Scienture Holdings, Inc.(SCNX) - 2024 Q3 - Quarterly Report

Financial Performance - Revenues for the three months ended September 30, 2024, were $64,861, compared to$83,560 for the same period in 2023, representing a decrease of approximately 22.4%[6] - Gross profit for the nine months ended September 30, 2024, was $39,592, down from$162,990 in 2023, indicating a decline of about 75.8%[6] - The net loss from continuing operations for the three months ended September 30, 2024, was $(3,183,601), compared to$(88,136) in 2023, marking a significant increase in losses[6] - The company reported a net loss per common share from continuing operations of $(1.34) for the three months ended September 30, 2024, compared to$(0.11) in the same period of 2023[6] - The company reported a net loss of $(3,183,601) for the quarter ending September 30, 2024[7] - The company reported a net loss from continuing operations of$11,441,764 for the nine months ended September 30, 2024, compared to a loss of $3,429,112 for the same period in 2023, indicating a significant increase in losses[8] - The net income (loss) on discontinued operations for the three months ended September 30, 2024, was$27,670,294, compared to a loss of $2,748,833 in the same period of 2023[40] - The company reported a loss on the disposition of business amounting to$2,083,742, included in income from discontinued operations, net of tax[37] Operating Expenses - Total operating expenses for the three months ended September 30, 2024, were $3,501,674, compared to$801,270 in the same period of 2023, reflecting an increase of approximately 337.5%[6] - Total operating expenses rose by $7,783,789 to$10,489,633, a 355% increase compared to the same period in 2023[85] - Research and development expenses for the three months ended September 30, 2024, were $1,253,983, with no comparable expenses reported in the same period of 2023[6] - Research and development expenses were$1,253,983 for the nine months ended September 30, 2024, compared to $0 in the same period of 2023, due to costs associated with the Scienture merger[85] Cash Flow and Assets - Cash at the end of the period was$579,103 as of September 30, 2024, compared to $34,031 at the end of the previous period[8] - The company has$4,505,797 in other receivables as of September 30, 2024, primarily consisting of short-term advances to Wellgistics Health, Inc.[21] - Cash provided by investing activities for the nine months ended September 30, 2024, was $27,552,791, compared to$74,283 for the same period in 2023[81] - Current assets (excluding cash) rose to $6,676,813 as of September 30, 2024, compared to$2,752,749 at the end of 2023, marking an increase of 143%[77] - Current liabilities decreased to $5,413,438 as of September 30, 2024, from$11,556,355 at the end of 2023, representing a reduction of 53%[77] Equity and Stock Transactions - The company executed a 1:15 reverse stock split on June 21, 2023, to comply with Nasdaq Listing Rule 5550(a)(2)[18] - The company issued common stock for services totaling $4,450,914 during the reporting period[7] - The Company issued 291,536 shares of common stock and 6,826,753 shares of Series X Preferred Stock as part of the Scienture Merger Agreement, with a total fair value of$78,646,184[56] - The Company authorized the issuance of up to 9,211,246 shares of Series X Preferred Stock, convertible into common stock[53] Acquisitions and Mergers - The company completed the acquisition of Superlatus on July 31, 2023, with a total value of $225,000,169, which included 136,441 shares of common stock and 306,855 shares of Series B Preferred Stock[10] - The company entered into a merger agreement with Scienture on July 25, 2024, resulting in the issuance of 291,536 shares of common stock and 6,826,753 shares of Series X Non-Voting Convertible Preferred Stock[11] - The Company acquired Scienture, Inc. for a total purchase consideration of$78,646,184, which included 291,536 shares of common stock and 6,826,753 shares of Series X Preferred Stock[27][28] Strategic Changes - The company anticipates dissolving Bonum Health, LLC, which was formed to hold telehealth assets, indicating a strategic shift in focus[9] - The company plans to commercialize innovative and branded pharmaceutical products in the US market through its subsidiary Scienture, targeting unmet medical needs[9] - The company plans to raise additional funding through equity sales and debt to support ongoing operations and potential acquisitions[79] Legal and Compliance - The company won a legal case against Studebaker Defense Group, LLC, with a court order for $550,000, but no payments have been received as of the filing date[63] - The company has a termination fee liability of$1,285,000 related to the agreement with Kesin Pharma Corporation, which remains outstanding as of September 30, 2024[65] Debt and Financing - The Company entered into a Loan and Security Agreement for $2,000,000 with NVK Finance, LLC, with an interest rate of 15.50$360,000 was issued in August 2024, with net proceeds of $314,000 and a monthly amortization payment of$7,200 starting six months after issuance[47] - The Company has accrued interest on its loans totaling $18,432 as of December 31, 2023[51]