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 306,855 shares of the Company’s Series B Preferred Stock, par value $0.00001 per share (the “Series B Preferred Stock”). The Series B Preferred Stock are convertible into shares of the Company’s common stock at a conversion ratio of 100-1.

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 15,759 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 11,643.84 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 $8.5 million to be delivered in the form Company common stock, $1.15 million in unpaid principal and accrued interest under a legacy note made by Superlatus in favor of Eat Well, $350,000 in cash consideration owed by Superlatus to Eat Well, $755,000 in unpaid principal and accrued interest on ten promissory notes made by Sapientia, Inc., a subsidiary of Superlatus, in favor of Eat Well, and certain other damages. There can be no assurance that an amicable resolution will be obtained. The Company intends to vigorously defend itself in the litigation.

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 $1,285,000 upon commercialization of product via a royalty arrangement. The royalty agreement requires that if the full $1,285,900 has not been repaid within two years of the earlier of (i) commercial launch or (ii) 120 days from FDA approval, then interest will accrue prospectively at a rate of 8% annually on the unpaid balance. Accordingly, Scienture recorded a $1,285,000 development agreement liability at inception. During the year ended December 31, 2025, the Company made aggregate payments of $489,848, consisting of $400,000 of principal and $89,848 of accrued interest. As of December 31, 2025, the remaining outstanding balance of $885,000 is presented on the consolidated balance sheet as $600,000 classified as current (Development agreement liability – current portion) and $285,000 classified as long-term (Development agreement liability).

 SCHEDULE OF 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 $1.285 million. The case was voluntarily dismissed on October 1, 2025. The Company and Kesin entered into a Settlement Agreement and Release on October 27, 2025, whereby Kesin agreed to unconditionally release and discharge the Company from all actions related to the complaint in exchange for the Company paying $1.285 million plus 8% interest from March 13, 2025, and legal fees and costs related to the complaint according to a payment schedule through December 2026.