DEBT |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Debt Disclosure [Abstract] | |
| DEBT | NOTE 9 – DEBT
October 2025 Streeterville Note
On October 14, 2025, the Company entered into a note purchase agreement with Streeterville Capital, LLC (“Streeterville”), providing for the issuance of a senior secured promissory note in the aggregate principal amount of $3,911,111.11 (the “2025 Streeterville Note”). The 2025 Streeterville Note carried an original issue discount of $391,111.11 and an interest rate of 9% per annum. After deducting the original issue discount and $20,000 in transaction costs, the Company received net proceeds of $3,500,000, which were utilized to repay the outstanding balance of the Scienture convertible debt and for general corporate purposes.
During the year ended December 31, 2025, the 2025 Streeterville Note was fully repaid. In connection with this repayment, the Company recognized interest expense of $13,981 representing accrued interest through the date of payoff. Additionally, the Company fully amortized the $391,111.11 original issue discount and the $20,000 in transaction costs, which were recognized as interest expense during the period. As of June 30, 2026, and December 31, 2025, the 2025 Streeterville Note had no outstanding balance, and there was no remaining unamortized debt discount or transaction costs associated with this obligation.
April 2026 Streeterville Notes
On April 27, 2026, the Company issued to Streeterville a secured promissory note in the original principal amount of $8,420,000, including a $400,000 original issue discount (the “A-1 Note”), and a secured promissory note in the original principal amount of $3,000,000 (the “B Note”). The A-1 Note bears interest at 9% per annum, the B Note bears interest at 5% per annum, and both notes mature on October 27, 2027. The Lender funded $8,000,000 in cash, of which $410,000 was paid as a placement agent fee, and deposited $3,000,000 into a controlled deposit account held by SCNX Holdings, LLC, a newly formed wholly-owned subsidiary of the Company (“SCNX Sub”). Beginning December 27, 2026, the Lender may redeem up to $175,000 of A-1 Note principal per calendar month, plus additional amounts based on trading volume in certain circumstances.
Debt discount and issuance costs of $830,000 were recognized on the A-1 Note at issuance, comprising the $400,000 original issue discount, $20,000 of transaction expenses and the $410,000 placement agent fee, and are being amortized to interest expense on a straight-line basis over the 18-month term. No discount or issuance costs were recognized on the B Note. During each of the three and six months ended June 30, 2026, the Company amortized $96,935 of debt discount and recognized stated interest expense of $132,875 on the A-1 Note and $26,301 on the B Note. As of June 30, 2026, unamortized debt discount was $733,066, note payable, net of debt discount, was $1,118,349 current and $9,568,586 non-current based on the Lender’s monthly redemption rights, and accrued interest payable was $159,176.
The $3,000,000 held in the SCNX Sub deposit account is restricted until maturity of the B Note and is presented as non-current restricted cash on the consolidated balance sheet. Restricted cash was $3,012,271 as of June 30, 2026, and the Company recognized $13,200 of interest income on the account during each of the three and six months ended June 30, 2026. The notes are secured by a first-priority security interest in substantially all assets of the Company and Scienture, LLC, together with guaranties, a pledge of the Company’s membership interests in SCNX Sub and control of the deposit account, and contain customary covenants, trigger events and events of default. Upon an event of default, the outstanding balance becomes immediately due and payable and default interest accrues at the lesser of 18% per annum or the maximum rate permitted by law.
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