PART I: FINANCIAL INFORMATION Financial Statements Scienture Holdings divested legacy businesses, now focused on specialty pharma, but faces critical liquidity and a $9.8M net loss, raising going concern doubts Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash | $15,391 | $308,096 | | Total current assets | $856,625 | $6,305,477 | | Goodwill | $21,372,960 | $21,372,960 | | Intangible assets, net | $76,400,000 | $76,400,000 | | Total assets | $104,294,834 | $104,853,805 | | Liabilities & Equity | | | | Total current liabilities | $7,688,199 | $7,906,893 | | Total liabilities | $26,434,370 | $25,781,684 | | Accumulated deficit | $(48,823,543) | $(39,038,973) | | Total stockholders' equity | $77,860,464 | $79,072,121 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $0 | $18,699 | $10,258 | $18,699 | | Total operating expenses | $5,157,906 | $1,494,988 | $8,729,896 | $6,987,959 | | Net loss from continuing operations | $(6,720,573) | $(1,624,741) | $(9,784,570) | $(8,258,163) | | Net (loss) income | $(6,720,573) | $(1,833,902) | $(9,784,570) | $19,412,131 | | Basic Net loss per share (continuing ops) | $(0.48) | $(1.16) | $(0.83) | $(6.75) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,990,704) | $(5,967,718) | | Net cash provided by investing activities | $0 | $27,431,815 | | Net cash provided by (used in) financing activities | $4,697,999 | $(13,896,011) | | Net change in cash | $(292,705) | $7,568,086 | | Cash at end of period | $15,391 | $7,719,993 | Notes to Condensed Consolidated Financial Statements Notes detail corporate changes, legacy divestiture, Scienture acquisition, a 'Going Concern' warning due to low cash and deficit, and significant legal proceedings - The company completed the sale of its legacy subsidiaries (IPS, Softell, and Bonum Health, Inc.) on April 30, 2025, to Tollo Health, LLC, an entity with beneficial interests held by the company's former CEO and President. The consideration was a $5 million promissory note, resulting in a recognized loss on disposition of $385,5283034 - Management has expressed substantial doubt about the company's ability to continue as a going concern due to its accumulated deficit of $48.8 million and cash balance of only $15,391 as of June 30, 2025. The company will need to raise additional capital to meet its funding requirements for the next 12 months727374 - The company is facing two significant legal challenges: a complaint from Eat Well Investment Group seeking over $8.5 million in stock and other damages related to the prior Superlatus acquisition, and a complaint from Kesin Pharma Corporation seeking payment of a disputed $1.285 million termination fee149151153 - Subsequent to the quarter's end, in July and August 2025, the company initiated a capital raise of up to $3.0 million, and as of August 6, 2025, had received approximately $1.3 million in proceeds from the sale of 754,716 shares of common stock at $1.59 per share163164 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A details the strategic pivot to specialty pharma, focusing on Scienture's pipeline, with critically low liquidity and surging expenses reinforcing going concern uncertainty Company Overview and Strategy Following legacy divestiture and Scienture acquisition, the company transformed into a specialty pharmaceutical firm focused on CNS/cardiovascular diseases, advancing its pipeline including FDA-approved SCN-102 - The company has completed a strategic realignment by divesting its legacy subsidiaries (IPS, Softell, Bonum Health) to sharpen its focus on the high-growth Branded and Specialty Pharma markets through its Scienture subsidiary178 - Scienture's lead product candidate, SCN-102 (Arbli), an oral liquid formulation of losartan, was approved by the FDA in March 2025. It is the first and only FDA-approved ready-to-use oral liquid losartan in the U.S. market189 Scienture's Development Pipeline | Product Candidate | Description | Development Stage/Key Milestone | | :--- | :--- | :--- | | SCN-102 (Arbli) | Losartan Oral Suspension for hypertension | FDA approved in March 2025 | | SCN-104 | Multi-dose DHE injection pen for migraine | Planning Phase 1 study in 2026 post-IND submission | | SCN-106 | Potential Biosimilar (thrombolytic agent) | Completed Biosimilar Initial Advisory meeting with FDA | | SCN-107 | Bupivacaine Long-Acting Injection for pain | Anticipates IND submission and Phase 1 study initiation in 2025 | Liquidity and Capital Resources The company's liquidity is precarious, with cash falling 95% to $15,391 and working capital deteriorating to a $6.8M deficit, necessitating capital raises and reinforcing going concern doubts Key Liquidity Metrics | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash | $15,391 | $308,096 | -95% | | Current Assets | $856,625 | $6,305,477 | -86% | | Current Liabilities | $7,688,199 | $7,906,893 | -3% | | Working Capital | $(6,831,574) | $(1,601,416) | -327% | - The company's primary sources of liquidity have shifted from operations and asset sales to prospective sales of equity and debt securities following the divestiture of its legacy businesses206 - A 'Going Concern' warning is explicitly stated, citing the accumulated deficit of $48.8 million, a cash balance of only $15,391, and the need to raise additional capital to fund operations over the next 12 months209210211 Results of Operations Operational results reflect strategic transformation, with revenues near zero and surging operating expenses, including R&D and interest, leading to a significantly wider net loss from continuing operations Comparison of Operations for the Three Months Ended June 30, 2025 and 2024 | Line Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $0 | $18,699 | -100% | | Total operating expenses | $5,157,906 | $1,494,988 | +245% | | Research and development | $843,549 | $0 | N/A | | Interest expense | $653,493 | $4,949 | +13104% | | Net loss from continuing operations | $(6,720,573) | $(1,624,741) | +314% | Comparison of Operations for the Six Months Ended June 30, 2025 and 2024 | Line Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $10,258 | $18,699 | -45% | | Total operating expenses | $8,729,896 | $6,987,959 | +25% | | Research and development | $1,418,228 | $0 | N/A | | Interest expense | $1,324,277 | $103,464 | +1180% | | Net loss from continuing operations | $(9,784,570) | $(8,258,163) | +18% | - The increase in operating expenses is primarily due to the addition of personnel and R&D activities from the Scienture acquisition, which did not exist in the prior-year period. R&D expenses for Q2 2025 were $843,549220224 Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," the company is not required to provide quantitative and qualitative disclosures about market risk - As a "smaller reporting company," Scienture Holdings, Inc. is not required to provide the information for this item244 Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective246 - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls249 PART II: OTHER INFORMATION Legal Proceedings The company is involved in significant legal proceedings, including claims from Eat Well Investment Group and Kesin Pharma Corporation, with management acknowledging inherent litigation uncertainty - The company is subject to ongoing litigation, with details provided in Note 12 of the financial statements, which includes significant claims from Eat Well and Kesin Pharma252 - Management does not currently expect pending litigation to have a material adverse effect, but notes that outcomes are uncertain and could change251253 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes have been made to the risk factors disclosed in the company's Form 10-K254 Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company issued 3,002,086 shares for services, and post-quarter, raised $1.3 million by selling 754,716 shares in an unregistered capital raise - In Q2 2025, the company issued 3,002,086 shares of common stock for services, including to directors, officers, and consultants257258 - Post-quarter, the company raised approximately $1.3 million by selling 754,716 shares of common stock in a private placement as part of an approved capital raise of up to $3 million255256 Defaults Upon Senior Securities None reported - The company reported no defaults upon senior securities261 Mine Safety Disclosures Not applicable - The company reported no mine safety disclosures262 Other Information No material Form 8-K information was omitted, nor were there changes to stockholder nomination procedures or officer/director 10b5-1 trading plans - No material information was omitted from Form 8-K filings during the quarter263 Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, material agreements, and officer certifications
Scienture Holdings, Inc.(SCNX) - 2025 Q2 - Quarterly Report