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Scienture Holdings, Inc.(SCNX) - 2025 Q1 - Quarterly Report
SCNXScienture Holdings, Inc.(SCNX)2025-05-12 21:30

Financial Performance - Revenues for the three months ended March 31, 2025, were 10,258,comparedto10,258, compared to 0 in the same period of 2024, indicating a significant increase[17]. - Gross profit for Q1 2025 was 673,resultinginagrossmarginofapproximately6.56673, resulting in a gross margin of approximately 6.56%[17]. - Operating loss for the first quarter of 2025 was 3.57 million, an improvement from a loss of 5.49millioninQ12024[17].−NetlossfromcontinuingoperationsforQ12025was5.49 million in Q1 2024[17]. - Net loss from continuing operations for Q1 2025 was 3.06 million, compared to a loss of 6.63millioninthesamequarterofthepreviousyear,showingareductionofapproximately53.916.63 million in the same quarter of the previous year, showing a reduction of approximately 53.91%[17]. - For the three months ended March 31, 2025, the net loss from continuing operations was 3,063,997, a decrease of 54% compared to a net loss of 6,633,422forthesameperiodin2024[1].−Thecompanyincurredanetlossfromoperationsof6,633,422 for the same period in 2024[1]. - The company incurred a net loss from operations of 3,063,997, a 54% improvement compared to a net loss of 6,633,422inthesameperiodin2024[194].−Net(loss)incomeforthethreemonthsendedMarch31,2025,was6,633,422 in the same period in 2024[194]. - Net (loss) income for the three months ended March 31, 2025, was (3,063,997), a decrease of 114% compared to net income of 21,246,033inthesameperiodin2024[185].AssetsandLiabilities−Totalassetsincreasedto21,246,033 in the same period in 2024[185]. Assets and Liabilities - Total assets increased to 106.36 million as of March 31, 2025, compared to 104.85millionattheendof2024,reflectingagrowthofapproximately1.44104.85 million at the end of 2024, reflecting a growth of approximately 1.44%[13]. - Total current liabilities decreased to 7.46 million as of March 31, 2025, from 7.91millionattheendof2024,adeclineofabout5.677.91 million at the end of 2024, a decline of about 5.67%[13]. - Cash balance increased significantly to 2.05 million as of March 31, 2025, compared to 308,096attheendof2024,representingagrowthofover564308,096 at the end of 2024, representing a growth of over 564%[13]. - The company reported an accumulated deficit of 42.10 million as of March 31, 2025, compared to 39.04millionattheendof2024[15].−Totalstockholders′equityincreasedto39.04 million at the end of 2024[15]. - Total stockholders' equity increased to 81.16 million as of March 31, 2025, from 79.07millionattheendof2024,reflectingagrowthofapproximately2.6679.07 million at the end of 2024, reflecting a growth of approximately 2.66%[15]. Cash Flow - Net cash used in operating activities from continuing operations was 2,956,457, significantly reduced from 9,659,231intheprioryear[1].−Thecompanyreportedanetcashprovidedbyinvestingactivitiesof9,659,231 in the prior year[1]. - The company reported a net cash provided by investing activities of 27,432,589, primarily due to proceeds from discontinued operations[1]. - Cash used in operating activities for the three months ended March 31, 2025, was 2,956,457,adecreaseof712,956,457, a decrease of 71% compared to 10,189,673 for the same period in 2024[181]. Strategic Transactions - The company plans to divest its membership interests in Integra Pharma Solutions, LLC and Bonum Health, Inc. to Tollo Health, Inc. for a total consideration of 5million[28][31].−Thedivestituresarepartofastrategicrealignmentaimedatoptimizingthecompany′sportfolioandacceleratinggrowthintheBrandedandSpecialtyPharmamarkets[32].−Thecompanyanticipatesusingproceedsfromthedivestmenttosupporthigh−growthcommercialandstrategicproductdevelopmentactivitiesatScienture,LLC[32].−ThecompanyenteredintoaMembershipInterestPurchaseAgreementwithTolloHealth,Inc.tosellallmembershipinterestsinIPSfor5 million[28][31]. - The divestitures are part of a strategic realignment aimed at optimizing the company's portfolio and accelerating growth in the Branded and Specialty Pharma markets[32]. - The company anticipates using proceeds from the divestment to support high-growth commercial and strategic product development activities at Scienture, LLC[32]. - The company entered into a Membership Interest Purchase Agreement with Tollo Health, Inc. to sell all membership interests in IPS for 5 million, payable via a promissory note[153]. - Tollo has agreed to pay the company 5millionforacquiringIPSandBonum,withapromissorynotematuringonJune30,2030[168].ResearchandDevelopment−Scienture,LLCisengagedintheresearchanddevelopmentofbrandedpharmaceuticalproducts,withafocusonaddressingunmetmedicalneeds[27].−TheCompanyidentifiedproducttechnologyassetsrelatedtopotentialtreatmentsforhypertension,migraine,pain,andthrombosis,whichareinvariousphasesofdevelopment[53].−ManagementexpectsSCN−102toachieveregulatoryapprovalinmid−2025,withcommercializationprojectedtobegininlate2025[93].DebtandFinancing−Thecompanyneedstoraiseadditionalcapitalorsecuredebtfundingtosupportongoingoperations,whichmaynotbeavailableonfavorableterms,raisingsubstantialdoubtaboutitsabilitytocontinueasagoingconcern[68].−ThecompanyenteredintoaSecuritiesPurchaseAgreementtoissueconvertibledebentureswithaprincipalamountofupto5 million for acquiring IPS and Bonum, with a promissory note maturing on June 30, 2030[168]. Research and Development - Scienture, LLC is engaged in the research and development of branded pharmaceutical products, with a focus on addressing unmet medical needs[27]. - The Company identified product technology assets related to potential treatments for hypertension, migraine, pain, and thrombosis, which are in various phases of development[53]. - Management expects SCN-102 to achieve regulatory approval in mid-2025, with commercialization projected to begin in late 2025[93]. Debt and Financing - The company needs to raise additional capital or secure debt funding to support ongoing operations, which may not be available on favorable terms, raising substantial doubt about its ability to continue as a going concern[68]. - The company entered into a Securities Purchase Agreement to issue convertible debentures with a principal amount of up to 12,222,222, with the first tranche of 3,333,333completedonNovember25,2024[94][95].−TheoutstandingbalanceoftheArenadebentures,netofunamortizeddebtdiscount,was3,333,333 completed on November 25, 2024[94][95]. - The outstanding balance of the Arena debentures, net of unamortized debt discount, was 1,092,461 as of March 31, 2025[101]. - The company accrued 84,167ininterestexpenserelatedtotheArenadebenturesduringthethreemonthsendedMarch31,2025[99].−TheNVKdebtof84,167 in interest expense related to the Arena debentures during the three months ended March 31, 2025[99]. - The NVK debt of 2,000,000, which accrues interest at 15.50%, is collateralized by the company's receivables and intellectual property[107]. Stock and Equity - The company issued 240,000 common shares for services and 2.8 million shares for cash pursuant to an equity line of commitment during the first quarter of 2025[19]. - The company recognized a net increase to additional paid-in capital of 2,691,467fromtheissuanceof2,800,000sharesofcommonstockforgrossproceedsof2,691,467 from the issuance of 2,800,000 shares of common stock for gross proceeds of 4,597,999 under the ELOC Agreement[127]. - The company authorized the issuance of up to 9,211,246 shares of Series X Preferred Stock, replacing the revoked Series A Preferred Stock[113]. - In connection with the Scienture Merger, 291,536 shares of common stock and 6,826,753 shares of Series X Preferred Stock were issued[115]. Expenses - Operating expenses totaled 3,571,990,adecreaseof353,571,990, a decrease of 35% from 5,492,971 in the comparable period in 2024[185]. - Wage and salary expenses increased by 213% to 696,068,attributedtoexecutivesalaryincreasesandtheScientureMerger[188].−Professionalfeesroseby130696,068, attributed to executive salary increases and the Scienture Merger[188]. - Professional fees rose by 130% to 412,850, mainly due to post-acquisition expenses related to Scienture[189]. - General and administrative expenses decreased by 71% to 1,355,948,primarilyduetoareductioninthefairvalueofsharesissuedforservices[191].−Interestexpenseincreasedsignificantlyto1,355,948, primarily due to a reduction in the fair value of shares issued for services[191]. - Interest expense increased significantly to 670,784 from 98,515,drivenbyinterestonScienture′sconvertibledebt[192].GoodwillandIntangibleAssets−TheCompanyacquiredintangibleassetsvaluedat98,515, driven by interest on Scienture's convertible debt[192]. Goodwill and Intangible Assets - The Company acquired intangible assets valued at 76,400,000 and recognized goodwill of $21,372,960 from the Scienture acquisition[48]. - As of March 31, 2025, no impairment of goodwill was recognized, indicating that the fair value of reporting units exceeded their carrying values[52]. - The Company did not record any impairment charge for the three months ended March 31, 2025 and 2024[56]. - Goodwill is tested annually for impairment and is not amortized, with management regularly reviewing operating results[49]. - The product technology assets will be amortized over their expected remaining life of 15-20 years once placed in service[54].