Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the Company's historical performance and financial condition should be read together with the consolidated financial statements and related notes in the section entitled "Item 8. Financial Statements and Supplemental Data" of this Annual Report. This discussion contains forward-looking statements based on the views and beliefs of our management, as well as assumptions and estimates made by our management. See the section entitled "Cautionary Statement Regarding Forward-Looking Information" above. These statements by their nature are subject to risks and uncertainties and are influenced by various factors. As a consequence, actual results may differ materially from those in the forward-looking statements. See "Item 1A. Risk Factors" of this Annual Report for the discussion of risk factors. For all periods presented, the consolidated statements of income and consolidated balance sheet data have been adjusted for the reclassification of discontinued operations information, unless otherwise noted. All references to years relate to the calendar year ended December 31 of the particular year.

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.
	●	Recent Events. Summary of material transactions occurring during year ended December 31, 2025.
	●	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 years ended December 31, 2025 and 2024.
	●	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.

Dispositions

SOSRx, LLC

SOSRx, was formed on February 15, 2022. The Company entered into a relationship with Exchange Health, LLC ("Exchange Health"), a technology company providing an online platform for manufacturers and suppliers to sell and purchase pharmaceuticals, pursuant to which SOSRx, a Delaware limited liability company, was formed, which was owned 51% by the Company and 49% by Exchange Health. SOSRx did not generate material revenue and in February 2023 the Company voluntarily withdrew from the joint venture agreement.

Community Specialty Pharmacy, LLC and Alliance Pharma Solutions, LLC

On January 20, 2023, the Company entered into Membership Interest Purchase Agreements to sell 100% of the outstanding membership interests of the Company's former subsidiaries, Community Specialty Pharmacy, LLC and Alliance Pharma Solutions, LLC (d.b.a DelivMeds). The Company also agreed to enter into a Master Service Agreement to operate the businesses prior to closing. The transactions contemplated by the Membership Interest Purchase Agreements closed on August 22, 2023.

Superlatus Inc.

On July 14, 2023, the Company entered into the Superlatus Merger Agreement with Superlatus Inc., a diversified food technology company, and Merger Sub.

On July 31, 2023, the Company completed its acquisition of Superlatus in accordance with the terms and conditions of the Superlatus Merger Agreement, pursuant to which the Company acquired Superlatus by way of a merger of the Merger Sub with and into Superlatus, with Superlatus being a wholly owned subsidiary of the Company and the surviving entity in the Superlatus Merger.

Under the terms of the Superlatus Merger Agreement, at the Closing, shareholders of Superlatus received an aggregate of 136,441 shares of the Company's common stock and 306,855 shares of the Company's Series B Preferred Stock, convertible into 100 shares of the Company's common stock. At Closing, the value of the Company's common stock was $7.30 per share, resulting in a total value of $225,000,169.

On October 13, 2023, the Company announced that Superlatus PD Holding Company, Inc., a purported subsidiary of Superlatus, entered into a supplier agreement with Rainforest, pursuant to which Superlatus allegedly appointed Rainforest as its exclusive distributor for Superlatus' portfolio of consumer packaged goods brands in certain markets. The Company later learned and announced that neither the Company's management nor the Company's Board of Directors authorized or approved the organization of Superlatus PD Holding Company, Inc. or the entry into the supplier agreement. Instead, the Company's management determined that certain representatives of a former subsidiary of the Company likely unilaterally took actions related to the supplier agreement.

On January 8, 2024, the Company entered into the Superlatus Amendment as not all of the closing conditions of the Superlatus Merger Agreement were met. Under the terms of the Superlatus Amendment, the merger consideration to the shareholders of Superlatus was adjusted to the aggregate of 136,441 shares of the Company's common stock and 15,759 shares of the Company's Series B Preferred Stock, resulting in a total value of $12,500,089. Additionally, the shareholders of Superlatus agreed to surrender back to the Company 291,096 shares of the Company's Series B Preferred Stock.

On March 5, 2024, the Company entered into the Superlatus SPA with the Buyer, Superlatus Foods Inc. Pursuant to the Superlatus SPA, the Company sold all of the issued and outstanding stock of Superlatus to the Buyer. A $1.00 purchase price was delivered to the Company at the closing, which occurred simultaneously with the execution of the Superlatus SPA. As a result of the transaction Superlatus is no longer a subsidiary of the Company, and the rights and assets of Superlatus together with various liabilities and obligations that were specific to Superlatus became rights and obligations of the Buyer.

Other Legacy Subsidiaries

The Company also previously owned 100% of Softell, IPS, Bonum Health, Inc., and Bonum Health, LLC.

Softell & IPS Entities

On October 4, 2024, the Company and Softell entered into the 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.

On April 8, 2025, the Company entered into the IPS MIPA with 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 have a beneficial interest in Tollo.

On April 8, 2025, the Company also entered into the Softell SPA 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 the Bonum SPA 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.

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 LLC 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.

Liquidity Outlook Cash Explanation

Cash Requirements

As of December 31, 2025, the Company's primary source of liquidity consisted of $6,662,008 in cash and cash equivalents and the Tollo promissory note with a principal balance of $5,000,000 (bearing interest at the prime rate and maturing June 30, 2030). The Company has financed its operations primarily through equity issuances under its equity line of credit ("ELOC") and convertible note arrangements. During the year ended December 31, 2025, the Company raised approximately $26.3 million in gross equity proceeds through ELOC and other equity transactions. The Company's principal uses of cash are commercialization of ARBLI™ and REZENOPY^TM research and development, general and administrative costs, and debt service. The Company expects to fund its operations for at least the next twelve months from its existing cash balance and revenues generated from ARBLI™ commercialization, which commenced in the third quarter of 2025 and is expected to grow in 2026. The company also expects to generate revenue from REZENOPY^TM which is anticipated to commence in the second quarter of 2026. The Company may also raise additional funding through the sale of debt or equity to fund accelerated pipeline development activities; however, there can be no assurance that such funding will be available on favorable terms, or at all.

The Company's ability to continue to fund operations beyond the next twelve months will depend on its ability to grow revenues from the commercialization of ARBLI™ and REZENOPY^TM and, if needed, to access additional capital markets. Management continues to evaluate potential strategic transactions and partnerships to accelerate product development and commercialization across the pipeline.

Going Concern

The consolidated financial statements have been prepared on a going concern basis. As of December 31, 2025, the Company had cash and cash equivalents of $6,662,008, positive working capital of approximately $5,181,000, and current liabilities of approximately $2,735,000. Management evaluated conditions and events in accordance with ASC 205-40 and determined that, based on the factors described below, there is no substantial doubt about the Company's ability to continue as a going concern for the twelve-month period following the date these financial statements are issued. See also "Note 2 - Going Concern" in the Notes to Consolidated Financial Statements for further discussion.

As of December 31, 2025, the Company had an accumulated deficit of $80,551,237 and cash and cash equivalents of $6,662,008. The Company had current liabilities of $2,735,351 and working capital of approximately $5,181,000, an improvement of approximately $6,782,000 from the working capital deficit of $(1,601,416) as of December 31, 2024.

Management believes that the Company's existing cash of $6,662,008, combined with growing revenues from ARBLI™ and REZENOPY^TM commercialization and its plans to access additional capital as needed, will be sufficient to fund operations and meet its obligations for at least the twelve months following the issuance of these financial statements. Key factors supporting this assessment include: (i) cash on hand of $6.7 million, which management believes is sufficient to cover current operating requirements; (ii) positive working capital of approximately $5.2 million as of December 31, 2025, compared to a working capital deficit of approximately $(1.6) million as of December 31, 2024; (iii) initial revenues from ARBLI™ commencing in the third quarter of 2025, with projected revenue growth in 2026; (iv) initial revenues from REZENOPY™ commencing in the third quarter of 2025, with projected revenue growth in 2026 and (v) the Company's ability to modulate discretionary spending and access equity markets, as demonstrated by raising approximately $26.3 million in gross equity proceeds during 2025.

Cash Flows

The following table summarizes the Company's Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024:

		Year Ended December 31, 2025				Year Ended December 31, 2024				Change				% Change
Net cash used in operating activities from continuing operations		$	(13,382,482	)		$	(13,286,163	)		$	(96,319	)			1	%
Net cash provided by (used in) operating activities from discontinued operations			2,799				(979,075	)			981,874				-100	%
Operating Activities		$	(13,379,683	)		$	(14,265,238	)		$	885,555				-6	%
Net cash used in investing activities from continuing operations			-			$	(2,379,024	)		$	2,379,024				-100	%
Net cash provided by investing activities from discontinued operations			-				29,931,815				(29,931,815	)			-100	%
Investing Activities		$	-			$	27,552,791			$	(27,552,791	)			-100	%
Net cash provided by (used in) financing activities from continuing operations		$	19,733,595			$	(12,974,770	)		$	32,708,365				-252	%
Net cash used in financing activities from discontinued operations			-				(5,000	)			5,000				-100	%
Financing Activities		$	19,733,595			$	(12,979,770	)		$	32,713,365				-252	%
Net change in cash		$	6,353,912			$	307,782			$	6,046,130				1,964	%

Net cash used in operating activities from continuing operations for the year ended December 31, 2025 was $13,382,482, compared to net cash used in operating activities of approximately $13,286,163 for the year ended December 31, 2024. The net loss of $43,507,142 was the primary driver of cash used in operations in 2025, partially offset by significant non-cash charges including $26,346,050 of impairment losses, $3,161,100 of debt discount amortization, $2,068,892 of stock-based compensation expense, $4,310,090 of common stock issued for services, $453,846 of amortization of intangible assets, and gains on warrant and derivative fair value changes of $3,205,854. Changes in working capital used cash of approximately $3,0,000, primarily driven by increases in accounts receivable and inventory associated with the ARBLI™ commercialization launch.

Net cash provided by (used in) investing activities from continuing operations was $0 for the year ended December 31, 2025 and $2,379,024 net cash used in investing activities from continuing operations for the year ended December 31, 2024. Net cash provided by investing activities from discontinued operations was $0 for 2025, compared to $29,931,815 in 2024, which primarily reflected proceeds from the disposition of Micro Merchant Systems assets and other asset sales completed in the first and second quarters of 2024.

Net cash provided by financing activities from continuing operations for the year ended December 31, 2025 was $19,733,595, compared to net cash used in financing activities of approximately $12,980,000 for the year ended December 31, 2024. Cash provided by financing activities in 2025 was primarily driven by gross proceeds of $26,293,039 from the issuance of common stock through the Company's ELOC and other equity transactions, partially offset by repayment of convertible notes of $9,244,444, net repayment of related party loans of $415,000, and development liability payments of $400,000. The year ended December 31, 2024 reflected cash used in financing activities primarily due to the payment of special cash dividends of approximately $14,858,000 partially offset by proceeds from convertible note issuances.

Results of Operations

The following selected consolidated financial data should be read in conjunction with the audited consolidated financial statements and the notes to these statements included in this Annual Report.

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

		Year Ended
		December 31,												Percent
		2025				2024				Change				Change
Revenues		$	431,609			$	136,643				294,966				216	%
Cost of sales			100,127				130,638				(30,511	)			-23	%
Gross profit			331,482				6,005				325,477				5420	%
Operating expenses:
Wage and salary expense			2,118,568				2,111,066				7,502				0	%
Professional fees			2,407,822				1,458,332				949,490				65	%
Accounting and legal expense			2,070,337				1,807,041				263,296				15	%
Technology expense			97,261				416,311				(319,050	)			-77	%
General and administrative (including stock-based compensation expense)			7,926,016				6,677,580				1,248,436				19	%
Research and development			1,956,270				2,236,690				(280,420	)			-13	%
Impairment loss			26,346,050				-				26,346,050				100	%
Total operating expenses			42,922,324				14,707,020				28,215,304				192	%
Change in fair value of warrant liability			909,020				(182,982	)			1,092,002				-597	%
Change in fair value of derivative liability			2,296,834				180,383				2,116,451				1173	%
Impairment of investment			-				(2,500,000	)			2,500,000				-100	%
Loss on conversion of note payable			(53,446	)			-				(53,446	)			-100	%
Loss on disposition of subsidiaries			(288,204	)			-				(288,204	)			-100	%
Interest income			302,702				135,337				167,365				124	%
Loss on disposal of asset			-				(374,968	)			374,968				-100	%
Interest expense			(4,083,206	)			(1,335,631	)			(2,747,575	)			206	%
Net loss from continuing operations			(43,507,142	)			(18,778,876	)			(24,728,266	)			132	%
Benefit / (provision) for income taxes			1,994,878				534,396				1,460,482				273	%
Net loss from continuing operations, net of tax			(41,512,264	)			(18,244,480	)			(23,267,784	)			128	%
Income from discontinued operations, net of tax			-				27,310,278				(27,310,278	)			-100	%
Net (loss) income		$	(41,512,264	)		$	9,065,798			$	(50,578,062	)			-558	%

Revenues and Gross Profit

Revenues for the year ended December 31, 2025 were $431,609, compared to $136,643 for the year ended December 31, 2024, an increase of $294,966, or approximately 216%. The increase reflects initial sales of ARBLI™ (SCN-102, Losartan Potassium Oral Suspension) through wholesale distribution channels, which commenced in the third quarter of 2025 following FDA approval in March 2025. Revenue in 2024 consisted primarily of residual pharmaceutical wholesale activity prior to the IPS disposition. Cost of sales for the year ended December 31, 2025 was $100,127, resulting in gross profit of $331,482 (gross margin: 76.8%), compared to cost of sales of $130,638 and gross profit of $6,005 (gross margin: 4.4%) for the year ended December 31, 2024. The improvement in gross margin reflects the shift to higher-margin branded pharmaceutical sales through ARBLI™ versus the prior-period lower-margin wholesale distribution activity.

Operating Expenses

Total operating expenses were $42,922,324 for the year ended December 31, 2025 compared to $14,707,020 for the year ended December 31, 2024. The increase of $28,215,304 was primarily driven by non-cash impairment charges of $26,346,050 recognized in 2025 (comprising a goodwill impairment of $21,372,960 and IPR&D impairment of $4,973,090), with no comparable charge in 2024. Excluding impairment charges, total operating expenses were $16,576,274 in 2025 compared to $14,707,020 in 2024. Key components of operating expenses were as follows:

Wage and salary expense was $2,118,568 for the year ended December 31, 2025, relatively flat compared to $2,111,066 for 2024. Professional fees increased $949,490 to $2,407,822 in 2025 from $1,458,332 in 2024, primarily due to higher external consulting costs related to commercialization activities, SEC compliance, and corporate actions. Accounting and legal expense was $2,070,337 in 2025 compared to $1,807,041 in 2024, an increase of $263,296, driven by incremental costs associated with the year-end audit, SEC filings, and legal matters. General and administrative expenses (including non-cash stock-based compensation) increased $1,248,436 to $7,926,016 in 2025 from $6,677,580 in 2024, primarily due to higher non-cash stock-based compensation expense and costs associated with ARBLI™ commercialization activities. Technology expense decreased $319,050 to $97,261 in 2025 from $416,311 in 2024, primarily reflecting the wind-down of legacy technology platform expenses following the IPS and Softell dispositions. Research and development expenses were $1,956,270 in 2025 compared to $2,236,690 in 2024, a decrease of $280,420, reflecting shifts in the timing of CRO and regulatory spending across our pipeline programs (SCN-102: $368K; SCN-104: $422K; SCN-106: $298K; SCN-107: $500K in 2025).

Non-Operating Income (Expense)

Non-operating income (expense) for the year ended December 31, 2025 included: a gain on the change in fair value of warrant liability of $909,020 (2024: loss of $182,982), reflecting mark-to-market decreases in warrant fair value; a gain on the change in fair value of the derivative liability of $2,296,834 (2024: gain of $180,383), primarily related to the derecognition of the Arena convertible debenture derivative liability upon full repayment; interest income of $302,702 (2024: $135,337) on the Tollo promissory note; interest expense of $4,083,206 (2024: $1,335,631), reflecting a full year of amortization of debt discount and interest on the Arena debenture and other convertible notes; a loss on conversion of note payable of $53,446; and a loss on disposition of subsidiaries of $288,204, primarily related to the Bonum Health, Inc. and Softell transactions. The Company recognized an income tax benefit of $1,994,878 for the year ended December 31, 2025 (2024: $nil), reflecting changes in deferred tax liabilities attributable to the intangible asset impairment charges recognized during the year.

Net Loss and Discontinued Operations

Net loss from continuing operations, net of tax, was $41,512,264 for the year ended December 31, 2025, compared to a net loss from continuing operations of $15,803,908 for the year ended December 31, 2024. The increase in net loss was primarily attributable to the $26,346,050 of non-cash impairment charges recognized in 2025, with no comparable charge in 2024. Excluding impairment, net loss from continuing operations improved by approximately $37,000 year over year. There was no income from discontinued operations in 2025. For the year ended December 31, 2024, income from discontinued operations, net of tax, was $27,310,278, primarily from the gain on the sale of MMS assets and the Softell disposition in the first half of 2024. Net loss for the year ended December 31, 2025 was $41,512,264, compared to net income of $11,506,370 for the year ended December 31, 2024.

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

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.

Revenue Recognition

In general, the Company accounts for revenue recognition in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606, "Revenue from Contracts with Customers."

IPS is a licensed wholesaler of brand, generic and non-drug products to Customers. IPS takes orders for products, creates invoices for each order and recognizes revenue at the time the product is shipped to the Customer. IPS was divested on April 30, 2025, and its operations are presented as discontinued operations for all periods presented. Following the IPS disposition, the Company's revenue is derived solely from the sale of pharmaceutical products through wholesale distribution channels. ARBLI™ (SCN-102, Losartan Potassium Oral Suspension) is the Company's first commercially available product, with sales commencing in the third quarter of 2025. The Company sells its products to wholesale distributors, who in turn sell to retail pharmacies, hospitals, and other healthcare providers. Revenue is recognized at the point in time when control of the product transfers to the customer, which generally occurs upon delivery to the customer's designated facility. Revenue is measured at the net transaction price, which reflects the gross invoice price reduced by estimated variable consideration, as described below.

Gross-to-Net Sales Adjustments. The Company records product revenue net of estimated variable consideration. Gross-to-net adjustments include: (i) chargebacks, representing the difference between the price charged to wholesale distributors and the lower contract price that distributors extend to their end-customers (including retail pharmacies, hospitals, and clinics under contracted pricing arrangements), estimated based on expected sell-through to qualifying end-customers and contractual terms; (ii) wholesaler rebates and distribution service fees, representing fees and rebates paid to wholesale distributors and, where applicable, group purchasing organizations ("GPOs") under contractual arrangements, estimated based on contracted rates, expected sales volumes, and historical payment patterns; (iii) prompt pay discounts, representing discounts offered to wholesale distributors for timely payment, estimated based on contractual terms and expected payment timing; and (iv) product returns, estimated based on contractual return rights and available market data, which have not been material to date given the early stage of commercialization of ARBLI™. Estimates of variable consideration are updated each reporting period based on available historical data, contractual terms, and management's judgment regarding current market conditions. Accrued liabilities related to gross-to-net adjustments are classified within accrued liabilities on the consolidated balance sheets. The Company does not disclose the value of unsatisfied performance obligations as all contracts have an expected duration of one year or less.

Acquisitions, Goodwill and Other Intangible Assets

The Company allocates the cost of an acquired business to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess value of the cost of an acquired business over the estimated fair value of the assets acquired and liabilities assumed is recognized as goodwill. The Company uses a variety of information sources to determine the value of acquired assets and liabilities, including: identifiable intangibles.

Goodwill and indefinite-lived intangibles are not amortized but are instead evaluated annually for impairment as part of the Company's annual financial review, or when indicators of a potential impairment are present. The annual test for impairment performed for goodwill can be qualitative or quantitative, taking into consideration certain factors surrounding the fair value of the goodwill including, level by which fair value exceeded carrying value in the prior valuation, as well as macroeconomic factors, industry conditions and actual results at the test date.

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 year ended December 31, 2025, adjusted EBITDA was $(5,384,274), compared to adjusted EBITDA of $17,820,898 for the year ended December 31, 2024. The decrease reflects the transition from a diversified operating business (which included higher-revenue wholesale and asset-sale activities in 2024) to a focused specialty pharmaceutical company in 2025, with initial ARBLI™ revenues only commencing in Q3 2025 and higher operating costs associated with the build-out of commercialization infrastructure. Excluding the non-cash impairment charges of $26,346,050 recognized in 2025, adjusted EBITDA was $(5,384,274), reflecting the early-stage commercial nature of the business. The following table reconciles net loss from continuing operations to adjusted EBITDA for the years ended December 31, 2025 and 2024:

		Year Ended
		December 31,
		2025				2024
Net (loss) income		$	(41,512,264	)		$	9,065,798
Depreciation and amortization			491,781				53,361
Benefit for income taxes			1,994,878
Interest expense			4,083,206				1,335,631
Other non-operating expenses (income)			(3,166,906	)			2,742,230
Stock based compensation (non-cash)			6,378,981				4,623,878
Impairment loss			26,346,050				-
Adjusted EBITDA		$	(5,384,274	)		$	17,820,898

Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules.

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 "Item 8. Financial Statements and Supplemental Data.".