liability for the three months ended March 31, 2026, as the derivative liability was fully derecognized in connection with the repayment of the Arena debentures during 2025. We recognized a gain on the change in the fair value of the derivative liability of $603,322 for the three months ended March 31, 2025.
During the three months ended March 31, 2026, the Company incurred a net loss of $3,402,264, compared to a net loss of $3,063,997 for the three months ended March 31, 2025. The increase in net loss of $338,267 was primarily attributable to the changes in operating expenses and non-operating income/(expense) discussed above.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of net sales and expenses for each period. The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.
Acquisitions
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
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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 ASU 2018-07 for the accounting of share-based payments granted to non-employees for goods and services.
Non-GAAP Financial Measures
In addition to our financial results determined in accordance with the generally accepted accounting principles in the United States (“GAAP”), our management uses earnings before interest, taxes, depreciation, and amortization expenses to net income (“EBITDA”), a non-GAAP measure, as a key measure in operating our business. We use EBITDA to make strategic decisions, establish business plans and forecasts, identify trends affecting our business, and evaluate performance. For example, we use adjusted EBITDA as a measure of our operating performance. Adjusted EBITDA is presented for supplemental informational purposes only, should not be considered a substitute for, or a more meaningful measure than, financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation is provided below for adjusted EBITDA to the most directly comparable financial measure presented in accordance with GAAP. Investors are encouraged to review the related GAAP financial measure and the reconciliation of adjusted EBITDA to its most directly comparable GAAP financial measure.
For the three months ended March 31, 2026, adjusted EBITDA was $(2,939,166), compared to adjusted EBITDA of $(2,475,856) for the three months ended March 31, 2025. The increase in the adjusted EBITDA loss of $463,310 was primarily attributable to a higher net loss of $(3,402,264) for the three months ended March 31, 2026 compared to $(3,063,997) for the prior-year period, driven by increased operating expenses including higher professional fees and research and development costs associated with pipeline advancement, partially offset by higher gross profit from the continued ramp of SCN-102 (ARBLI™) wholesale distribution revenues. The decrease was further moderated by lower non-cash stock-based compensation expense of $102,320 in the current period compared to $1,080,437 in the prior-year period, a significant reduction in interest expense to $37,019 from $670,784 following the repayment of the Arena convertible debentures during 2025, and higher depreciation and amortization of $468,013 compared to $15,024 in the prior-year period. The following table reconciles net loss to adjusted EBITDA for the three months ended March 31, 2026 and 2025:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net loss | $ | (3,402,264 | ) | $ | (3,063,997 | ) | ||
| Depreciation and amortization | 468,013 | 15,024 | ||||||
| Interest expense | 37,019 | 670,784 | ||||||
| Other non-operating expenses (income) | (144,254 | ) | (1,178,104 | ) | ||||
| Stock based compensation (non-cash) | 102,320 | 1,080,437 | ||||||
| Adjusted EBITDA | $ | (2,939,166 | ) | $ | (2,475,856 | ) | ||
Recently Issued Accounting Standards
For more information on recently issued accounting standards, see “NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION,” to the Notes to Consolidated Financial Statements included herein under “PART I. - ITEM 1. FINANCIAL STATEMENTS”.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K (17 C.F.R. § 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, as appropriate, in order to allow timely decisions in connection with required disclosure.
Under the supervision and with the participation of our management, including our co-Chief Executive Officers and our Chief Financial Officer (our principal executive officers and principal accounting/financial officer), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Report. Based on this evaluation, our co-Chief Executive Officers and our Chief Financial Officer concluded that as of March 31, 2026, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports filed with the SEC pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our co-CEOs and CFO, as appropriate, to allow timely decisions regarding required disclosures.
Limitations on the Effectiveness of Controls
Management of the Company, including its co-Chief Executive Officers and its Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Furthermore, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons or by the collusion of two or more persons. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Changes in Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial reporting during the quarter ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of business, we may become a party to lawsuits involving various matters. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We believe the ultimate resolution of any such current proceeding will not have a material adverse effect on our continued financial position, results of operations or cash flows.
Such current litigation or other legal proceedings are described in, and incorporated by reference in, this “ITEM 1. LEGAL PROCEEDINGS” of this Report from, “PART I – ITEM 1. FINANCIAL STATEMENTS” in the Notes to Consolidated Financial Statements in “NOTE 13 – COMMITMENTS AND CONTINGENCIES”. The Company believes that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on our financial condition or results of operations. However, assessment of the current litigation or other legal claims could change in light of the discovery of facts not presently known to the Company or by judges, juries or other finders of fact, which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims.
Additionally, the outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Annual Report on Form 10-K filed on March 30, 2026, and amended on April 30, 2026. Investors should review the risks disclosed in the Form 10-K and in this Report, prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Form 10-K,this Report, and other reports we have filed with the SEC, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
There were no sales of unregistered equity securities by the Company during the three months ended March 31, 2026.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The Company did not repurchase shares of common stock during the three months ended March 31, 2026.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
(a) During the quarter ended March 31, 2026, there was no information required to be disclosed in a report on Form 8-K which was not disclosed in a report on Form 8-K.
(b) During the quarter ended March 31, 2026, there were no material changes to the procedures by which stockholders may recommend nominees to our Board.
(c)
During the quarter ended March 31, 2026, no officer or director
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ITEM 6. EXHIBITS
| Exhibit No. | Description | |
| 3.1 | Second Amended and Restated Certificate of Incorporation of the Company, as amended through September 20, 2024 (incorporated by reference to Exhibit 3.1 of the Company’s Form 10-K filed on March 26, 2025). | |
| 3.2 | Certificate of Amendment to Second Amended and Restated Certificate of Incorporation (1-for-6 Reverse Stock Split of Common Stock) filed with the Delaware Secretary of State on February 12, 2020, and effective February 13, 2020 (incorporated by reference to Exhibit 3.3 of the Company’s Form 10-K filed on March 26, 2025). | |
| 3.3 | Certificate of Amendment of Certificate of Incorporation (changing name TRxADE HEALTH, INC.) (incorporated by reference to Exhibit 3.4 of the Company’s Form 10-K filed on March 26, 2025). | |
| 3.4 | Form of Certificate of Amendment to Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.5 of the Company’s Form 10-K filed on March 26, 2025). | |
| 3.5 | Certificate of Amendment of Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.6 of the Company’s Form 10-K filed on March 26, 2025). | |
| 3.6 | Amended and Restated Bylaws of the Company, as amended through March 24, 2022 (incorporated by reference to Exhibit 3.10 of the Company’s Form 10-K filed on March 26, 2025). | |
| 4.1 | Certificate of Designation of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed on June 26, 2023). | |
| 4.2 | Certificate of Designation of Preferences, Rights and Limitations of Series C Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed on October 11, 2023). | |
| 4.3 | Certificate of Designation of Preference, Rights and Limitations of Series X Non-Voting Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed on July 31, 2024). | |
| 10.1 | Note Purchase Agreement dated April 27, 2026, by and between the Company and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on May 1, 2026). | |
| 10.2 | Secured Promissory Note A-1 dated April 27, 2026, made by the Company in favor of Streeterville Capital, LLC (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on May 1, 2026). | |
| 10.3 | Secured Promissory Note B dated April 27, 2026, made by the Company in favor of Streeterville Capital, LLC (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed on May 1, 2026). | |
| 10.4 | Security Agreement dated April 27, 2026, by and between the Company and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K filed on May 1, 2026). | |
| 10.5 | Security Agreement dated April 27, 2026, by and between Scienture, LLC and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.5 of the Company’s Form 8-K filed on May 1, 2026). | |
| 10.6 | Intellectual Property Security Agreement dated April 27, 2026, by and between Scienture, LLC and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.6 of the Company’s Form 8-K filed on May 1, 2026). | |
| 10.7 | Pledge Agreement dated April 27, 2026, by and between the Company and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.7 of the Company’s Form 8-K filed on May 1, 2026). | |
| 10.8 | Guaranty dated April 27, 2026, made by Scienture, LLC and SCNX Holdings, LLC for the benefit of Streeterville Capital, LLC (incorporated by reference to Exhibit 10.8 of the Company’s Form 8-K filed on May 1, 2026). | |
| 31.1 | Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2 | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SCIENTURE HOLDINGS, INC. | ||
| By: | /s/ Dr. Narasimhan Mani | |
| Dr. Narasimhan Mani | ||
Co-Chief Executive Officer and President (Principal Executive Officer) | ||
| By: | /s/ Dr. Shankar Hariharan | |
| Dr. Shankar Hariharan | ||
Co-Chief Executive Officer and Executive Chairman (Principal Executive Officer) | ||
| By: | /s/ Eric Sherb | |
| Eric Sherb | ||
Chief Financial Officer (Principal Accounting/Financial Officer) | ||
| Date: | May 15, 2026 |
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